As filed on August 31, 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. 52 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 26 X
INVESCO STOCK FUNDS, INC.
(formerly, INVESCO Equity Funds, Inc.;
formerly, INVESCO Capital Appreciation Funds, Inc.)
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Ronald M. Feiman, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
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Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
X immediately upon filing pursuant to paragraph (b)
- --
- -- on , pursuant to paragraph (b)
- -- 60 days after filing pursuant to paragraph (a)(1)
- -- on _____________, pursuant to paragraph (a)(1)
- -- 75 days after filing pursuant to paragraph (a)(2)
- -- on _________, pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
- -- this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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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
INVESCO S&P 500 INDEX FUND -- CLASS II
INVESCO VALUE EQUITY FUND
SEVEN NO-LOAD MUTUAL FUNDS SEEKING LONG-TERM CAPITAL APPRECIATION.
TABLE OF CONTENTS
Investment Goals And Strategies....................3
Fund Performance...................................6
Fees And Expenses..................................8
Investment Risks..................................11
Risks Associated With Particular Investments......11
Temporary Defensive Positions.....................20
Portfolio Turnover................................20
Fund Management...................................20
Portfolio Managers................................21
Potential Rewards.................................23
Share Price.......................................23
How To Buy Shares.................................24
Your Account Services.............................27
How To Sell Shares................................27
Taxes.............................................30
Dividends And Capital Gain Distributions..........30
Financial Highlights..............................32
[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.
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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
INVESCO Funds Group, Inc. ("INVESCO") is the investment adviser for the Funds.
Together with our affiliated companies, we at INVESCO direct all aspects of the
management and sale of the Funds.
FOR MORE DETAILS ABOUT EACH FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK,
PLEASE SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
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 (except S&P 500 Index and Value Equity 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.
S&P 500 Index Fund is passively managed to track the composition and
performance of the S&P 500 Stock Index.
Value Equity Fund is managed in the value style. That means we seek
securities, particularly stocks, that are currently undervalued by the
market - companies that are performing well, or have solid management and
products, but whose stock prices do not reflect that value. Through our
value process, we seek to provide reasonably consistent returns over a
variety of market cycles.
[ARROW ICON] In addition to the risks outlined in the following sections for
each Fund, the Funds are subject to other principal risks such as market,
liquidity, derivatives, options and futures, counterparty, interest rate,
duration, foreign securities, lack of timely information and credit
risks. These risks are described and discussed later in the Prospectus
under the headings "Investment Risks" and "Risks Associated With Particular
Investments." An investment in a Fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation
("FDIC") or any other government agency. As with any mutual fund, there is
always a risk that you can lose money on your investment in a Fund.
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[KEY ICON] INVESCO 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
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 -- those with market capitalizations between
$1 billion and $10 billion -- but also has the flexibility to invest in other
types of securities including preferred stocks, convertible securities and
bonds.
The core of the Fund's portfolio is invested in securities of established
companies that are leaders in attractive growth markets with a history of strong
returns. The remainder of the portfolio is invested in securities of companies
that show accelerating growth, driven by product cycles, favorable industry or
sector conditions and other factors that INVESCO believes will lead to rapid
sales or earnings growth.
The Fund's strategy relies on many short-term factors including current
information about a company, investor interest, price movements of a company's
securities and general market and monetary conditions. Consequently, the Fund's
investments are usually bought and sold relatively frequently.
[ARROW ICON] While the Fund generally invests in mid-sized companies, the Fund
sometimes invests in the securities of smaller companies. The prices of these
securities tend to move up and down more rapidly than the securities prices of
larger, more established companies, and the price of Fund shares tends to
fluctuate more than it would if the Fund invested in the securities of larger
companies.
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[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 other debt securities.
The Fund's strategy relies on many short-term factors including current
information about a company, investor interest, price movements of a company's
securities and general market and monetary conditions. Consequently, the Fund's
investments are usually bought and sold relatively frequently.
[ARROW ICON] The Fund's investments are not limited to companies of a particular
size. It invests in the securities of smaller companies, including companies
just entering the securities marketplace with initial public offerings. The
prices of these securities tend to move up and down more rapidly than the
securities prices of larger, more established companies. When the Fund
concentrates its investments in the securities of smaller companies, the price
of Fund shares tends to fluctuate more than it would if the Fund invested in the
securities of larger companies.
[KEY ICON] INVESCO GROWTH & INCOME FUND
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.
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[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.
[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
performance 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. Undervalued stocks may not realize their perceived value
for extened periods of time. Value-oriented funds may underperform when another
investing style is in favor.
[GRAPH ICON] FUND PERFORMANCE
The bar charts below show 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 their "total return") over the past
decade. The table below shows average annual total returns for various periods
ended December 31, 1998 for each Fund compared to the relevant following
indexes: S&P Midcap 400 Index, S&P 500 Composite Index and Russell 2000 Index.
The information in the charts and table illustrates the variability of each
Fund's return and how its performance compared to a broad measure of market
performance. Remember, past performance does not indicate how a Fund will
perform in the future.(1)
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.
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ACTUAL ANNUAL TOTAL RETURN(2)(3) ACTUAL ANNUAL TOTAL RETURN(2)(3)
The bar chart shows the Blue Chip The bar chart shows the Dynamics
Growth Fund's actual yearly performance Fund's actual yearly performance
for the years ended December 31. for the years ended December 31.
Best calendar qtr. 12/98 26.85% Best calendar qtr. 3/91 28.82%
Worse calendar qtr. 9/90 (16.37%) Worse calendar qtr. 9/90 (19.61%)
ACTUAL ANNUAL TOTAL RETURN(2)(3)(4) ACTUAL ANNUAL TOTAL RETURN(2)(3)
The bar chart shows the Small Company The bar chart shows the Value Equity
Growth Fund's actual yearly performance Fund's actual yearly performance
for the years ended December 31. for the years ended December 31.
Best calendar qtr. 12/98 26.27% Best calendar qtr. 3/91 18.10%
Worse calendar qtr. 9/90 (16.94%) Worse calendar qtr. 9/90 (15.24%)
ACTUAL ANNUAL TOTAL RETURN(2)(3)(5)
The bar chart shows the S&P 500 Index
Fund - Class II's actual yearly
performance for the years ended
December 31.
Best calendar qtr. 12/98 21.22%
Worse calendar qtr. 9/98 (9.27%)
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AVERAGE ANNUAL RETURN(2)
AS OF 12/31/98
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1 YEAR 5 YEARS 10 YEARS
Dynamics Fund 23.25% 18.99% 19.95%
S&P MidCap 400 Index 18.25% 18.67% 19.29%
Blue Chip Growth Fund 41.72% 20.84% 19.15%
Value Equity Fund 15.05% 18.84% 15.61%
S&P 500 Index Fund - Class II (12/97) 31.14% N/A N/A
S&P 500 Composite Index 28.58% 24.03% 19.17%
Small Company Growth Fund (12/91) 14.90% 13.69% N/A
Russell 2000 Index (2.55%) 11.87% 12.92%
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(1)The S&P MidCap 400 is an unmanaged index indicative of domestic
mid-capitalization stock prices. The S&P 500 Index is an unmanaged index
considered representative of the performance of the broad U.S. stock market. The
Russell 2000 Index is an unmanaged index indicative of small capitalization
stocks. Please keep in mind that the indexes do not pay brokerage, management,
administrative or distribution expenses, all of which are paid by the Funds and
are reflected in their annual returns.
(2)Total return figures include reinvested dividends and capital gain
distributions, and include the effect of the Fund's expenses.
(3)Year-to-date return for Blue Chip Growth, Dynamics, Small Company Growth, S&P
500 Index - Class II and Value Equity Funds were 9.29%, 25.21%, 15.46%, 11.83%
and 5.28%, respectively, for the calender quarter ended June 30, 1999.
(4)The Fund commenced operations on December 27, 1991.
(5)The Fund commenced operations on December 23, 1997.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Funds:
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
S&P 500 INDEX FUND - CLASS II
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends and Other Distributions None
Redemption Fee (as a percentage of amount redeemed) 1.00%*
Exchange Fee 1.00%*
Maximum Account Fee None
* A 1% fee shall be imposed on redemptions or exchanges held three months
or less.
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ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
BLUE CHIP GROWTH FUND
Management Fees 0.55%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses(2)(3) 0.26%
Total Annual Fund Operating Expenses(2)(3) 1.06%
DYNAMICS FUND
Management Fees 0.52%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses (2)(3)(4) 0.27%
Total Annual Fund Operating Expenses(2)(3)(4) 1.04%
ENDEAVOR FUND
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses(2)(3)(4) 0.49%
Total Annual Fund Operating Expenses(2)(3)(4) 1.49%
GROWTH & INCOME FUND
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses(2)(3)(4) 0.75%
Total Annual Fund Operating Expenses(2)(3)(4) 1.75%
SMALL COMPANY GROWTH FUND
Management Fees 0.72%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses(2)(3)(4) 0.65%
Total Annual Fund Operating Expenses(2)(3)(4) 1.62%
S&P 500 INDEX FUND - CLASS II
Management Fees 0.25%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses(2)(3)(4) 0.51%
Total Annual Fund Operating Expenses(2)(3)(4) 1.01%
VALUE EQUITY FUND
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses(2)(3)(4) 0.40%
Total Annual Fund Operating Expenses(2)(3)(4) 1.40%
(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 custodian and transfer agent fees
were reduced under expense offset arrangements.
(3) The expense information presented in the table has been restated to
reflect a change in the administrative services fee.
(4) Certain expenses of Growth & Income, Small Company Growth, S&P 500 Index
Fund - Class II, and Value Equity Funds were absorbed voluntarily by
INVESCO pursuant to a commitment to those Funds. After absorption, Growth &
Income Fund's " Other Expenses" and "Total Annual Fund Operating Expenses"
were 0.52% and 1.52%, respectively, Small Company Growth Fund's "Other
Expenses" and "Total Annual Fund Operating Expenses" were 0.53% and 1.50%,
respectively, S&P 500 Index Fund Class II's "Other Expenses" and "Total
Annual Fund Operating Expenses" were 0.12% and 0.62%, respectively, and
Value Equity Fund's "Other Expenses" and "Total Annual Fund Operating
Expenses" were 0.29% and 1.29%, respectively.
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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:
1 year 3 years 5 years 10 years
Blue Chip Growth Fund $ 108 $ 336 $ 582 $ 1,289
Dynamics Fund $ 106 $ 330 $ 573 $ 1,268
Endeavor Fund* $ 152 $ 472 $ 815 $ 1,783
Growth & Income Fund* $ 178 $ 551 $ 949 $ 2,062
Small Company Growth Fund $ 165 $ 511 $ 881 $ 1,922
S&P 500 Index Fund - Class II $ 103 $ 322 $ 558 $ 1,236
Value Equity Fund $ 143 $ 443 $ 766 $ 1,680
*Annualized
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[ARROW ICON] INVESTMENT RISKS
BEFORE INVESTING IN A FUND, YOU SHOULD DETERMINE THE LEVEL OF RISK WITH
WHICH YOU ARE COMFORTABLE. TAKE INTO ACCOUNT FACTORS LIKE YOUR AGE, CAREER,
INCOME LEVEL, AND TIME HORIZON.
You should determine the level of risk with which you are comfortable
before you invest. The principal risks of investing in any mutual fund,
including these Funds, are:
NOT INSURED. Mutual funds are not insured by the FDIC or any other agency,
unlike bank deposits such as CDs or savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment
objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its
performance, nor assure you that the market value of your investment will
increase. You may lose the money you invest, and the Funds will not reimburse
you for any of these losses.
VOLATILITY. The price of your mutual fund shares will increase or decrease
with changes in the value of a Fund's underlying investments and changes to the
equity markets as a whole.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not
constitute a complete investment plan. The Funds are designed to be only a part
of your personal investment plan.
YEAR 2000. Many computer systems in use today may not be able to recognize
any date after December 31, 1999. If these systems are not fixed by that date,
it is possible that they could generate erroneous information or fail
altogether. INVESCO has committed substantial resources in an effort to make
sure that its own major computer systems will continue to function on and after
January 1, 2000. Of course, INVESCO cannot fix systems that are beyond its
control. If INVESCO's own systems, or the systems of third parties upon which it
relies, do not perform properly after December 31, 1999, the Funds could be
adversely affected.
In addition, the markets for, or values of, securities in which the Funds
invest may possibly be hurt by computer failures affecting portfolio investments
or trading of securities beginning January 1, 2000. For example, improperly
functioning computer systems could result in securities trade settlement
problems and liquidity issues, production issues for individual companies and
overall economic uncertainties. Individual issuers may incur increased costs in
making their own systems Year 2000 compliant. The combination of market
uncertainty and increased costs means that there is a possibility that Year 2000
computer issues may adversely affect the Funds' investments. At this time, it is
generally believed that foreign issuers, particularly those in emerging and
other markets, may be more vulnerable to Year 2000 problems than will be issuers
in the U.S.
[ARROW ICON] RISKS ASSOCIATED WITH PARTICULAR INVESTMENTS
You should consider the special factors associated with the policies
discussed below in determining the appropriateness of investing in a Fund.
See the Statement of Additional Information for a discussion of additional
risk factors.
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of 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.
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LIQUIDITY RISK
A Fund's portfolio is liquid if the Fund is able to sell the securities it
owns at a fair price within a reasonable time. Liquidity is generally related to
the market trading volume for a particular security. Investments in smaller
companies or in foreign companies or companies in emerging markets are subject
to a variety of risks, including potential lack of liquidity.
DERIVATIVES RISK
A derivative is a financial instrument whose value is "derived," in some manner,
from the price of another security, index, asset or rate. Derivatives include
options and futures contracts, among a wide range of other instruments. The
principal risk of investments in derivatives is that the fluctuations in their
values may not correlate perfectly with the overall securities markets. Some
derivatives are more sensitive to interest rate changes and market price
fluctuations than others. Also, derivatives are subject to counterparty risk as
described below.
OPTIONS AND FUTURES RISK
Options and futures are common types of derivatives that a Fund may
occasionally use to hedge its investments. An option is the right to buy or sell
a security or other instrument, index or commodity at a specific price on or
before a specific date. A future is an agreement to buy or sell a security or
other instrument, index or commodity at a specific price on a specific date.
COUNTERPARTY RISK
This is a risk associated primarily with repurchase agreements and some
derivatives transactions. It is the risk that the other party in the transaction
will not fulfill its contractual obligation to complete the transaction with a
Fund.
INTEREST RATE RISK
Changes in interest rates will affect the resale value of debt securities
held in a Fund's portfolio. In general, as interest rates rise, the resale value
of debt securities decreases; as interest rates decline, the resale value of
debt securities generally increases. Debt securities with longer maturities
usually are more sensitive to interest rate movements.
DURATION RISK
Duration is a measure of a debt security's sensitivity to interest rate
changes. Duration is usually expressed in terms of years, with longer durations
usually more sensitive to interest rate fluctuations.
FOREIGN SECURITIES 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.
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REGULATORY RISK. Government regulations may affect the value of a security.
In foreign countries, securities markets that are less regulated than those
in the U.S. may permit trading practices that are not allowed in the U.S.
DIPLOMATIC RISK. A change in diplomatic relations between the U.S. and a
foreign country could affect the value or liquidity of investments.
EUROPEAN ECONOMIC AND MONETARY UNION. Austria, Belgium, Finland,
France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal
and Spain are presently members of the European Economic and Monetary
Union (the "EMU") which as of January 1, 1999, adopted the euro as a
common currency. The national currencies will be sub-currencies of the
euro until July 1, 2002, at which time these currencies will disappear
entirely. Other European countries may adopt the euro in the future.
The introduction of the euro presents some uncertainties and possible
risks, which could adversely affect the value of securities held by the
Funds.
EMU countries, as a single market, may affect future investment
decisions of the Funds. As the euro is implemented, there may be
changes in the relative strength and value of the U.S. dollar and other
major currencies, as well as possible adverse tax consequences. The
euro transition by EMU countries - present and future - may affect the
fiscal and monetary levels of those participating countries. There may
be increased levels of price competition among business firms within
EMU countries and between businesses in EMU and non-EMU countries. The
outcome of these uncertainties could have unpredictable effects on
trade and commerce and result in increased volatility for all financial
markets.
LACK OF TIMELY INFORMATION RISK
Timely information about a security or its issuer may be unavailable,
incomplete or inaccurate. This risk is more common to securities issued by
foreign companies and companies in emerging markets than it is to the securities
of U.S.-based companies.
CREDIT RISK
The Funds may invest in debt instruments, such as notes, bonds and
commercial paper. There is a possibility that the issuers of these instruments
will be unable to meet interest payments or repay principal. Changes in the
financial strength of an issuer may reduce the credit rating of its debt
instruments and may affect their value.
The Funds generally invest in equity securities of growing companies.
However, in an effort to diversify their holdings and provide some protection
against the risk of other investments, the Funds also may invest in other types
of securities and other financial instruments, as indicated in the chart below.
These investments, which at any given time may constitute a significant portion
of a Fund's portfolio, have their own risks.
<PAGE>
- --------------------------------------------------------------------------------
BLUE CHIP GROWTH &
INVESTMENT RISKS GROWTH DYNAMICS ENDEAVOR INCOME
- --------------------------------------------------------------------------------
AMERICAN DEPOSITORY Market
RECEIPTS (ADRS) informa-
These are securities tion,
issued by U.S. banks Political,
that represent shares of Regula-
foreign corporations tory, X X X X
held by those banks. Diplo-
Although traded in U.S. matic,
securities markets and Liquidity
valued in U.S. dollars, and Cur-
ADRs carry most of the rency
risks of investing Risks
directly in foreign
securities.
- --------------------------------------------------------------------------------
DEBT SECURITIES Market,
Securities issued by Credit,
private companies or Interest X X X X
governments repre- Rate and
senting an obligation Duration
to pay interest Risks
principal when the
security matures.
- --------------------------------------------------------------------------------
DELAYED DELIVERY OR Market
WHEN ISSUED SECURITIES and
Ordinarily, the Fund Interest
purchases securities and Rate Risks
pays for them in cash at
the normal trade
settlement time. When
the Fund purchases a
delayed delivery or
when-issued security,
it promises to pay in
the future - for example, X X X X
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>
- --------------------------------------------------------------------------------
BLUE CHIP GROWTH &
INVESTMENT RISKS GROWTH DYNAMICS ENDEAVOR INCOME
- --------------------------------------------------------------------------------
FORWARD FOREIGN
CURRENCY CONTRACTS
A contract to
exchange an amount of Currency,
currency on a date in Political,
the future at an Diplo-
agreed-upon exchange matic and
rate might be used by Regula- X X X X
the Fund to hedge tory Risks
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 securi ties
decline.
- --------------------------------------------------------------------------------
FUTURES Market,
A futures contract Liquidity
is an agreement and
to buy or sell a Options X X X X
specific amount of a and
financial instrument Futures
(such as an index Risks
option) at a stated
price on a stated date.
The Fund may use futures
contracts to provide
liquidity and to hedge
portfolio value.
- --------------------------------------------------------------------------------
JUNK BONDS
Debt Securities that Market,
are rated BB or lower Credit,
by S&P or Ba or Interest X X X X
lower by Moody's. Rate and
Tend to pay higher Duration
interest rates than Risks
higher-rated debt
securities, but carry
a higher credit risk.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
BLUE CHIP GROWTH &
INVESTMENT RISKS GROWTH DYNAMICS ENDEAVOR INCOME
- --------------------------------------------------------------------------------
OPTIONS Credit,
The obligation Informa-
or right to deliver or tion,
receive a security or Liquidity
other instrument, index and
or com modity, or cash Options
payment depend ing on and X X X X
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
INSTRUMENTS
These may Counter-
include forward party,
contracts, swaps, caps, Credit,
floors and collars. Currency,
They may be used to try Interest
to manage the Fund's Rate,
foreign cur rency Liquidity, X X X X
exposure and other Market
invest ment risks, which and Regu-
can cause its net asset latory
value to rise or fall. Risks
The Fund may use these
financial instruments,
commonly known as
"derivatives," to
increase or decrease its
exposure to changing
securities prices,
interest rates, currency
exchange rates or other
factors.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
A contract Credit and
under which the seller Counter- X X X X
of a security agrees to party Risks
buy it back at an
agreed-upon price and
time in the future.
- --------------------------------------------------------------------------------
RULE 144A SECURITIES
Securities that are Liquidity
not registered, but Risk
which are bought and
sold solely by insti-
tutional investors.
The Fund considers
many Rule 144A sec- X X X X
urities to be "liquid,"
although the market
for such securities
typically is less
active than the public
securities markets.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SMALL
COMPANY S&P 500 VALUE
INVESTMENT RISKS GROWTH INDEX EQUITY
- --------------------------------------------------------------------------------
AMERICAN DEPOSITORY Market,
RECEIPTS (ADRS) Informa-
These are securities tion, Politi-
issued by U.S. banks cal,
that represent shares Regulatory, X X
of foreign corpora- Diplomatic,
tions held by those Liquidity
banks. Although traded and Cur-
in U.S. securities rency Risks
markets and valued in
U.S. dollars,
ADRs carry most of the
risks of invest ing
directly in foreign
securities.
- --------------------------------------------------------------------------------
DEBT SECURITIES Market,
Securities issued Credit,
by Interest private Interest
companies or govern- Rate and X X
ments representing an Duration
obligation to pay Risks
interest and to repay
principal 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 X X
when-issued security,
it promises to pay in
the future for example,
when the security is
actually available for
delivery to the Fund.
The Fund's obligation
to pay and the interest
rate it receives, in
the case of debt sec-
urities, usually are
fixed when the Fund
promises to pay.
Between the date the
Fund promises to pay
and the date the sec-
urities 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>
- --------------------------------------------------------------------------------
SMALL
COMPANY S&P 500 VALUE
INVESTMENT RISKS GROWTH INDEX EQUITY
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY Currency,
CONTRACTS Political,
A contract to exchange Diplomatic
an amount of currency and Regula-
on a date in the future tory Risks
at an agreed-upon ex-
change rate might be used
by the Fund to hedge
against changes in for-
eign currency exchange X X
rates when the Fund
invests in foreign
securities. Does not
reduce price fluctua-
tions in foreign secur-
ities, or prevent losses
if the prices of those
securities decline.
- -------------------------------------------------------------------------------
FUTURES Market,
A futures contract Liquidity
is an agreement to buy and Options
or sell a specific and Futures
amount of a financial Risks
instrument (such as an
index option) at a X X X
stated price on a stated
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 Credit,
by S&P or Ba or lower Interest
by Moody's. Tend to Rate and X
pay higher interest Duration
rates than higher- Risks
rated debt securities,
but carry a higher
credit risk.
- -------------------------------------------------------------------------------
OPTIONS Credit,
The obligation or Informa-
right to deliver or tion, Liq-
recieve a security or uidity and
other instrument, index Options
or commodity, or cash and
payment depending Futures X X X
on the price of the Risks
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>
- --------------------------------------------------------------------------------
SMALL
COMPANY S&P 500 VALUE
INVESTMENT RISKS GROWTH INDEX EQUITY
- --------------------------------------------------------------------------------
OTHER FINANCIAL Counter-
INSTRUMENTS party,
These may include Credit,
forward contracts, swaps, Currency,
caps, floors and collars. Interest
They may be used to try Rate,
to manage the Fund's Liquidity,
foreign currency exposure Market X X X
and other investment and Reg-
risks, which can cause ulatory
its net asset value Risks
to rise or fall. The
Fund may use these fin-
ancial instruments,
commonly known as "der-
ivatives," to increase
or decrease its exposure
to changing securities
prices, interest rates,
currency exchange rates
or other factors.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
A contract under Credit
which the seller of a and
security agrees to buy Counter- X X
it back at an agreed- party Risks
upon price and time in
the future.
- --------------------------------------------------------------------------------
RULE 144A SECURITIES
Securities that are Liquidity
not registered, but Risk
which are bought and
sold solely by institu-
tional investors. The
Fund considers many X X
Rule 144A securities
to be "liquid,"
although the market for
such securities typically
is less active than the
public securities markets.
- --------------------------------------------------------------------------------
<PAGE>
[ARROW ICON] TEMPORARY DEFENSIVE POSITIONS
When securities markets or economic conditions are unfavorable or
unsettled, we might try to protect the assets of a Fund by investing in
securities that are highly liquid such as high quality money market instruments
like short-term U.S. government obligations, commercial paper or repurchase
agreements. 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 134%(a)
INVESCO Dynamics Fund 23%(b)
INVESCO Endeavor Fund 47%(b)
INVESCO Growth & Income Fund 46%(b)
INVESCO Small Company Growth Fund 41%(c)
INVESCO S&P 500 Index Fund 2%
INVESCO Value Equity Fund 22%(a)
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) From June 1, 1999 to July 31, 1999
A portfolio turnover rate of 200%, for example, is equivalent to a Fund
buying and selling all of the securities in its portfolio two times in the
course of a year. A comparatively high turn-over rate may result in higher
brokerage commissions and taxable capital gain distributions to a Fund's
shareholders.
[INVESCO ICON] FUND MANAGEMENT
INVESTMENT ADVISER
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT
MANAGEMENT COMPANY THAT MANAGES MORE THAN $296 BILLION IN ASSETS WORLDWIDE.
AMVESCAP IS BASED IN LONDON, WITH MONEY MANAGERS LOCATED IN EUROPE, NORTH AND
SOUTH AMERICA, AND THE FAR EAST.
INVESCO, located at 7800 East Union Avenue, Denver, Colorado, is the investment
adviser of the Funds. INVESCO was founded in 1932 and manages over $24.1 billion
for more than 924,637 shareholders of 42 INVESCO mutual funds. INVESCO performs
a wide variety of other services for the Funds, including administrative and
transfer agency functions (the processing of purchases, sales and exchanges of
Fund shares).
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.
<PAGE>
A wholly owned subsidiary of INVESCO, INVESCO Distributors, Inc. ("IDI") is
the Funds' distributor and is responsible for the sale of the Funds' shares.
INVESCO, ICM and IDI are subsidiaries of AMVESCAP PLC.
World is a general partnership organized by Munder Capital Management, a
general partnership formed in December 1994 which engages in investment
management and advisory services.
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 0.55% (Annualized)
INVESCO Dynamics Fund 0.52% (Annualized)
INVESCO Endeavor Fund 0.75% (Annualized)
INVESCO Growth & Income Fund 0.75% (Annualized)
INVESCO Small Company Growth Fund 0.72% (Annualized)
INVESCO S&P 500 Index Fund - Class II 0.25%
INVESCO Value Equity Fund 0.75% (Annualized)
---------------------------------------------------------------------------
[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
Thomas Wald
Endeavor Timothy J. Miller
Growth & Income Trent E. May
Fritz Meyer
Small Company Growth Stacie Cowell
Timothy J. Miller
Trent E. May
Value Equity Michael E. Harhai
Terrence Irrgang
S&P 500 Index World Asset Management
TIMOTHY J. MILLER is the leader of INVESCO's Growth Team and the lead
portfolio manager of Dynamics and Endeavor Funds and a Chartered Financial
Analyst. He is also a director and senior vice president of INVESCO, where he
has had progressively more responsible investment professional positions since
joining the company in 1992. Before joining INVESCO, Tim was a portfolio manager
with Mississippi Valley Advisors. He holds an M.B.A. from the University of
Missouri -- St. Louis and a B.S.B.A. from St. Louis University.
<PAGE>
STACIE COWELL is the lead portfolio manager of Small Company Growth
Fund and a Chartered Financial Analyst who joined INVESCO in 1997. She is also a
vice president of INVESCO. Before joining us, she was senior equity analyst with
Founders Asset Management and capital markets and trading analyst with Chase
Manhatten Bank in New York. Stacie holds a B.A. in Economics from Colgate
University.
MICHAEL C. HARHAI is the portfolio manager of Value Equity Fund and a
Chartered Financial Analyst who joined INVESCO Capital Management, Inc. in 1992.
He is also an executive vice president of ICM. Before joining ICM, he was
employed by Sovran Capital Management Corp., C&S/Sovran Capital Management and
Citizens & Southern Investment Advisors, Inc. Michael holds a B.A. from the
University of South Florida and an M.B.A. from the University of Central
Florida.
TERRENCE IRRGANG is the co-portfolio manager of Value Equity Fund who joined
INVESCO Capital Management, Inc. in 1992. He is also a vice president of ICM.
Before joining ICM, he was a consultant for Towers, Perrin, Forster & Crosby.
Terrence holds a B.A. from Gettysburg College and an M.B.A. from Temple
University.
TRENT E. MAY is the lead portfolio manager of Growth & Income Fund and
a Chartered Financial Analyst who joined INVESCO in 1996. Trent is also a vice
president of INVESCO. Before joining us, he was with Munder Capital Management
and SunBank Capital Management. He holds an M.B.A. from Rollins College and a
B.S. in Engineering from Florida Institute of Technology.
DOUGLAS J. MCELDOWNEY is the co-portfolio manager of Blue Chip Growth Fund who
joined INVESCO in 1999. Doug is also a vice president of INVESCO. Before joining
INVESCO, Doug was with Bank of America Investment Management, Inc., SunTrust
Banks, Inc. and Merrill Lynch & Company, Inc. He holds a B.B.A. in Finance from
University of Kentucky and an M.B.A. from the Crummer Graduate School at Rollins
College.
FRITZ MEYER is the co-portfolio manager of Growth & Income Fund who
joined INVESCO in 1996. He is also a vice president of INVESCO. Before joining
us, he was an executive vice president and portfolio manager with Nelson, Benson
& Zellmer, Inc. Fritz holds an M.B.A. from Amos Tuck School -- Dartmouth College
and an B.A. with a distinction in Economics from Dartmouth College.
THOMAS WALD is the co-portfolio manager of Dynamics Fund and a Chartered
Financial Analyst who joined INVESCO in 1997. He is also a vice president of
INVESCO. Before joining us, he was employed by Munder Capital Management, Duff &
Phelps and Prudential Investment Corp. He holds an M.B.A. from the Wharton
School at the University of Pennsylvania and a B.A. from Tulane University.
Tim Miller, Stacie Cowell, Trent May, Doug McEldowney, Fritz Meyer and Tom
Wald are each members of the INVESCO Growth Team, which is led by Tim Miller.
<PAGE>
[INVESCO ICON] POTENTIAL REWARDS
NO SINGLE FUND SHOULD REPRESENT YOUR COMPLETE INVESTMENT PROGRAM NOR SHOULD
YOU ATTEMPT TO USE THE FUNDS FOR SHORT-TERM TRADING PURPOSES.
The Funds offer shareholders the potential to increase the value of their
capital over time; Blue Chip Growth, Growth & Income and Value Equity Funds also
offer the opportunity for current income. Like most mutual funds, each Fund
seeks to provide higher returns than market or its competitors, but cannot
guarantee that performance. Each Fund seeks to minimize risk by investing in
many different companies in a variety of industries.
SUITABILITY FOR INVESTORS
Only you can determine if an investment in a Fund is right for you based upon
your own economic situation, the risk level with which you are comfortable and
other factors. In general, the Funds are most suitable for investors who:
o are willing to grow their capital over the long term (at least five
years).
o understand that shares of a Fund can, and likely will, have daily price
fluctuations.
o are investing tax-deferred retirement accounts, such as traditional and
Roth Individual Retirement Accounts ("IRAs"), as well as employer-
sponsored qualified retirement plans, including 401(k)s and 403(b)s,
all of which have longer investment horizons.
You probably do not want to invest in the Funds if you are:
o primarily seeking current dividend income.
o unwilling to accept potentially significant changes in the price of Fund
shares.
o speculating on short-term fluctuations in the stock markets.
[INVESCO ICON] SHARE PRICE
CURRENT MARKET VALUE OF FUND ASSETS
+ ACCRUED INTEREST AND DIVIDENDS
- - FUND DEBTS,
INCLUDING ACCRUED EXPENSES
- --------------------------------------
/ NUMBER OF SHARES
= YOUR SHARE PRICE (NAV).
The value of your Fund shares is likely to change daily. This value is known as
the Net Asset Value per share, or NAV. INVESCO determines the market value of
each investment in each Fund's portfolio each day that the New York Stock
Exchange ("NYSE") is open, at the close of trading on that exchange (normally
4:00 p.m. Eastern time). Therefore, shares of the Funds are not priced on days
when the NYSE is closed, which generally is on weekends and national holidays in
the U.S.
NAV is calculated by adding together the current market price of all of a Fund's
investments and other assets, including accrued interest and dividends;
subtracting the Fund's debts, including accrued expenses; and dividing that
dollar amount by the total number of the Fund's outstanding shares.
All purchases, sales and exchanges of Fund shares are made by INVESCO at the NAV
next calculated after INVESCO receives proper instructions from you to purchase,
redeem or exchange shares of a Fund. Your instructions must be received by
INVESCO no later than the close of the NYSE to effect transactions at that day's
NAV. If INVESCO hears from you after that time, your instructions will be
processed at the NAV calculated at the end of the next day that the NYSE is
open.
Foreign securities exchanges, which set the prices for foreign securities held
by the Funds, are not always open the same days as the NYSE, and may be open for
business on days the NYSE is not. For example, Thanksgiving Day is a holiday
observed by the NYSE and not by overseas exchanges. In this situation, the Funds
would not calculate NAV on Thanksgiving Day (and INVESCO would not buy, sell
exchange shares for you on that day), even though activity on foreign exchanges
could result in changes in the value of investments held by the Funds on that
day.
<PAGE>
[INVESCO ICON] HOW TO BUY SHARES
TO BUY SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE THE
CLOSE OF THE NYSE, NORMALLY 4:00 P.M. EASTERN TIME.
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 - Class II, 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 - Class II, 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. $5,000 for S&P 500 Index Fund - Class II.
MINIMUM SUBSEQUENT INVESTMENT. $50 (Minimums are lower for certain retirement
plans.) $1,000 for S&P 500 Index Fund - Class II.
EXCHANGE POLICY. You may exchange your shares in any of the Funds for those in
another INVESCO mutual fund on the basis of their respective NAVs at the time of
the exchange.
FUND EXCHANGES CAN BE A CONVENIENT WAY FOR YOU TO DIVERSIFY YOUR
INVESTMENTS, OR TO REALLOCATE YOUR INVESTMENTS WHEN YOUR OBJECTIVES CHANGE.
Before making any exchange, be sure to review the prospectuses of the funds
involved and consider the differences between the funds. Also, be certain that
you qualify to purchase certain classes of shares in the new fund. An exchange
is the sale of shares from one fund immediately followed by the purchase of
shares in another. Therefore, any gain or loss realized on the exchange is
recognizable for federal income tax purposes (unless, of course, you or your
account qualifies as tax-deferred under the Internal Revenue Code). If the
shares of the fund you are selling have gone up in value since you bought them,
the sale portion of an exchange may result in taxable income to you.
We have the following policies governing exchanges:
o Both fund accounts involved in the exchange must be registered in exactly the
same name(s) and Social Security or federal tax I.D. number(s).
o You may make up to four exchanges out of each Fund per year.
o Each Fund reserves the right to reject any exchange request, or to modify or
terminate the exchange policy, if it is in the best interests of the Fund and
its shareholders. Notice of all such modifications or termination that affect
all shareholders of the Fund will be given at least 60 days prior to the
effective date of the change, except in unusual instances, including a
suspension of redemption of the exchanged security under Section 22(e) of the
Investment Company Act of 1940.
<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 - CLASS II ONLY). If you exchange shares
of S&P 500 Index Fund - Class II 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 -
Class II, to avoid transaction and other expenses caused by early redemptions,
and to facilitate portfolio management. The fee is currently waived for
institutional, qualified retirement plan and other shareholders investing
through omnibus accounts, due to certain economies associated with these
accounts. However, S&P 500 Index Fund - Class II reserves the right to impose
redemption fees on shares held by such shareholders at any time if warranted by
the Fund's future cost of processing redemptions. The redemption fee may be
modified or discontinued at any time or from time to time. 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. S&P 500 Index Fund - Class II 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
by overnight courier to: Fund-Class II -
7800 E. Union Ave. $5,000 for regular
Denver, CO 80237. accounts; $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 received within 3
request your purchase. Fund-Class II - business days, or the
Then send $5,000 your for regular transaction may be
check by overnight accounts; $2,000 cancelled.
courier to our for an IRA; $1,000
street address: 7800 E. minimum for each
Union Ave., Devner, subsequent
CO 80237. Or you may investment.
send your payment by
bank wire (call INVESCO
for instructions).
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
- -------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50. You must forward your
Call 1-800-525-8085 to S&P 500 Index bank account
request your purchase. Fund-Class II - information to INVESCO
INVESCO will move money $5,000 for regular prior to using this
from your designated accounts; $2,000 option.
bank/credit union for an IRA; $1,000
checking or savings minimum for each
account in order to subsequent invest
purchase shares, upon ment.
your telephone
instructions, whenever
you wish.
- -------------------------------------------------------------------------------
REGULAR INVESTING WITH $50 per month for Like all regular
EASIVEST EasiVest; $50 investment plans, nei
OR DIRECT PAYROLL per pay period for ther EasiVest nor
PURCHASE Direct Payroll Direct Payroll Pur
You may enroll on your Purchase. You may chase ensures a profit
fund start or stop your or protects against
application, or call us regular investment loss in a falling
for a separate plan at any time, market. Because you'll
form and more details. with two weeks' invest continually,
Investing notice to INVESCO. regardless of varying
the same amount on a S&P 500 Index price levels, con-
monthly basis Fund-Class II - sider your financial
allows you to buy more $5,000 for regular ability to keep buying
shares when prices are accounts; $2,000 through low price
low and fewer shares for an IRA; $1,000 levels. And remember
when prices are high. minimum for each that you will lose
This "dollar cost subsequent invest money if you redeem
averaging" may help ment. your shares when the
offset market fluctua- market value of all
tions. Over a period of your shares is less
time, your average cost than their cost.
per share may be less
than the actual average
price per share.
- -------------------------------------------------------------------------------
BY PAL(R) $1,000. (The Be sure to write down
Your "Personal Account exchange minimum the confirmation
Line" is available for is $250 for number provided by
subsequent purchases subsequent pur PAL(R). Pay ment must be
and exchanges 24 chases requested received within 3
hours a day. by telephone.) business days, or the
Simply call S&P 500 Index transaction may be
1-800-525-8085. Fund-Class II - cancelled.
$5,000 for regular
accounts; $2,000
for an IRA; $1,000
minimum for each
subsequent invest
ment.
- ------------------------------------------------------------------------------
BY EXCHANGE $1,000 to open a See "Exchange Policy."
Between two INVESCO new account; $50
funds. Call for written
1-800-525-8085 for requests to pur
prospectuses of chase additional
other INVESCO funds. shares for an
Exchanges existing account.
may be made by phone or (The exchange
at our Web site at minimum is $250
www.invesco.com. You for exchanges
may also establish an requested by
automatic monthly telephone.)
exchange service between S&P 500 Index
two INVESCO funds; call Fund-Class II -
us for further details $5,000 for regular
and the correct form. accounts; $2,000
for an IRA; $1,000
minimum for each
subsequent invest-
ment.
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 - CLASS II 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. The fee is
currently waived for institutional, qualified retirement plan and other
shareholders investing through omnibus accounts, due to certain economies
associated with these accounts. However, S&P 500 Index Fund - Class II reserves
the right to impose redemption fees on shares held by such shareholders at any
time if warranted by the Fund's future cost of processing redemptions. The
redemption fee may be modified or discontinued at any time or from time to time.
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 MINIMUM REDEMPTION PLEASE REMEMBER
- -------------------------------------------------------------------------------
BY TELEPHONE $250 (or, if less, INVESCO's telephone
Call us toll-free at: full liquidation of redemption privileges
1-800-525-8085. the account) for a may be modified or
redemption check; terminated in the
$1,000 for a wire to Future at INVESCO's
your bank of record. discretion.
The maximum amount
which may be redeemed
by telephone is
generally $25,000.
- -------------------------------------------------------------------------------
IN WRITING Any amount. The redemption
Mail your request to request must be
INVESCO Funds Group, signed by all
Inc., P.O. Box registered account
173706, Denver, CO owners. Payment will
80217-3706. You may be mailed to your
also send your address as it appears
request by overnight on INVESCO's records,
courier to 7800 E. or to a bank
Union Ave., designated by you in
Denver, CO 80237. writing.
- -------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50. You must forward your
Call 1-800-525-8085 bank account
to request your information to
redemption. INVESCO INVESCO prior to
will automatically using this option.
pay the proceeds into
your designated bank
account.
- -------------------------------------------------------------------------------
BY EXCHANGE $250 for exchanges See "Exchange Policy."
Between two INVESCO requested by When opening a new
funds. Call telephone. account, investment
1-800-525-8085 for S&P 500 Index minimums apply.
prospectuses of other Fund-Class II -
INVESCO funds. $1,000 for purchases
Exchanges may be made requested by
by phone or at our telephone.
Web site at
www.invesco.com.
You may also estab-
lish an automatic
monthly exchange
service between two
INVESCO funds; call
us for further
details and the
correct form.
- -------------------------------------------------------------------------------
PERIODIC WITHDRAWAL $100 per payment on a You must have at
PLAN monthly or quarterly least $10,000 total
You may call us to basis. The redemption invested with the
request the check may be made INVESCO funds with at
appropriate form and payable to any party least $5,000 of that
more information at you designate. total invested in
1-800-525-8085. the fund from which
withdrawals will be
made.
- -------------------------------------------------------------------------------
PAYMENT TO THIRD Any amount. All registered
PARTY account owners must
Mail your request to sign the request,
INVESCO Funds Group, Inc., with signature
P.O. Box 173706 guarantees from an
Denver, CO 80217-3706. eligible guarantor
financial institution,
such as a commercial
bank or a recognized
national or regional
securities firm.
<PAGE>
[GRAPH ICON] TAXES
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 had paid for them. If total gains on sales
exceed total losses (including losses carried forward from previous years), a
Fund has a net realized capital gain. Net realized capital gains, if any, are
distributed to shareholders at least annually, usually in December.
Under present federal income tax laws, capital gains may be taxable at
different rates, depending on how long a Fund has held the underlying
investment. Short-term capital gains which are derived from the sale of assets
held one year or less are taxed as ordinary income. Long-term capital gains
which are derived from the sale of assets held for more than one year are taxed
at the maximum capital gains rate, currently 20% for individuals.
<PAGE>
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
The financial highlights table is intended to help you understand a Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in a Fund (assuming reinvestment of
all dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the financial statements, are included in INVESCO Stock Funds, Inc.'s 1999
Annual Report to Shareholders which is available without charge by contacting
IDI at the address or telephone number on the back cover of this Prospectus.
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED AUGUST 31
- --------------------------------------------------------------------------------------------------
BLUE CHIP GROWTH FUND 1999(a) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 5.15 $ 6.06 $ 5.44 $ 5.33 $ 5.34 $ 5.28
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income(b) 0.00 0.02 0.01 0.03 0.05 0.03
Net Gains on Securities
(Both Realized and
Unrealized) 2.11 0.69 1.39 0.95 0.49 0.11
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 2.11 0.71 1.40 0.98 0.54 0.14
- --------------------------------------------------------------------------------------------------
Less Distributions
Dividends from Net
Investment Income(c) 0.00 0.02 0.01 0.03 0.05 0.03
Distributions from
Capital Gains 0.51 1.60 0.77 0.84 0.50 0.05
- --------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.51 1.62 0.78 0.87 0.55 0.08
- --------------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $ 6.75 $ 5.15 $ 6.06 $ 5.44 $ 5.33 $ 5.34
==================================================================================================
TOTAL RETURN 42.06%(d) 13.42% 28.14% 20.23% 12.05% 2.52%
RATIOS
Net Assets - End of
Period ($000 Omitted) $1,232,908 $747,739 $709,220 $596,726 $501,285 $488,411
Ratio of Expenses to
Average Net Assets 1.03%(e)(f) 1.04%(e) 1.07%(e) 1.05%(e) 1.06% 1.03%
Ratio of Net Investment
Income to Average Net
Assets (0.08%)(f) 0.37% 0.22% 0.64% 1.07% 0.47%
Portfolio Turnover Rate 134%(d) 153% 286% 207% 111% 63%
</TABLE>
(a) From September 1, 1998 to July 31, 1999, the Fund's current fiscal year
end.
(b) Net Investment Income for the period ended July 31, 1999, aggregated less
than $0.01 on a per share basis.
(c) Distributions in excess of net investment income for the period ended July
31, 1999 and for the year ended July 31, 1999 and for the year ended August
31, 1995, aggregated less than $0.01 on a per share basis.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31 YEAR ENDED APRIL 30
- --------------------------------------------------------------------------------------------------
DYNAMICS FUND 1999(a) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $18.15 $16.41 $12.02 $13.61 $11.38 $10.15
- --------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income (Loss)(b) 0.00 0.00 (0.05) (0.04) 0.02 0.03
Net Gains or Losses
on Securities
(Both Realized
and Unrealized) 1.24 3.04 6.39 (0.19) 3.94 1.34
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 1.24 3.04 6.34 (0.23) 3.96 1.37
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income (c) 0.00 0.00 0.00 0.00 0.02 0.03
Distributions from
Capital Gains 0.00 1.30 1.95 1.36 1.71 0.11
- --------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.00 1.30 1.95 1.36 1.73 0.14
- --------------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $19.39 $18.15 $16.41 $12.02 $13.61 $11.38
==================================================================================================
TOTAL RETURN 6.83%(d) 20.83% 56.42% (2.34%) 36.32% 13.57%
RATIOS
Net Assets - End of
Period ($000 Omitted) $2,471,482 $2,044,321 $1,340,299 $762,396 $778,416 $421,600
Ratio of Expenses to
Average Net Assets 1.03%(e)(g) 1.05%(e) 1.08%(e) 1.16%(e) 1.14%(e) 1.20%(f)
Ratio of Net
Investment Income
(Loss) to Average (0.32%)(g) (0.41%) (0.43%) (0.31%) 0.16% 0.33%(f)
Net Assets
Portfolio Turnover Rate 23%(d) 129% 178% 204% 196% 176%
</TABLE>
(a) From May 1, 1999 to July 31, 1999, the Fund's current fiscal year end.
(b) Net Investment Income (Loss) aggregated less than $0.01 on a per share basis
for the period ended July 31, 1999 and for the year ended April 30, 1999.
(c) Distributions in excess of net investment income for the year ended April
30, 1996, aggregated less than $0.01 on a per share basis.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
year ended April 30, 1995. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 1.22% and
ratio of net investment income to average net assets would have been 0.31%.
(g) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED PERIOD ENDED
JULY 31 April 30
- --------------------------------------------------------------------------------
1999(a)(b) 1999(c)
INVESCO ENDEAVOR FUND
PER SHARE DATA
Net Asset Value -
Beginning of Period $16.32 $10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (0.03) (0.03)
Net Loss on Securities (Both
Realized and Unrealized) 0.32 6.35
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.29 6.32
- --------------------------------------------------------------------------------
Net Asset Value - End of Period $16.61 $16.32
================================================================================
TOTAL RETURN 1.78%(d) 63.20%(d)
RATIOS
Net Assets-End of Period ($000 Omitted) $109,532 $72,592
Ratio of Expenses to Average
Net Assets(e) 1.49%(f) 1.43%(f)
Ratio of Net Investment Loss
to Average Net Assets (0.83%)(f) (0.55%)(f)
Portfolio Turnover Rate 47%(d) 107%(d)
(a) From May 1, 1999 to July 31, 1999.
(b) The per share information was computed using average shares.
(c) From October 28, 1998, commencement of investment operations,
to April 30, 1999.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED PERIOD ENDED
JULY 31 April 30
- --------------------------------------------------------------------------------
1999(a) 1999(b)
GROWTH & INCOME FUND
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.54 $10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss(c) 0.00 0.00
Net Loss on Securities (Both
Realized and Unrealized) 0.83 5.22
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.83 5.22
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from Capital Gains 0.00 0.68
- --------------------------------------------------------------------------------
Net Asset Value - End of Period $15.37 $14.54
================================================================================
TOTAL RETURN 5.71%(d) 53.07%(d)
RATIOS
Net Assets-End of Period ($000 Omitted) $61,316 $53,994
Ratio of Expenses to Average
Net Assets(e)(f) 1.52%(g) 1.52%(g)
Ratio of Net Investment Loss
to Average Net Assets (f) (0.45%)(g) (0.25%)(g)
Portfolio Turnover Rate 46%(d) 121%(d)
(a) From the period May 1, 1999 to July 31, 1999, the Fund's current fiscal
year end.
(b) From July 1, 1998, commencement of investment operations, to April 30, 1999.
(c) Net Investment Loss aggregated less than $0.01 on a per share basis for the
periods ended July 31, 1999 and April 30, 1999.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
periods ended July 31, 1999 and April 30, 1999. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would
have been 1.75% (annualized) and 1.71% (annualized), respectively, and ratio
of net investment loss to average net assets would have been (0.68%)
(annualized) and (0.44%) (annualized), respectively.
(g) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED MAY 31
- --------------------------------------------------------------------------------------------------
1999(a) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
SMALL COMPANY GROWTH FUND
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.08 $11.90 $12.82 $14.38 $9.37 $11.40
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss)(b) 0.00 0.00 (0.06) (0.07) (0.06) 0.04
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 1.53 1.35 2.56 (0.96) 5.25 0.46
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 1.53 1.35 2.50 (1.03) 5.19 0.50
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.00 0.00 0.00 0.00 0.04
Distributions from
Capital Gains 0.00 1.17 3.42 0.53 0.18 2.49
- --------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.00 1.17 3.42 0.53 0.18 2.53
- --------------------------------------------------------------------------------------------------
Net Asset Value End
of Period $13.61 $12.08 $11.90 $12.82 $14.38 $9.37
==================================================================================================
TOTAL RETURN 12.67%(c) 12.91% 22.65% (7.08%) 55.78% 4.98%
RATIOS
Net Assets - End of
Period ($000 Omitted) $452,861 $318,109 $272,619 $294,259 $370,029 $153,727
Ratio of Expenses to
Average Net Assets(d) 1.50%(e)(f) 1.51%(e) 1.48%(e) 1.52%(e) 1.48%(e) 1.49%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(d) (0.69%)(f) (0.58%) (0.42%) (0.55%) (0.78%) 0.41%
Portfolio Turnover Rate 41%(c) 203% 158% 216% 221% 228%
</TABLE>
(a) From June 1, 1999 to July 31, 1999, the Fund's current fiscal year end.
(b) Net Investment Income (Loss) for the period ended July 31, 1999 and the
year ended May 31, 1999 aggregated less than $0.01 on a per share basis.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
period ended July 31, 1999 and for the years ended May 31, 1999, 1997 and
1995. If such expenses had not been voluntarily absorbed, ratio of expenses
to average net assets would have been 1.62% (annualized), 1.59%, 1.54% and
1.52%, respectively, and ratio of net investment income (loss) to average
net assets would have been (0.81%) (annualized), (0.66%), (0.57%) and
0.38%, respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended July 31 Period ended July 31
- --------------------------------------------------------------------------------
1999 1998(a)
S&P 500 INDEX FUND - CLASS II
PER SHARE DATA
Net Asset Value
Beginning of Period $12.14 $10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.14 0.07
Net Gains on Securities
(Both Realized and
Unrealized) 2.29 2.14
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 2.43 2.21
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividens from Net
Investment Income 0.13 0.07
Distributions from
Capital Gain 0.05 0.00
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.18 0.07
- --------------------------------------------------------------------------------
Net Asset Value -
End of Period $14.39 $12.14
================================================================================
TOTAL RETURN(b) 20.09% 22.11%(c)
RATIOS
Net Assets - End of Period
($000 Omitted) $64,613 $15,065
Ratio of Expenses to 0.60%
Average Net Assets(d)(e) 0.62%(f)
Ratio of Net Investment
Income to Average
Net Assets(e) 1.06% 1.52%(f)
Portfolio Turnover Rate 2% 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, if applicable, which is before any expense offset
arrangements.
(e) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
year ended July 31, 1999 and the period ended July 31, 1998. If such
expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 0.99% and 1.71% (annualized) and ratio of net
investment income (loss) to average net assets would have been 0.67% and
0.42% (annualized), respectively.
(f) Annualized
(g) Portfolio Turnover Rate calculated to less than 0.10% for the period ended
July 31, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED AUGUST 31
- --------------------------------------------------------------------------------------------------
VALUE EQUITY FUND 1999(a) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $25.68 $28.30 $22.24 $19.53 $18.12 $17.79
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.17 0.26 0.35 0.35 0.39 0.36
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) 6.25 (0.43) 6.62 3.09 2.58 1.20
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 6.42 (0.17) 6.97 3.44 2.97 1.56
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.17 0.26 0.35 0.35 0.39 0.31
In Excess of Net
Investment Income(b) 0.00 0.00 0.00 0.00 0.00 0.04
Distributions from
Capital Gains 2.32 2.19 0.56 0.38 1.17 0.88
- --------------------------------------------------------------------------------------------------
Total Distributions 2.49 2.45 0.91 0.73 1.56 1.23
- --------------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $29.61 $25.68 $28.30 $22.24 $19.53 $18.12
==================================================================================================
TOTAL RETURN 25.41%(c) (1.06%) 32.04% 17.77% 17.84% 9.09%
RATIOS
Net Assets - End of
Period ($000 Omitted) $369,982 $349,984 $369,766 $200,046 $153,171 $111,850
Ratio of Expenses to
Average Net Assets(d) 1.27%(e)(f) 1.15%(e) 1.04%(e) 1.01%(e) 0.97% 1.01%
Ratio of Net Investment
Income to Average Net
Assets (d) 0.63%(f) 0.86% 1.35% 1.64% 2.17% 1.80%
Portfolio Turnover Rate 22%(c) 48% 37% 27% 34% 53%
</TABLE>
(a) From September 1, 1998 to July 31, 1999, the Fund's currect fiscal
year end.
(b) Distributions in excess of net investment income for the period ended July
31, 1999 and for the year ended August 31, 1998, aggregated less than $0.01
on a per share basis.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
period ended July 31, 1999 and for the year ended August 31, 1998. If such
expenses had not been voluntarily absorbed, the ratio of expenses to
average net assets would have been 1.38% (annualized) and 1.19%,
respectively, and the ratio of net investment income to average net assets
would have been 0.52% (annualized) and 0.82%, respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.
(f) Annualized
<PAGE>
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, SAI,
annual report and semiannual report of the Funds are available on the SEC
Web site at www.sec.gov.
To obtain a free copy of the current Prospectus, SAI, annual report or
semiannual report, write to INVESCO Distributors, Inc., P.O. Box 173706,
Denver, Colorado 80217-3706; or call 1-800-525-8085. Copies of these
materials are also available (with a copying charge) from the SEC's Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C. Information
on the Public Reference Section can be obtained by calling 1-800-SEC-0330.
The SEC file numbers for the Funds are 811-1474 and 002-26125.
811-1474
<PAGE>
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.................41
Fund Performance................................41
Fees And Expenses...............................42
Investment Risks................................44
Risks Associated With Particular Investments....45
Temporary Defensive Positions...................47
Fund Management.................................47
Portfolio Managers..............................47
Potential Rewards...............................48
Share Price.....................................48
How To Buy Shares...............................49
Your Account Services...........................52
How To Sell Shares..............................52
Taxes...........................................54
Dividends And Capital Gain Distributions........55
Financial Highlights............................56
[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
- --------------------------------------------------------------------------------
[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 direct 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 advisability 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.
[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
performance of the S&P 500.
Other principal risks involved in investing in the Fund are market, liquidity,
derivatives, options and futures and counterparty risks. These risks are
described and discussed later in the Prospectus under the headings "Investment
Risks" and "Risks Associated With Particular Investments." An investment in the
Fund is not a deposit of any bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation ("FDIC") or any other government agency.
As with any other mutual funds, there is always a risk that you can lose money
on your investment in the Fund.
[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") since inception. The
table below shows average annual total return for various periods ended December
31, 1998 for the Fund compared to the S&P 500 Composite 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. Remember,
past performance does not indicate how the Fund will perform in the future.(1)
<PAGE>
Actual Annual Total Return (2)(3)(4)
The bar chart shows the S&P 500 Index
Fund - Class I's actual yearly performance
for the year ended December 31.
Best calendar qtr. 12/98 21.33%
Worse calendar qtr. 9/98 (9.22%)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURN(2)
AS OF 12/31/98
- --------------------------------------------------------------------------------
1 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------
S&P 500 Index Fund - Class I 29.85% 33.32%(4)
S&P 500 Index 28.58% 19.17%
- --------------------------------------------------------------------------------
(1) The S&P 500 Index is an unmanaged index considered representative of the
performance of the broad U.S. stock market.
(2) Total return figures include reinvested dividends and capital gain
distributions, and include the effect of the Fund's expenses.
(3) Year to date return for the Fund was 11.97% for the calendar quarter
ended June 30, 1999.
(4) The Fund commenced operations on December 23, 1997.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
S&P 500 INDEX FUND - CLASS I
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends and Other Distributions None
Redemption Fee (as a percentage of amount redeemed) 1.00%*
Exchange Fee 1.00%*
Maximum Account Fee None
* A 1% fee shall be imposed on redemptions or exchanges held three months
or less.
<PAGE>
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
S&P 500 INDEX FUND -- CLASS I
Management Fees 0.25%
Distribution and Service (12b-1) Fees None
Other Expenses(1)(2) 1.19%
Total Annual Fund Operating Expenses(1)(2)(3) 1.44%
(1)The Fund's Actual Total Annual Fund Operating Expenses were lower than the
figures shown, because its custodian fees were reduced under expense offset
arrangements.
(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 were absorbed voluntarily by INVESCO pursuant to
a commitment to the Fund. After absorption, the Fund's "Other Expenses" and
"Total Annual Fund Operating Expenses" were 0.37% and 0.62%, respectively.
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
$147 $456 $787 $1,724
<PAGE>
[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 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 and changes in
the equity markets as a whole.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not
constitute a complete investment plan. The 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.
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.
<PAGE>
[ARROW ICON] RISKS ASSOCIATED WITH PARTICULAR INVESTMENTS
You should consider the special factors associated with the policies
discussed below in determining the appropriateness of investing in the Fund. See
the Statement of Additional Information for a discussion of additional risk
factors.
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 as
described below.
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 the 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,
receive 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 $296 BILLION IN ASSETS WORLDWIDE.
AMVESCAP IS BASED IN LONDON, WITH MONEY MANAGERS LOCATED IN EUROPE, NORTH AND
SOUTH AMERICA, AND THE FAR EAST.
INVESCO, located at 7800 East Union Avenue, Denver, Colorado, is the investment
adviser of the Fund. INVESCO was founded in 1932 and manages over $24.1 billion
for more than 924,637 shareholders of 42 INVESCO mutual funds. INVESCO performs
a wide variety of other services for the Fund, including administrative 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, a general partnership formed
in December 1994 which engages in investment management and advisory services.
The Fund's advisory fee as a percentage of average annual assets under
management in the year ended July 31, 1999 was 0.25%.
[INVESCO ICON] PORTFOLIO MANAGERS
The Fund is managed by a team of World portfolio managers that are
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 daily price
fluctuations.
o are investing tax-deferred retirement accounts, such as traditional and
Roth Individual Retirement Accounts ("IRAs"), as well as employer-sponsored
qualified retirement plans, including 401(k)s and 403(b)s, all of which
have longer investment horizons.
You probably do not want to invest in the 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. Eastern time). Therefore, shares of the Fund are not priced on days
when the NYSE is closed, which generally is on weekends and national holidays in
the U.S.
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 institutional 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, if it is in the best interests of the
Fund and its shareholders. Notice of all such modifications or termination
that affect all shareholders of the Fund will be given at least 60 days
prior to the effective date of the change, except in unusual instances,
including a suspension of redemption of the exchanged security under
Section 22(e) of the Investment Company Act of 1940.
<PAGE>
In addition, the ability to exchange may be temporarily suspended at any
time that sales of the fund into which you wish to exchange are temporarily
stopped.
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. The fee is currently waived
for institutional, qualified retirement plan and other shareholders investing
through omnibus accounts, due to certain economies associated with these
accounts. However, S&P 500 Index Fund - Class II reserves the right to impose
redemption fees on shares held by such shareholders at any time if warranted by
the Fund's future cost of processing redemptions. The redemption fee may be
modified or discontinued at any time or from time to time. 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
Denver, CO 80217-3706. investment.
You may send your check
by overnight courier to:
7800 E. Union Ave.
Denver, CO 80237.
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
- -------------------------------------------------------------------------------
BY TELEPHONE OR WIRE $250,000; $25,000 Payment must be
Call 1-800-525-8085 to minimum for each received within 3
request subsequent business days, or the
your purchase. Then investment. transaction may be
send your cancelled.
check by overnight
courier to our
street address: 7800 E.
Union Ave.,
Denver, CO 80237. Or you
may
send your payment by
bank wire (call INVESCO
for
instructions).
- -------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50. You must forward your
Call 1-800-525-8085 to You must fulfill bank account information
request your pur chase. the minimum to INVESCO prior to
INVESCO will move money initial investment using this option.
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 Class I pur- investment plans, nei
OR DIRECT PAYROLL chasers or ther EasiVest nor
PURCHASE shareholders. Direct Payroll Pur
You may enroll on your chase ensures a profit
fund or protects against
application, or call us loss in a falling
for a separate market. Because you'll
form and more details. invest continually,
Investing regardless of varying
the same amount on a price levels, con
monthly basis sider your financial
allows you to buy more ability to
shares when prices are keep buying through
low and fewer shares low price levels. And
when prices are high. remember that you will
This "dollar cost averag 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 average price
per share.
- -------------------------------------------------------------------------------
BY PAL(R) $25,000 Be sure to write down
Your "Personal Account the confirmation
Line" is available for number provided by
subsequent purchases PAL(R). Pay ment must be
and exchanges 24 received within 3
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; $50,000
funds. Call for written
1-800-525-8085 for requests to purchase
prospectuses of additional shares.
other INVESCO funds. (The exchange
Exchanges minimum is $1,000
may be made by phone or for exchanges
at our 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.
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 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.
<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.
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. The fee is
currently waived for institutional, qualified retirement plan and other
shareholders investing through omnibus accounts, due to certain economies
associated with these accounts. However, S&P 500 Index Fund - Class II reserves
the right to impose redemption fees on shares held by such shareholders at any
time if warranted by the Fund's future cost of processing redemptions. The
redemption fee may be modified or discontinued at any time or from time to time.
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 MINIMUM REDEMPTION PLEASE REMEMBER
- -------------------------------------------------------------------------------
BY TELEPHONE $1,000 (or, if less, INVESCO's telephone
Call us toll-free at: full liquidation of redemption privileges
1-800-525-8085 the account) for a may be modified or
redemption check; terminated in the
$1,000 for a wire to future at INVESCO's
your bank of record. discretion.
- -------------------------------------------------------------------------------
IN WRITING Any amount. The redemption
Mail your request to request must be
INVESCO Funds Group, signed by all
Inc., P.O. Box registered account
173706, Denver, CO owners. Payment will
80217-3706. You may be mailed to your
also send your address as it appears
request by overnight on INVESCO's
courier to 7800 E. records,
Union Ave., or to a bank
Denver, CO 80237. designated by you
in writing.
- -------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50. You must forward your
Call 1-800-525-8085 bank account
to request your information to
redemption. INVESCO INVESCO prior to
will automatically using this option.
pay the proceeds into
your designated bank
account.
<PAGE>
METHOD MINIMUM REDEMPTION PLEASE REMEMBER
- -------------------------------------------------------------------------------
BY EXCHANGE $250 for exchanges See "Exchange Policy."
Between two INVESCO requested by When opening a new
funds. Call telephone. account, investment
1-800-525-8085 for minimums apply.
prospectuses of other
INVESCO funds.
Exchanges may be
made by phone or
at our Web site at
www.invesco.com.
You may also establish
an automatic monthly
exchange service
between two INVESCO
funds; call us for
further details and
the correct form.
- -------------------------------------------------------------------------------
PERIODIC WITHDRAWAL 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 Funds Group, with signature
Inc., P.O. Box 173706 guarantees from an
Denver, CO eligible guarantor
80217-3706. financial
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 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.
<PAGE>
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
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 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.
The Fund also realizes capital gains and losses when it sells securities in its
portfolio for more or less than it had paid for them. If total gains on sales
exceed total losses (including losses carried forward from previous years), 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
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Fund (assuming reinvestment
of all dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the financial statements, are included in the INVESCO Stock Funds, Inc.'s 1999
Annual Report to Shareholders which is available without charge by contacting
IDI at the address or telephone number on the back cover of this Prospectus.
YEAR ENDED PERIOD ENDED
JULY 31, 1999 JULY 31, 1998(a)
- -------------------------------------------------------------------------------
S&P 500 INDEX FUND- CLASS I
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.01 $10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.18 0.11
Net Gains on Securities (Both
Realized and Unrealized) 2.26 1.98
- -------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.24 2.09
- -------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.19 0.08
Distributions from Capital Gains 0.05 0.00
- -------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.24 0.24
- -------------------------------------------------------------------------------
Net Asset Value - End of Period $14.21 $12.01
===============================================================================
TOTAL RETURN(b) 20.40% 20.93%(c)
RATIOS
Net Assets - End of Period
($000 Omitted) $4,420 $3,259
Ratio of Expenses to Average Net
Assets(d)(e) 0.35% 0.46%(f)
Ratio of Net Investment Income to
Average Net Assets(e) 1.36% 1.96%(f)
Portfolio Turnover Rate 2% 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
year eneded July 31, 1999 and 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 1.17% and 2.51% (annualized), respectively, and
ratio of net investment income (loss) to average net assets would have been
0.54% and (0.09%) (annualized), respectively.
(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, SAI, annual report and semiannual report of the Fund
are available on the SEC Web site at www.sec.gov.
To obtain a free copy of the current Prospectus, SAI, annual report or
semiannual report, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver,
Colorado 80217-3706; or call 1-800-525-8085. Copies of these materials are also
available (with a copying charge) from the SEC's Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. Information on the Public Reference Section
can be obtained by calling 1-800-SEC-0330. The SEC file numbers for the Fund are
811-1474 and 002-26125.
811-1747
<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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Investments, Policies and Risks . . . . . . . . . . . . . . . . . . . . . . .61
Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Other Service Providers . . . . . . . . . . . . . . . . . . . . . . . . . . .111
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . . . 112
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115
Tax Consequences of Owning Shares of a Fund . . . . . . . . . . . . . . . . .116
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200
<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.
Although S&P 500 Index Fund attempts to mirror the performance of the S&P 500
Composite Stock Price Index, the Fund is not affiliated in any way with Standard
& Poor's. S&P is not involved in the determination of the prices and amount of
the securities bought by the Fund, the sale of Fund shares or the calculation
of the equation by which Fund shares are to be converted into cash.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500 or
any data included therein and S&P shall have no liability for any errors,
omissions or interruptions therein. S&P makes no warranty, express or implied,
as to results to be obtained by the Company, shareholders of the Fund or any
other person or entity from the use of the S&P 500 or any data included therein.
S&P makes no express or implied warranty, and expressly disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the S&P 500 Index or any data included therein. Without limiting
any of the foregoing, in no event shall S&P have any liability for any special,
punitive, indirect or consequential damages (including lost profits), even if
notified of the possibility of such damages.
<PAGE>
INVESTMENTS, POLICIES AND RISKS
The principal investments and policies of the Funds are discussed in the
Prospectuses of the Funds. The Funds also may invest in the following securities
and engage in the following practices.
ADRS -- American Depository Receipts, or ADRs, are securities issued by American
banks. ADRs are receipts for the shares of foreign corporations that are held by
the bank issuing the receipt. An ADR entitles its holder to all dividends and
capital gains on the underlying foreign securities, less any fees paid to the
bank. Purchasing ADRs gives a Fund the ability to purchase the functional
equivalent of foreign securities without going to the foreign securities markets
to do so. ADRs are bought and sold in U.S. dollars, not foreign currencies. An
ADR that is "sponsored" means that the foreign corporation whose shares are
represented by the ADR is actively involved in the issuance of the ADR, and
generally provides material information about the corporation to the U.S.
market. An "unsponsored" ADR program means that the foreign corporation whose
shares are held by the bank is not obligated to disclose material information in
the United States, and, therefore, the market value of the ADR may not reflect
important facts known only to the foreign company. Since they mirror their
underlying foreign securities, ADRs generally have the same risks as investing
directly in the underlying foreign securities.
CERTIFICATES OF DEPOSIT IN FOREIGN BANKS AND U.S. BRANCHES OF FOREIGN BANKS --
The Funds may maintain time deposits in and invest in U.S. dollar denominated
CDs issued by foreign banks and U.S. branches of foreign banks. The Funds limit
investments in foreign bank obligations to U.S. dollar denominated obligations
of foreign banks which have more than $10 billion in assets, have branches or
agencies in the U.S., and meet other criteria established by the board of
directors. Investments in foreign securities involve special considerations.
There is generally less publicly available information about foreign issuers
since many foreign countries do not have the same disclosure and reporting
requirements as are imposed by the U.S. securities laws. Moreover, foreign
issuers are generally not bound by uniform accounting and auditing and financial
reporting requirements and standards of practice comparable to those applicable
to domestic issuers. Such investments may also entail the risks of possible
imposition of dividend withholding or confiscatory taxes, possible currency
blockage or transfer restrictions, expropriation, nationalization or other
adverse political or economic developments, and the difficulty of enforcing
obligations in other countries.
The Funds may also invest in bankers' acceptances, time deposits and
certificates of deposit of U.S. branches of foreign banks and foreign branches
of U.S. banks. Investments in instruments of U.S. branches of foreign banks will
be made only with branches that are subject to the same regulations as U.S.
banks. Investments in instruments issued by a foreign branch of a U.S. bank will
be made only if the investment risk associated with such investment is the same
as that involving an investment in instruments issued by the U.S. parent, with
the U.S. parent unconditionally liable in the event that the foreign branch
fails to pay on the investment for any reason.
<PAGE>
COMMERCIAL PAPER -- Commercial paper is the term for short-term promissory notes
issued by domestic corporations to meet current working capital needs.
Commercial paper may be unsecured by the corporation's assets but may be backed
by a letter of credit from a bank or other financial institution. The letter of
credit enhances the paper's creditworthiness. The issuer is directly responsible
for payment but the bank "guarantees" that if the note is not paid at maturity
by the issuer, the bank will pay the principal and interest to the buyer.
INVESCO Funds Group, Inc. ("INVESCO"), the Funds' adviser, will consider the
creditworthiness of the institution issuing the letter of credit, as well as the
creditworthiness of the issuer of the commercial paper, when purchasing paper
enhanced by a letter of credit. Commercial paper is sold either as
interest-bearing or on a discounted basis, with maturities not exceeding 270
days.
DEBT SECURITIES -- Debt securities include bonds, notes and other securities
that give the holder the right to receive fixed amounts of principal, interest,
or both on a date in the future or on demand. Debt securities also are often
referred to as fixed income securities, even if the rate of interest varies over
the life of the security.
Debt securities are generally subject to credit risk and market risk. Credit
risk is the risk that the issuer of the security may be unable to meet interest
or principal payments or both as they come due. Market risk is the risk that the
market value of the security may decline for a variety of reasons, including
changes in interest rates. An increase in interest rates tends to reduce the
market values of debt securities in which a Fund has invested. A decline in
interest rates tends to increase the market values of debt securities in which a
Fund has invested.
Moody's Investor Services, Inc. ("Moody's") and 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, INVESCO will limit Fund investments to debt securities which INVESCO
believes are not highly speculative and which are rated at least B by S&P and
Moody's.
A significant economic downturn or increase in interest rates may cause issuers
of debt securities to experience increased financial problems which could
adversely affect their ability to pay principal and interest obligations, to
meet projected business goals, and to obtain additional financing. These
conditions more severely impact issuers of lower-rated debt securities. The
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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.
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.
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EQUITY SECURITIES -- The Funds may invest in common, preferred and convertible
preferred stocks, and securities whose values are tied to the price of stocks,
such as rights, warrants and convertible debt securities. Common stocks and
preferred stocks represent equity ownership in a corporation. Owners of stock,
such as the Funds, share in a corporation's earnings through dividends which may
be declared by the corporation, although the receipt of dividends is not the
principal benefit that the Funds seek when they invest in stocks and similar
instruments.
Instead, the Funds seek to invest in stocks that will increase in market value
and may be sold for more than a Fund paid to buy them. Market value is based
upon constantly changing investor perceptions of what the company is worth
compared to other companies. Although dividends are a factor in the changing
market value of stocks, many companies do not pay dividends, or pay
comparatively small dividends. The principal risk of investing in equity
securities is that their market values fluctuate constantly, often due to
factors entirely outside the control of the Funds or the company issuing the
stock. At any given time, the market value of an equity security may be
significantly higher or lower than the amount paid by a Fund to acquire it.
Owners of preferred stocks are entitled to dividends payable from the
corporation's earnings, which in some cases may be "cumulative" if prior
dividends on the preferred stock have not been paid. Dividends payable on
preferred stock have priority over distributions to holders of common stock, and
preferred stocks generally have a priority on the distribution of assets in the
event of the corporation's liquidation. Preferred stocks may be "participating,"
which means that they may be entitled to dividends in excess of the stated
dividend in certain cases. The holders of a company's debt securities generally
are entitled to be paid by the company before it pays anything to its
stockholders.
Rights and warrants are securities which entitle the holder to purchase the
securities of a company (usually, its common stock) at a specified price during
a specified time period. The value of a right or warrant is affected by many of
the same factors that determine the prices of common stocks. Rights and warrants
may be purchased directly or acquired in connection with a corporate
reorganization or exchange offer.
The Funds also may purchase convertible securities including convertible debt
obligations and convertible preferred stock. A convertible security entitles the
holder to exchange it for a fixed number of shares of common stock (or other
equity security), usually at a fixed price within a specified period of time.
Until conversion, the owner of convertible securities usually receives the
interest paid on a convertible bond or the dividend preference of a preferred
stock.
A convertible security has an "investment value" which is a theoretical value
determined by the yield it provides in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. It also has a "conversion value,"
which is the market value the convertible security would have if it were
exchanged for the underlying equity security. Convertible securities may be
purchased at varying price levels above or below their investment values or
conversion values.
Conversion value is a simple mathematical calculation that fluctuates directly
with the price of the underlying security. However, if the conversion value is
<PAGE>
substantially below investment value, the market value of the convertible
security is governed principally by its investment value. If the conversion
value is near or above investment value, the market value of the convertible
security generally will rise above investment value. In such cases, the market
value of the convertible security may be higher than its conversion value, due
to the combination of the convertible security's right to interest (or dividend
preference) and the possibility of capital appreciation from the conversion
feature. However, there is no assurance that any premium above investment value
or conversion value will be recovered because prices change and, as a result,
the ability to achieve capital appreciation through conversion may be
eliminated.
EUROBONDS AND YANKEE BONDS (ALL FUNDS, EXCEPT S&P 500 INDEX FUND) -- Bonds
issued by foreign branches of U.S. banks ("Eurobonds") and bonds issued by a
U.S. branch of a foreign bank and sold in the United States ("Yankee bonds").
These bonds are bought and sold in U.S. dollars, but generally carry with them
the same risks as investing in foreign securities.
FOREIGN SECURITIES -- Investments in the securities of foreign companies,
or companies that have their principal business activities outside the United
States, involve certain risks not associated with investment in U.S. companies.
Non-U.S. companies generally are not subject to the same uniform accounting,
auditing and financial reporting standards that apply to U.S. companies.
Therefore, financial information about foreign companies may be incomplete, or
may not be comparable to the information available on U.S. companies. There may
also be less publicly available information about a foreign company.
Although the volume of trading in foreign securities markets is growing,
securities of many non-U.S. companies may be less liquid and have greater swings
in price than securities of comparable U.S. companies. The costs of buying and
selling securities on foreign securities exchanges is generally significantly
higher than similar costs in the United States. There is generally less
government supervision and regulation of exchanges, brokers and issuers in
foreign countries than there is in the United States. Investment in non-U.S.
securities may also be subject to other risks different from those affecting
U.S. investments, including local political or economic developments,
expropriation or nationalization of assets, confiscatory taxation, and
imposition of withholding taxes on dividends or interest payments. If it becomes
necessary, it may be more difficult for a Fund to obtain or to enforce a
judgment against a foreign issuer than against a domestic issuer.
Securities traded on foreign markets are usually bought and sold in local
currencies, not in U.S. dollars. Therefore, the market value of foreign
securities acquired by a Fund can be affected -- favorably or unfavorably -- by
changes in currency rates and exchange control regulations. Costs are incurred
in converting money from one currency to another. Foreign currency exchange
rates are determined by supply and demand on the foreign exchange markets.
Foreign exchange markets are affected by the international balance of payments
and other economic and financial conditions, government intervention,
speculation and other factors, all of which are outside the control of each
Fund. Generally, the Funds' foreign currency exchange transactions will be
conducted on a cash or "spot" basis at the spot rate for purchasing or selling
currency in the foreign currency exchange markets.
<PAGE>
FUTURES, OPTIONS AND OTHER FINANCIAL INSTRUMENTS
GENERAL. As discussed in the Prospectuses, the adviser and/or sub-adviser may
use various types of financial instruments, some of which are derivatives, to
attempt to manage the risk of a Fund's investments or, in certain circumstances,
for investment (e.g., as a substitute for investing in securities). These
financial instruments include options, futures contracts (sometimes referred to
as "futures"), forward contracts, swaps, caps, floors and collars (collectively,
"Financial Instruments"). The policies in this section do not apply to other
types of instruments sometimes referred to as derivatives, such as indexed
securities, mortgage-backed and other asset-backed securities, and stripped
interest and principal of debt.
Hedging strategies can be broadly categorized as "short" hedges and "long" or
"anticipatory" hedges. A short hedge involves the use of a Financial Instrument
in order to partially or fully offset potential variations in the value of one
or more investments held in a Fund's portfolio. A long or anticipatory hedge
involves the use of a Financial Instrument in order to partially or fully offset
potential increases in the acquisition cost of one or more investments that the
Fund intends to acquire. In an anticipatory hedge transaction, the Fund does not
already own a corresponding security. Rather, it relates to a security or type
of security that the Fund intends to acquire. If the Fund does not eliminate the
hedge by purchasing the security as anticipated, the effect on the Fund's
portfolio is the same as if a long position were entered into. Financial
Instruments may also be used, in certain circumstances, for investment (e.g., as
a substitute for investing in securities).
Financial Instruments on individual securities generally are used to attempt to
hedge against price movements in one or more particular securities positions
that a Fund already owns or intends to acquire. Financial Instruments on
indexes, in contrast, generally are used to attempt to hedge all or a portion of
a portfolio against price movements of the securities within a market sector in
which the Fund has invested or expects to invest.
The use of Financial Instruments is subject to applicable regulations of the
Securities and Exchange Commission ("SEC"), the several exchanges upon which
they are traded, and the Commodity Futures Trading Commission ("CFTC"). In
addition, the Funds' ability to use Financial Instruments will be limited by tax
considerations. See "Tax Consequences of Owning Shares of a Fund."
In addition to the instruments and strategies described below, the adviser
and/or sub-adviser may use other similar or related techniques to the extent
that they are consistent with a Fund's investment objective and permitted by its
investment limitations and applicable regulatory authorities. The Funds'
Prospectuses or Statement of Additional Information ("SAI") will be supplemented
to the extent that new products or techniques become employed involving
materially different risks than those described below or in the Prospectuses.
<PAGE>
Special Risks. Financial Instruments and their use involve special
considerations and risks, certain of which are described below.
(1) Financial Instruments may increase the volatility of a Fund. If the adviser
and/or sub-adviser employs a Financial Instrument that correlates imperfectly
with a Fund's investments, a loss could result, regardless of whether or not the
intent was to manage risk. In addition, these techniques could result in a loss
if there is not a liquid market to close out a position that a Fund has entered.
(2) There might be imperfect correlation between price movements of a Financial
Instrument and price movement of the investment(s) being hedged. For example, if
the value of a Financial Instrument used in a short hedge increased by less than
the decline in value of the hedged investment(s), the hedge would not be fully
successful. This might be caused by certain kinds of trading activity that
distorts the normal price relationship between the security being hedged and the
Financial Instrument. Similarly, the effectiveness of hedges using Financial
Instruments on indexes will depend on the degree of correlation between price
movements in the index and price movements in the securities being hedged.
The Funds are authorized to use options and futures contracts related to
securities with issuers, maturities or other characteristics different from the
securities in which it typically invests. This involves a risk that the options
or futures position will not track the performance of a Fund's portfolio
investments.
The direction of options and futures price movements can also diverge from the
direction of the movements of the prices of their underlying instruments, even
if the underlying instruments match a Fund's investments well. Options and
futures prices are affected by such factors as current and anticipated
short-term interest rates, changes in volatility of the underlying instrument,
and the time remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result from
differing levels of demand in the options and futures markets and the securities
markets, from structural differences in how options and futures and securities
are traded, or from imposition of daily price fluctuation limits or trading
halts. A Fund may take positions in options and futures contracts with a greater
or lesser face value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for dif-ferences in volatility
between the contract and the securities, although this may not be successful in
all cases.
(3) If successful, the above-discussed hedging strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable price
movements of portfolio securities. However, such strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements. For example, if a Fund entered into a short hedge because the adviser
and/or sub-adviser projected a decline in the price of a security in the Fund's
portfolio, and the price of that security increased instead, the gain from that
increase would likely be wholly or partially offset by a decline in the value of
the short position in the Financial Instrument. Moreover, if the price of the
Financial Instrument declined by more than the increase in the price of the
security, the Fund could suffer a loss.
<PAGE>
(4) A Fund's ability to close out a position in a Financial Instrument prior to
expiration or maturity depends on the degree of liquidity of the market or, in
the absence of such a market, the ability and willingness of the other party to
the transaction (the "counterparty") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed out
at a time and price that is favorable to a Fund.
(5) As described below, the Funds are required to maintain assets as "cover,"
maintain segregated accounts or make margin payments when they take positions in
Financial Instruments involving obligations to third parties (i.e., Financial
Instruments other than purchased options). If a Fund is unable to close out its
positions in such Financial Instruments, it might be required to continue to
maintain such assets or segregated accounts or make such payments until the
position expired. These requirements might impair a Fund's ability to sell a
portfolio security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at a
disadvantageous time.
Cover. Positions in Financial Instruments, other than purchased options, expose
the Funds to an obligation to another party. A Fund will not enter into any such
transaction unless it owns (1) an offsetting ("covered") position in securities,
currencies or other options, futures contracts or forward contracts, or (2) cash
and liquid assets with a value, marked-to-market daily, sufficient to cover its
obligations to the extent not covered as provided in (1) above. The Funds will
comply with SEC guidelines regarding cover for these instruments and will, if
the guidelines so require, designate cash or liquid assets as segregated in the
prescribed amount as determined daily.
Assets used as cover or held as segregated cannot be sold while the position in
the corresponding Financial Instrument is open unless they are replaced with
other appropriate assets. As a result, the commitment of a large portion of a
Fund's assets to cover or to hold as segregated could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.
Options. Each Fund may engage in certain strategies involving options to attempt
to manage the risk of its investments or, in certain circumstances, for
investment (e.g., as a substitute for investing in securities). A call option
gives the purchaser the right to buy, and obligates the writer to sell the
underlying investment at the agreed-upon exercise price during the option
period. A put option gives the purchaser the right to sell, and obligates the
writer to buy the underlying investment at the agreed-upon exercise price during
the option period. Purchasers of options pay an amount, known as a premium, to
the option writer in exchange for the right under the option contract. See
"Options on Indexes" below with regard to cash settlement of option contracts on
index values.
The purchase of call options can serve as a hedge against a price rise of the
underlier and the purchase of put options can serve as a hedge against a price
decline of the underlier. Writing call options can serve as a limited short
hedge because declines in the value of the hedged investment would be offset to
the extent of the premium received for writing the option. However, if the
security or currency appreciates to a price higher than the exercise price of
the call option, it can be expected that the option will be exercised and a Fund
will be obligated to sell the security or currency at less than its market
value.
<PAGE>
Writing put options can serve as a limited long or anticipatory hedge because
increases in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. However, if the security or
currency depreciates to a price lower than the exercise price of the put option,
it can be expected that the put option will be exercised and a Fund will be
obligated to purchase the security or currency at more than its market value.
The value of an option position will reflect, among other things, the current
market value of the underlying investment, the time remaining until expiration,
the relationship of the exercise price to the market price of the underlying
investment, the price volatility of the underlying investment and general market
and interest rate conditions. Options that expire unexercised have no value.
A Fund may effectively terminate its right or obligation under an option by
entering into a closing transaction. For example, the Fund may terminate its
obligation under a call or put option that it had written by purchasing an
identical call or put option, which is known as a closing purchase transaction.
Conversely, the Fund may terminate a position in a put or call option it had
purchased by writing an identical put or call option, which is known as a
closing sale transaction. Closing transactions permit a Fund to realize profits
or limit losses on an option position prior to its exercise or expiration.
Risks of Options on Securities. Options embody the possibility of large amounts
of exposure, which will result in a Fund's net asset value being more sensitive
to changes in the value of the related investment. A Fund may purchase or write
both exchange-traded and OTC options. Exchange-traded options in the United
States are issued by a clearing organization affiliated with the exchange on
which the option is listed that, in effect, guarantees completion of every
exchange-traded option transaction. In contrast, OTC options are contracts
between a Fund and its counterparty (usually a securities dealer or a bank) with
no clearing organization guarantee. Thus, when a Fund purchases an OTC option,
it relies on the counterparty from whom it purchased the option to make or take
delivery of the underlying investment upon exercise of the option. Failure by
the counterparty to do so would result in the loss of any premium paid by a Fund
as well as the loss of any expected benefit from the transaction.
The Funds' ability to establish and close out positions in options depends on
the existence of a liquid market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the counterparty, or by a
transaction in the secondary market if any such market exists. There can be no
assurance that a Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
counterparty, a Fund might be unable to close out an OTC option position at any
time prior to the option's expiration. If a Fund is not able to enter into an
offsetting closing transaction on an option it has written, it will be required
to maintain the securities subject to the call or the liquid assets underlying
the put until a closing purchase transaction can be entered into or the option
expires. However, there can be no assurance that such a market will exist at any
particular time.
If a Fund were unable to effect a closing transaction for an option it had
purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call option
<PAGE>
written by a Fund could cause material losses because the Fund would be unable
to sell the investment used as cover for the written option until the option
expires or is exercised.
Options on Indexes. Puts and calls on indexes are similar to puts and calls on
securities or futures contracts except that all settlements are in cash and
changes in value depend on changes in the index in question. When a Fund writes
a call on an index, it receives a premium and agrees that, prior to the
expiration date, upon exercise of the call, the purchaser will receive from the
Fund an amount of cash equal to the positive difference between the closing
price of the index and the exercise price of the call times a specified multiple
("multiplier"), which determines the total dollar value for each point of such
difference. When a Fund buys a call on an index, it pays a premium and has the
same rights as to such call as are indicated above. When a Fund buys a put on an
index, it pays a premium and has the right, prior to the expiration date, to
require the seller of the put to deliver to the Fund an amount of cash equal to
the positive difference between the exercise price of the put and the closing
price of the index times the multiplier. When a Fund writes a put on an index,
it receives a premium and the purchaser of the put has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the positive difference between the exercise price of the put and the closing
level of the index times the multiplier.
The risks of purchasing and selling options on indexes may be greater than
options on securities. Because index options are settled in cash, when a Fund
writes a call on an index it cannot fulfill its potential settlement obligations
by delivering the underlying securities. A Fund can offset some of the risk of
writing a call index option by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a Fund cannot,
as a practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Fund could assemble a portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level. As with other kinds of options, a Fund as the call
writer will not learn what it has been assigned until the next business day. The
time lag between exercise and notice of assignment poses no risk for the writer
of a covered call on a specific underlying security, such as common stock,
because in that case the writer's obligation is to deliver the underlying
security, not to pay its value as of a moment in the past. In contrast, the
writer of an index call will be required to pay cash in an amount based on the
difference between the closing index value on the exercise date and the exercise
price. By the time a Fund learns what it has been assigned, the index may have
declined. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure.
If a Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund nevertheless will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer.
<PAGE>
OTC Options. Unlike exchange-traded options, which are standardized with respect
to the underlying instrument, expiration date, contract size, and strike price,
the terms of OTC options (options not traded on exchanges) generally are
established through negotiation with the other party to the option contract.
While this type of arrangement allows a Fund great flexibility to tailor the
option to its needs, OTC options generally involve greater risk than
exchange-traded options, which are guaranteed by the clearing organization of
the exchange where they are traded.
Generally, OTC foreign currency options used by a Fund are European-style
options. This means that the option is only exercisable immediately prior to its
expiration. This is in contrast to American-style options, which are exercisable
at any time prior to the expiration date of the option.
Futures Contracts and Options on Futures Contracts. When a Fund purchases or
sells a futures contract, it incurs an obligation respectively to take or make
delivery of a specified amount of the obligation underlying the contract at a
specified time and price. When a Fund writes an option on a futures contract, it
becomes obligated to assume a position in the futures contract at a specified
exercise price at any time during the term of the option. If a Fund writes a
call, on exercise it assumes a short futures position. If it writes a put, on
exercise it assumes a long futures position.
The purchase of futures or call options on futures can serve as a long or an
anticipatory hedge, and the sale of futures or the purchase of put options on
futures can serve as a short hedge. Writing call options on futures contracts
can serve as a limited short hedge, using a strategy similar to that used for
writing call options on securities or indexes. Similarly, writing put options on
futures contracts can serve as a limited long or anticipatory hedge.
In addition, futures strategies can be used to manage the "duration" (a measure
of anticipated sensitivity to changes in interest rates, which is sometimes
related to the weighted average maturity of a portfolio) and associated interest
rate risk of a Fund's fixed-income portfolio. If the adviser and/or sub-adviser
wishes to shorten the duration of a Fund's fixed-income portfolio (i.e., reduce
anticipated sensitivity), the Fund may sell an appropriate debt futures contract
or a call option thereon, or purchase a put option on that futures contract. If
the adviser and/or sub-adviser wishes to lengthen the duration of a Fund's
fixed-income portfolio (i.e., increase anticipated sensitivity), the Fund may
buy an appropriate debt futures contract or a call option thereon, or sell a put
option thereon.
At the inception of a futures contract, a Fund is required to deposit "initial
margin" in an amount generally equal to 10% or less of the contract value.
Initial margin must also be deposited when writing a call or put option on a
futures contract, in accordance with applicable exchange rules. Subsequent
"variation margin" payments are made to and from the futures broker daily as the
value of the futures or written option position varies, a process known as
"marking-to-market." Unlike margin in securities transactions, initial margin on
futures contracts and written options on futures contracts does not represent a
borrowing on margin, but rather is in the nature of a performance bond or
good-faith deposit that is returned to the Fund at the termination of the
transaction if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, a Fund may be required to
increase the level of initial margin deposits. If the Fund has insufficient cash
to meet daily variation margin requirements, it might need to sell securities in
order to do so at a time when such sales are disadvantageous.
<PAGE>
Purchasers and sellers of futures contracts and options on futures can enter
into offsetting closing transactions, similar to closing transactions on
options, by selling or purchasing, respectively, an instrument identical to the
instrument purchased or sold. However, there can be no assurance that a liquid
market will exist for a particular contract at a particular time. In such event,
it may not be possible to close a futures contract or options position.
Under certain circumstances, futures exchanges may establish daily limits on the
amount that the price of a futures contract or an option on a futures contract
can vary from the previous day's settlement price; once that limit is reached,
no trades may be made that day at a price beyond the limit. Daily price limits
do not limit potential losses because prices could move to the daily limit for
several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.
If a Fund were unable to liquidate a futures contract or an option on a futures
contract position due to the absence of a liquid market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to continue to maintain the
position being hedged by the futures contract or option or to continue to
maintain cash or securities in a segregated account.
To the extent that a Fund enters into futures contracts, options on futures
contracts and options on foreign currencies traded on a CFTC-regulated exchange,
in each case that is not for bona fide hedging purposes (as defined by the
CFTC), the aggregate initial margin and premiums required to establish these
positions (excluding the amount by which options are "in-the-money" at the time
of purchase) may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into. This policy does not limit to 5% the
percentage of the Fund's assets that are at risk in futures contracts, options
on futures contracts and currency options.
Risks of Futures Contracts and Options Thereon. The ordinary spreads at a given
time between prices in the cash and futures markets (including the options on
futures markets), due to differences in the natures of those markets, are
subject to the following factors. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions, which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. Due to the possibility of distortion, a hedge may not be successful.
Although stock index futures contracts do not require physical delivery, under
extraordinary market conditions, liquidity of such futures contracts also could
be reduced. Additionally, the adviser and/or sub-adviser may be incorrect in its
expectations as to the extent of various interest rates, currency exchange rates
or stock market movements or the time span within which the movements take
place.
<PAGE>
Index Futures. The risk of imperfect correlation between movements in the price
of index futures and movements in the price of the securities that are the
subject of a hedge increases as the composition of a Fund's portfolio diverges
from the index. The price of the index futures may move proportionately more
than or less than the price of the securities being hedged. If the price of the
index futures moves proportionately less than the price of the securities that
are the subject of the hedge, the hedge will not be fully effective. Assuming
the price of the securities being hedged has moved in an unfavorable direction,
as anticipated when the hedge was put into place, the Fund would be in a better
position than if it had not hedged at all, but not as good as if the price of
the index futures moved in full proportion to that of the hedged securities.
However, if the price of the securities being hedged has moved in a favorable
direction, this advantage will be partially offset by movement of the price of
the futures contract. If the price of the futures contract moves more than the
price of the securities, the Fund will experience either a loss or a gain on the
futures contract that will not be completely offset by movements in the price of
the securities that are the subject of the hedge.
Where index futures are purchased in an anticipatory hedge, it is possible that
the market may decline instead. If a Fund then decides not to invest in the
securities at that time because of concern as to possible further market decline
or for other reasons, it will realize a loss on the futures contract that is not
offset by a reduction in the price of the securities it had anticipated
purchasing.
Foreign Currency Hedging Strategies--Special Considerations. A Fund may use
options and futures contracts on foreign currencies, as mentioned previously,
and forward currency contracts, as described below, to attempt to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated or, in certain circumstances, for investment (e.g., as a
substitute for investing in securities denominated in foreign currency).
Currency hedges can protect against price movements in a security that a Fund
owns or intends to acquire that are attributable to changes in the value of the
currency in which it is denominated.
A Fund might seek to hedge against changes in the value of a particular currency
when no Financial Instruments on that currency are available or such Financial
Instruments are more expensive than certain other Financial Instruments. In such
cases, a Fund may seek to hedge against price movements in that currency by
entering into transactions using Financial Instruments on another currency or a
basket of currencies, the value of which the adviser and/or sub-adviser believes
will have a high degree of positive correlation to the value of the currency
being hedged. The risk that movements in the price of the Financial Instrument
will not correlate perfectly with movements in the price of the currency subject
to the hedging transaction may be increased when this strategy is used.
The value of Financial Instruments on foreign currencies depends on the value of
the underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of such Financial Instruments, a
Fund could be disadvantaged by having to deal in the odd-lot market (generally
consisting of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
<PAGE>
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirement that quotations available through dealers or other
market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Financial Instruments until they reopen.
Settlement of hedging transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency. Thus,
a Fund might be required to accept or make delivery of the underlying foreign
currency in accordance with any U.S. or foreign regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and might be
required to pay any fees, taxes and charges associated with such delivery
assessed in the issuing country.
Forward Currency Contracts and Foreign Currency Deposits. The Funds may enter
into forward currency contracts to purchase or sell foreign currencies for a
fixed amount of U.S. dollars or another foreign currency. A forward currency
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days (term) from the date of the
forward currency contract agreed upon by the parties, at a price set at the time
the forward currency contract is entered. Forward currency contracts are
negotiated directly between currency traders (usually large commercial banks)
and their customers.
Such transactions may serve as long or anticipatory hedges. For example, a Fund
may purchase a forward currency contract to lock in the U.S. dollar price of a
security denominated in a foreign currency that the Fund intends to acquire.
Forward currency contracts may also serve as short hedges. For example, a Fund
may sell a forward currency contract to lock in the U.S. dollar equivalent of
the proceeds from the anticipated sale of a security or a dividend or interest
payment denominated in a foreign currency.
The Funds may also use forward currency contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. Such a hedge
would tend to offset both positive and negative currency fluctuations, but would
not offset changes in security values caused by other factors. A Fund could also
hedge the position by entering into a forward currency contract to sell another
currency expected to perform similarly to the currency in which the Fund's
existing investments are denominated. This type of hedge could offer advantages
in terms of cost, yield or efficiency, but may not hedge currency exposure as
effectively as a simple hedge against U.S. dollars. This type of hedge may
result in losses if the currency used to hedge does not perform similarly to the
currency in which the hedged securities are denominated.
The Funds may also use forward currency contracts in one currency or a basket of
currencies to attempt to hedge against fluctuations in the value of securities
denominated in a different currency if the adviser anticipates that there will
be a positive correlation between the two currencies.
<PAGE>
The cost to a Fund of engaging in forward currency contracts varies with factors
such as the currency involved, the length of the contract period and the market
conditions then prevailing. Because forward currency contracts are usually
entered into on a principal basis, no fees or commissions are involved. When a
Fund enters into a forward currency contract, it relies on the counterparty to
make or take delivery of the underlying currency at the maturity of the
contract. Failure by the counterparty to do so would result in the loss of some
or all of any expected benefit of the transaction.
As is the case with futures contracts, purchasers and sellers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures contracts, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts, with
the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counterparty. Thus, there can be
no assurance that a Fund will in fact be able to close out a forward currency
contract at a favorable price prior to maturity. In addition, in the event of
insolvency of the counterparty, the Fund might be unable to close out a forward
currency contract. In either event, the Fund would continue to be subject to
market risk with respect to the position, and would continue to be required to
maintain a position in securities denominated in the foreign currency or to
segregate cash or liquid assets.
The precise matching of forward currency contract amounts and the value of the
securities, dividends or interest payments involved generally will not be
possible because the value of such securities, dividends or interest payments,
measured in the foreign currency, will change after the forward currency
contract has been established. Thus, a Fund might need to purchase or sell
foreign currencies in the spot (cash) market to the extent such foreign
currencies are not covered by forward currency contracts. The projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain.
Forward currency contracts may substantially change a Fund's investment exposure
to changes in currency exchange rates and could result in losses to the Fund if
currencies do not perform as the adviser anticipates. There is no assurance that
the adviser's and/or sub-adviser's use of forward currency contracts will be
advantageous to a Fund or that it will hedge at an appropriate time.
The Funds may also purchase and sell foreign currency and invest in foreign
currency deposits. Currency conversion involves dealer spreads and other costs,
although commissions usually are not charged.
Combined Positions. A Fund may purchase and write options or futures in
combination with each other, or in combination with futures or forward currency
contracts, to manage the risk and return characteristics of its overall
position. For example, a Fund may purchase a put option and write a call option
on the same underlying instrument, in order to construct a combined position
whose risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, in order to reduce the
risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in
higher transaction costs.
<PAGE>
Turnover. The Funds' options and futures activities may affect their turnover
rates and brokerage commission payments. The exercise of calls or puts written
by a Fund, and the sale or purchase of futures contracts, may cause it to sell
or purchase related investments, thus increasing its turnover rate. Once a Fund
has received an exercise notice on an option it has written, it cannot effect a
closing transaction in order to terminate its obligation under the option and
must deliver or receive the underlying securities at the exercise price. The
exercise of puts purchased by a Fund may also cause the sale of related
investments, increasing turnover. Although such exercise is within the Fund's
control, holding a protective put might cause it to sell the related investments
for reasons that would not exist in the absence of the put. A Fund will pay a
brokerage commission each time it buys or sells a put or call or purchases or
sells a futures contract. Such commissions may be higher than those that would
apply to direct purchases or sales.
Swaps, Caps, Floors and Collars. The Funds are authorized to enter into swaps,
caps, floors and collars. Swaps involve the exchange by one party with another
party of their respective commitments to pay or receive cash flows, e.g., an
exchange of floating rate payments for fixed rate payments. The purchase of a
cap or a floor entitles the purchaser, to the extent that a specified index
exceeds in the case of a cap, or falls below in the case of a floor, a
predetermined value, to receive payments on a notional principal amount from the
party selling such instrument. A collar combines elements of buying a cap and
selling a floor.
ILLIQUID SECURITIES (ALL FUNDS, EXCEPT S&P 500 INDEX FUND) -- Securities which
do not trade on stock exchanges or in the over the counter market, or have
restrictions on when and how they may be sold, are generally considered to be
"illiquid." An illiquid security is one that a Fund may have difficulty -- or
may even be legally precluded from -- selling at any particular time. The Funds
may invest in illiquid securities, including restricted securities and other
investments which are not readily marketable. A Fund will not purchase any such
security if the purchase would cause the Fund to invest more than 15% of its net
assets, measured at the time of purchase, in illiquid securities. Repurchase
agreements maturing in more than seven days are considered illiquid for purposes
of this restriction.
The principal risk of investing in illiquid securities is that a Fund may be
unable to dispose of them at the time desired or at a reasonable price. In
addition, in order to resell a restricted security, a Fund might have to bear
the expense and incur the delays associated with registering the securities with
the SEC, and otherwise obtaining listing on a securities exchange or in the over
the counter market.
INVESTMENT COMPANY SECURITIES -- To manage their daily cash positions, the Funds
may invest in securities issued by other investment companies that invest in
short-term debt securities and seek to maintain a net asset value of $1.00 per
share ("money market funds"). The Funds also may invest in 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
<PAGE>
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.
REPURCHASE AGREEMENTS -- A Fund may enter into repurchase agreements, or REPOs,
on debt securities that the Fund is allowed to hold in its portfolio. This is a
way to invest money for short periods. A REPO is an agreement under which the
Fund acquires a debt security and then resells it to the seller at an
agreed-upon price and date (normally, the next business day). The repurchase
price represents an interest rate effective for the short period the debt
security is held by the Fund, and is unrelated to the interest rate on the
underlying debt security. A repurchase agreement is often considered as a loan
collateralized by securities. The collateral securities acquired by the Fund
(including accrued interest earned thereon) must have a total value in excess of
the value of the repurchase agreement. The collateral securities are held by the
Fund's custodian bank until the repurchase agreement is completed.
The Funds may enter into repurchase agreements with commercial banks, registered
broker-dealers or registered government securities dealers that are creditworthy
under standards established by the Company's board of directors. The Company's
board of directors has established standards that the investment adviser and
sub-adviser must use to review the creditworthiness of any bank, broker or
dealer that is party to a REPO. REPOs maturing in more than seven days are
considered illiquid securities. A Fund will not enter into repurchase agreements
maturing in more than seven days if as a result more than 15% of the Fund's net
assets would be invested in these repurchase agreements and other illiquid
securities.
As noted above, the Funds use REPOs as a means of investing cash for short
periods of time. Although REPOs are considered to be highly liquid and
comparatively low-risk, the use of REPOs does involve some risks. For example,
if the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss on the sale of the collateral security. If the other party
to the agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by the Fund not within the control
of the Fund and therefore the realization by the Fund on such collateral may
automatically be stayed. Finally, it is possible that the Fund may not be able
to substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the other party to the agreement.
RULE 144A SECURITIES -- The Funds, except S&P 500 Index Fund, also may invest in
securities that can be resold to institutional investors pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "1933 Act"). In recent years,
a large institutional market has developed for many Rule 144A Securities.
Institutional investors generally cannot sell these securities to the general
<PAGE>
public but instead will often depend on an efficient institutional market in
which Rule 144A Securities can readily be resold to other institutional
investors, or on an issuer's ability to honor a demand for repayment. Therefore,
the fact that there are contractual or legal restrictions on resale to the
general public or certain institutions does not necessarily mean that a Rule
144A Security is illiquid. Institutional markets for Rule 144A Securities may
provide both reliable market values for Rule 144A Securities and enable a Fund
to sell a Rule 144A investment when appropriate. For this reason, the Company's
board of directors has concluded that if a sufficient institutional trading
market exists for a given Rule 144A security, it may be considered "liquid," and
not subject to a Fund's limitations on investment in restricted securities. The
Company's board of directors has given INVESCO the day-to-day authority to
determine the liquidity of Rule 144A Securities, according to guidelines
approved by the board. The principal risk of investing in Rule 144A Securities
is that there may be an insufficient number of qualified institutional buyers
interested in purchasing a Rule 144A Security held by a Fund, and the Fund might
be unable to dispose of such security promptly or at reasonable prices.
SECURITIES LENDING -- Each Fund may lend its portfolio securities. The advantage
of lending portfolio securities is that a Fund continues to have the benefits
(and risks) of ownership of the loaned securities, while at the same time
receiving interest from the borrower of the securities. The primary risk in
lending portfolio securities is that a borrower may fail to return a portfolio
security.
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, notes and bonds. Treasury bills have a maturity of one year or less,
Treasury notes generally have a maturity of one to ten years, and Treasury bonds
generally have maturities of more than ten years.
U.S. government debt securities also include securities issued or guaranteed by
agencies or instrumentalities of the U.S. government. Some obligations of U.S.
government agencies, which are established under the authority of an act of
Congress, such as Government National Mortgage Association ("GNMA")
participation certificates, are supported by the full faith and credit of the
U.S. Treasury. GNMA Certificates are mortgage-backed securities representing
part ownership of a pool of mortgage loans. These loans -- issued by lenders
such as mortgage bankers, commercial banks and savings and loan associations --
are either insured by the Federal Housing Administration or guaranteed by the
Veterans Administration. A "pool" or group of such mortgages is assembled and,
after being approved by GNMA, is offered to investors through securities
dealers. Once approved by GNMA, the timely payment of interest and principal on
each mortgage is guaranteed by GNMA and backed by the full faith and credit of
the U.S. government. The market value of GNMA Certificates is not guaranteed.
GNMA Certificates are different from bonds because principal is paid back
monthly by the borrower over the term of the loan rather than returned in a lump
sum at maturity, as is the case with a bond. GNMA Certificates are called
"pass-through" securities because both interest and principal payments
(including prepayments) are passed through to the holder of the GNMA
Certificate.
<PAGE>
Other United States government debt securities, such as securities of the
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the Treasury. Others, such as bonds issued by Fannie Mae, a federally chartered
private corporation, are supported only by the credit of the corporation. In the
case of securities not backed by the full faith and credit of the United States,
a Fund must look principally to the agency issuing or guaranteeing the
obligation in the event the agency or instrumentality does not meet its
commitments. A Fund will invest in securities of such instrumentalities only
when its investment adviser and sub-advisers are satisfied that the credit risk
with respect to any such instrumentality is comparatively minimal.
WHEN-ISSUED/DELAYED DELIVERY -- Ordinarily, the Funds buy and sell securities on
an ordinary settlement basis. That means that the buy or sell order is sent, and
a Fund actually takes delivery or gives up physical possession of the security
on the "settlement date," which is three business days later. However, the Funds
also may purchase and sell securities on a when-issued or delayed delivery
basis.
When-issued or delayed delivery transactions occur when securities are purchased
or sold by a Fund and payment and delivery take place at an agreed-upon time in
the future. The Funds may engage in this practice in an effort to secure an
advantageous price and yield. However, the yield on a comparable security
available when delivery actually takes place may vary from the yield on the
security at the time the when-issued or delayed delivery transaction was entered
into. When a Fund engages in when-issued and delayed delivery transactions, it
relies on the seller or buyer to consummate the sale at the future date. If the
seller or buyer fails to act as promised, that failure may result in the Fund
missing the opportunity of obtaining a price or yield considered to be
advantageous. No payment or delivery is made by a Fund until it receives
delivery or payment from the other party to the transaction. However,
fluctuation in the value of the security from the time of commitment until
delivery could adversely affect a Fund.
INVESTMENT RESTRICTIONS.
The Funds operate under certain investment restrictions. For purposes of the
following restrictions, all percentage limitations apply immediately after a
purchase or initial investment. Any subsequent change in a particular percentage
resulting from fluctuations in value does not require elimination of any
security from a Fund.
The following restictions are fundamental and may not be changed without prior
approval of a majority of the outstanding voting securities of a Fund, as
defined in the Investment 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.
<PAGE>
government or any of its agencies or instrumentalities, or securities of
other investment companies) if, as a result, (i) more than 5% of a Fund's
total assets would be invested in the securities of that issuer, or (ii) a
Fund would hold more than 10% of the outstanding voting securities of that
issuer;
3. underwrite securities of other issuers, except insofar as it may be
deemed to be an underwriter under the Securities Act of 1933, as amended,
in connection with the disposition of the Fund's portfolio securities;
4. borrow money, except that the Fund may borrow money in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings);
5. issue senior securities, except as permitted under the 1940 Act;
6. lend any security or make any loan if, as a result, more than 33 1/3%
of its total assets would be lent to other parties, but this limitation
does not apply to the purchase of debt securities or to repurchase
agreements;
7. purchase or sell physical commodities; however, this policy shall not
prevent the Fund from purchasing and selling foreign currency, futures
contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments; or
8. purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).
9. Each Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by INVESCO or an affiliate
or a successor thereof, with substantially the same fundamental investment
objective, policies and limitations as the Fund.
In addition, each Fund has the following non-fundamental policies, which may be
changed without shareholder approval:
A. The Fund may not sell securities short (unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold
short) or purchase securities on margin, except that (i) this policy does
not prevent the Fund from entering into short positions in foreign
currency, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments, (ii) the Fund may obtain
such short-term credits as are necessary for the clearance of
transactions, and (iii) the Fund may make margin payments in connection
with futures contracts, options, forward contracts, swaps, caps, floors,
collars and other financial instruments.
B. The Fund may borrow money only from a bank or from an open-end
management investment company managed by INVESCO or an affiliate or a
<PAGE>
successor thereof for temporary or emergency purposes (not for leveraging
or investing) or by engaging in reverse repurchase agreements with any
party (reverse repurchase agreements will be treated as borrowings for
purposes of fundamental limitation (4)).
C. The Fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
D. The Fund may invest in securities issued by other investment companies
to the extent that such investments are consistent with the Fund's
investment objective and policies and permissible under the 1940 Act.
E. With respect to fundamental limitation (1), domestic and foreign
banking will be considered to be different industries.
In addition, with respect to a Fund that may invest in municipal obligations,
the following non-fundamental policy applies, which may be changed without
shareholder approval:
Each state (including the District of Columbia and Puerto Rico), territory
and possession of the United States, each political subdivision, agency,
instrumentality and authority thereof, and each multi-state agency of
which a state is a member is a separate "issuer." When the assets and
revenues of an agency, authority, instrumentality or other political
subdivision are separate from the government creating the subdivision and
the security is backed only by assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the
case of an Industrial Development Bond or Private Activity bond, if that
bond is backed only by the assets and revenues of the non-governmental
user, then that non-governmental user would be deemed to be the sole
issuer. However, if the creating government or another entity guarantees a
security, then to the extent that the value of all securities issued or
guaranteed by that government or entity and owned by a Fund exceeds 10% of
the Fund's total assets, the guarantee would be considered a separate
security and would be treated as issued by that government or entity.
MANAGEMENT OF THE FUNDS
THE INVESTMENT ADVISER
INVESCO, located at 7800 East Union Avenue, Denver, Colorado, is the Company's
investment adviser. INVESCO was founded in 1932 and serves as an investment
adviser to:
INVESCO Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.)
INVESCO Combination Stock & Bond Funds, Inc. (formerly, INVESCO Flexible
Funds, Inc.)
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
<PAGE>
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios, Inc.)
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
As of July 31, 1999, INVESCO managed 42 mutual funds having combined assets of
$24.1 billion, on behalf of more than 924,637 shareholders.
INVESCO is an indirect wholly owned subsidiary of AMVESCAP PLC, a publicly
traded holding company. Through its subsidiaries, AMVESCAP PLC engages in the
business of investment management on an international basis. AMVESCAP PLC is one
of the largest independent investment management businesses in the world, with
approximately $296 billion in assets under management on June 30, 1999.
AMVESCAP PLC's North American subsidiaries include:
INVESCO Retirement and Benefit Services, Inc. ("IRBS"), Atlanta, Georgia,
develops and provides domestic and international defined contribution
retirement plan services to plan sponsors, institutional retirement plan
sponsors, institutional plan providers and foreign governments.
INVESCO Retirement Plan Services ("IRPS"), Atlanta, Georgia, a division of
IRBS, provides recordkeeping and investment selection services to defined
contribution plan sponsors of plans with between $2 million and $200 million
in assets. Additionally, IRPS provides investment consulting services to
institutions seeking to provide retirement plan products and services.
Institutional Trust Company, doing business as INVESCO Trust Company
("ITC"), Denver, Colorado, a division of IRBS, provides retirement account
custodian and/or trust services for individual retirement accounts ("IRAs")
and other retirement plan accounts. This includes services such as
recordkeeping, tax reporting and compliance. ITC acts as trustee or
custodian to these plans. ITC accepts contributions and provides, through
INVESCO, complete transfer agency functions: correspondence, sub-accounting,
telephone communications and processing of distributions.
INVESCO Capital Management, Inc., Atlanta, Georgia, manages institutional
investment portfolios, consisting primarily of discretionary employee
benefit plans for corporations and state and local governments, and
endowment funds.
INVESCO Management & Research, Inc., Boston, Massachusetts, primarily
manages pension and endowment accounts.
PRIMCO Capital Management, Inc., Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
<PAGE>
INVESCO Realty Advisors, Inc., Dallas, Texas, is responsible for providing
advisory services in the U.S. real estate markets for AMVESCAP PLC's clients
worldwide. Clients include corporate pension plans and public pension funds
as well as endowment and foundation accounts.
INVESCO (NY), Inc., New York, is an investment adviser for separately
managed accounts, such as corporate and municipal pension plans,
Taft-Hartley Plans, insurance companies, charitable institutions and private
individuals. INVESCO NY also offers the opportunity for its clients to
invest both directly and indirectly through partnerships in primarily
private investments or privately negotiated transactions. INVESCO NY further
serves as investment adviser to several closed-end investment companies, and
as sub-adviser with respect to certain commingled employee benefit trusts.
A I M Advisors, Inc., Houston, Texas, provides investment advisory and
administrative services for retail and institutional mutual funds.
A I M Capital Management, Inc., Houston, Texas, provides investment
advisory services to individuals, corporations, pension plans and other
private investment advisory accounts and also serves as a sub-adviser to
certain retail and institutional mutual funds, one Canadian mutual fund and
one portfolio of an open-end registered investment company that is offered
to separate accounts of variable insurance companies.
A I M Distributors, Inc. and Fund Management Company, Houston, Texas, are
registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.
The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire Square,
London, EC2M4YR, England.
THE INVESTMENT ADVISORY AGREEMENT
INVESCO serves as investment adviser to the Funds under an investment advisory
agreement dated February 28, 1997 (the "Agreement") with the Company.
The Agreement requires that INVESCO manage the investment portfolio of each Fund
in a way that conforms with the Fund's investment policies. INVESCO may directly
manage a Fund itself, or may hire a sub-adviser, which may be an affiliate of
INVESCO, to do so. Specifically, INVESCO is responsible for:
o managing the investment and reinvestment of all the assets of the Funds,
and executing all purchases and sales of portfolio securities;
o maintaining a continuous investment program for the Funds, consistent with
(i) each Fund's investment policies as set forth in the Company's 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
<PAGE>
Expenses not assumed by INVESCO are borne by the Funds. As full compensation for
its advisory services to the Company, INVESCO receives a monthly fee from each
Fund. The fee is calculated at the annual rate of:
Blue Chip Growth and Dynamics Funds
o 0.60% on the first $350 million of each Fund's average net assets;
o 0.55% on the next $350 million of each Fund's average net assets;
o 0.50% of each Fund's average net assets from $700 million;
o 0.45% of each Fund's average net assets from $2 billion;
o 0.40% of each Fund's average net assets from $4 billion;
o 0.375% of each Fund's average net assets from $6 billion; and
o 0.35% of each Fund's average net assets from $8 billion.
Endeavor and Growth & Income Funds
o 0.75% on the first $500 million of each Fund's average net assets;
o 0.65% on the next $500 million of each Fund's average net assets;
o 0.55% of each Fund's average net assets from $1 billion;
o 0.45% of each Fund's average net assets from $2 billion;
o 0.40% of each Fund's average net assets from $4 billion;
o 0.375% of each Fund's average net assets from $6 billion; and
o 0.35% of each Fund's average net assets from $8 billion.
Small Company Growth Fund
o 0.75% on the first $350 million of the Fund's average net assets;
o 0.65% on the next $350 million of the Fund's average net assets;
o 0.55% of the Fund's average net assets from $700 million;
o 0.45% of the Fund's average net assets from $2 billion;
<PAGE>
o 0.40% of the Fund's average net assets from $4 billion;
o 0.375% of the Fund's average net assets from $6 billion; and
o 0.35% of the Fund's average net assets from $8 billion.
S&P 500 Index Fund
o 0.25% of the Fund's average net assets.
Value Equity Fund
o 0.75% on the first $500 million of the Fund's average net assets;
o 0.65% on the next $500 million of the Fund's average net assets;
o 0.50% of the Fund's average net assets from $1 billion;
o 0.45% of the Fund's average net assets from $2 billion;
o 0.40% of the Fund's average net assets from $4 billion;
o 0.375% of the Fund's average net assets from $6 billion; and
o 0.35% of the Fund's average net assets from $8 billion.
During the periods outlined in the table below, the Funds paid INVESCO advisory
fees in the dollar amounts shown below. If applicable, the advisory fees were
offset by credits in the amounts shown below, so that INVESCO's fees were not in
excess of the expense limitations shown below, which have been voluntarily
agreed to by the Company and INVESCO.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisory Total Expense Total Expense
Fee Dollars Reimbursements Limitations
Blue Chip Growth Fund
July 31, 1999(a) $5,712,698 $0 N/A
August 31, 1998 $4,561,574 $0 N/A
August 31, 1997 $3,922,981 $0 N/A
August 31, 1996 $3,196,929 $0 N/A
Dynamics Fund
July 31, 1999(b) $2,927,803 $0 1.20%(c)
April 30, 1999 $7,750,919 $0 1.21%
April 30, 1998 $5,874,212 $0 1.21%
April 30, 1997 $4,550,303 $0 1.21%
<PAGE>
Endeavor Fund
July 31, 1999(b) $ 173,488 $0 1.50%
April 30, 1999 $ 206,836 $0 1.50%
Growth & Income Fund
July 31, 1999(b) $ 107,949 $33,201 1.50%
April 30, 1999 $ 209,172 $53,659 1.50%
Small Company Growth Fund
July 31, 1999(d) $ 512,934 $ 84,361 1.50%
May 31, 1999 $1,973,393 $201,069 1.50%
May 31, 1998 $2,334,680 $ 0 1.50%
May 31, 1997 $2,029,312 $ 59,729 1.50%
S&P 500 Index Fund - Class I
July 31, 1999(e) $ 9,042 $ 29,912 0.35%
July 31, 1998 $ 3,729 $ 31,239 0.30%
S&P 500 Index Fund - Class II
July 31, 1999(e) $ 99,317 $155,166 0.60%
July 31, 1998 $ 10,030 $ 44,823 0.55%
<PAGE>
Value Equity Fund
July 31, 1999(a) $2,756,316 $397,754 1.30%
August 31, 1998 $3,080,351 $164,235 1.25%
August 31, 1997 $2,250,039 $ 0 N/A
August 31, 1996 $1,382,049 $ 0 N/A
(a) For the period September 1, 1998 through July 31, 1999
(b) For the period May 1, 1999 through July 31, 1999
(c) Effective May 13, 1999, the Total Expense Limitation was changed to 1.20%
(d) For the period June 1, 1999 through July 31, 1999
(e) For the period August 1, 1998 through July 31, 1999
</TABLE>
THE SUB-ADVISORY AGREEMENT
With respect to the S&P 500 Index Fund, World Asset Management ("World") serves
as sub-adviser to the Fund pursuant to a sub-advisory agreement dated 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.
<PAGE>
The Sub-Agreements provide that World and ICM, as applicable, subject to the
supervision of INVESCO, shall manage the investment portfolios of the respective
Funds in conformity with each such Fund's investment policies. These management
services include: (a) managing the investment and reinvestment of all the
assets, now or hereafter acquired, of each Fund, and executing all purchases and
sales of portfolio securities; (b) maintaining a continuous investment program
for the Funds, consistent with (i) each Fund's investment policies as set forth
in the Company's Articles of Incorporation, Bylaws and Registration Statement,
as from time to time amended, under the 1940 Act, as amended, and in any
prospectus and/or statement of additional information of the Company, as from
time to time amended and in use under the 1933 Act and (ii) the Company's status
as a regulated investment company under the Internal Revenue Code of 1986, as
amended; (c) determining what securities are to be purchased or sold for each
Fund, unless otherwise directed by the directors of the Company or INVESCO, and
executing transactions accordingly; (d) providing the Funds the benefit of all
of the investment analysis and research, the reviews of current economic
conditions and trends, and the consideration of long-range investment policy now
or hereafter generally available to investment advisory customers of World or
ICM; (e) determining what portion of each applicable Fund's assets should be
invested in the various types of securities authorized for purchase by such
Fund; and (f) making recommendations as to the manner in which voting rights,
rights to consent to Company action and any other rights pertaining to the
portfolio securities of each applicable Fund shall be exercised.
The Sub-Agreements provide that, as compensation for their services, World and
ICM shall receive from INVESCO, at the end of each month, a fee based upon the
average daily value of the applicable Fund's net assets. The fees are calculated
at the following annual rates:
S&P 500 Index Fund
o 0.07% on the first $10 million of the Fund's average net assets;
o 0.05% on the next $40 million of the Fund's average net assets; and
o 0.03% of the Fund's average net assets from $50 million.
Value Equity Fund
o 0.30% on the first $500 million of the Fund's average net assets;
o 0.26% on the next $500 million of the Fund's average net assets;
o 0.20% of the Fund's average net assets from $1 billion;
o 0.18% of the Fund's average net assets from $2 billion;
o 0.16% of the Fund's average net assets from $4 billion;
<PAGE>
o 0.15% of the Fund's average net assets from $6 billion; and
o 0.14% of the Fund's average net assets from $8 billion.
ADMINISTRATIVE SERVICES AGREEMENT
INVESCO, either directly or through affiliated companies, provides certain
administrative, sub-accounting, and recordkeeping services to the Funds pursuant
to an Administrative Services Agreement.
The Administrative Services Agreement requires INVESCO to provide the following
services to the Funds:
o such sub-accounting and recordkeeping services and functions as are
reasonably necessary for the operation of the Funds; and
o such sub-accounting, recordkeeping, and administrative services and
functions, which may be provided by affiliates of INVESCO, as are
reasonably necessary for the operation of Fund shareholder accounts
maintained by certain retirement plans and employee benefit plans for the
benefit of participants in such plans.
As full compensation for services provided under the Administrative Services
Agreement, each Fund pays a monthly fee to INVESCO consisting of a base fee of
$10,000 per year, plus an additional incremental fee computed daily and paid
monthly at an annual rate of 0.015% per year of the average net assets of each
Fund prior to May 13, 1999, and 0.045% per year of the average net assets of
each Fund effective May 13, 1999.
TRANSFER AGENCY AGREEMENT
INVESCO also performs transfer agent, dividend disbursing agent and registrar
services for the Funds pursuant to a Transfer Agency Agreement.
The Transfer Agency Agreement provides that each Fund 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) were:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Blue Chip Growth Fund
July 31, August 31
Type of Fee 1999(a) 1998 1997 1996
Advisory $5,712,698 $4,561,574 $3,922,981 $3,196,929
Administrative Services 248,879 131,098 112,386 92,412
Transfer Agency $1,500,795 1,160,513 1,066,438 751,390
Dynamics Fund
July 31, April 30
Type of Fee 1999(b) 1999 1998 1997
Advisory $2,927,803 $7,750,919 $5,874,212 $4,550,303
Administrative Services $ 236,694 226,800 170,476 130,696
Transfer Agency $ 993,382 2,693,081 2,156,766 1,964,970
Endeavor Fund
July 31, April 30
Type of Fee 1999(b) 1999(c)
Advisory $ 173,488 $ 206,836
Administrative Services $ 12,209 9,217
Transfer Agency $ 57,863 52,532
Growth & Income Fund
July 31, April 30
Type of Fee 1999(b) 1999(d)
Advisory $ 107,949 $ 209,172
Administrative Services $ 8,442 12,517
Transfer Agency $ 47,918 70,040
Small Company Growth Fund
July 31, May 31
Type of Fee 1999(e) 1999 1998 1997
Advisory $ 512,934 $1,973,393 $2,334,680 $2,029,312
Administrative Services $ 33,164 54,324 56,738 50,660
Transfer Agency $ 327,104 1,116,282 1,090,224 1,043,895
S&P 500 Index Fund - Class I
July 31
Type of Fee 1999 1998
Advisory $ 9,042 $ 3,729
Administrative Services $ 1,793 $ 2,624
Transfer Agency $ 2,447 $ 266
<PAGE>
S&P 500 Index Fund - Class II
July 31
Type of Fee 1999 1998
Advisory $ 99,317 $ 10,030
Administrative Services $ 19,051 $ 4,250
Transfer Agency $ 76,345 $ 7,631
Value Equity Fund
July 31, August 31
Type of Fee 1999(f) 1998 1997 1996
Advisory $ 2,756,316 $3,080,351 $ 2,250,039 $ 1,382,049
Administrative Services $ 89,785 71,607 55,001 37,641
Transfer Agency $ 1,011,717 918,694 610,115 282,255
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) From October 28, 1998 (commencement of operations) to April 30, 1999
(d) From July 1, 1998 (commencement of operations) to April 30, 1999
(e) From June 1, 1999 to July 31, 1999
(f) From September 1, 1998 to July 31, 1999
</TABLE>
DIRECTORS AND OFFICERS OF THE COMPANY
The overall direction and supervision of the Company come from the board of
directors. The board of directors is responsible for making sure that the Funds'
general investment policies and programs are carried out and that the Funds are
properly administered.
The board of directors has an audit committee comprised of four of the directors
who are not affiliated with INVESCO (the "Independent Directors"). The committee
meets quarterly with the Company's independent accountants and officers to
review accounting principles used by the Company, the adequacy of internal
controls, the responsibilities and fees of the independent accountants, and
other matters.
The Company has a management liaison committee which meets quarterly with
various management personnel of INVESCO in order to facilitate better
understanding of management and operations of the Company, and to review legal
and operational matters which have been assigned to the committee by the board
of directors, in furtherance of the board of directors' overall duty of
supervision.
The Company has a soft dollar brokerage committee. The committee meets
periodically to review soft dollar and other brokerage transactions by the
Funds, and to review policies and procedures of INVESCO with respect to
brokerage transactions. It reports on these matters to the Company's board of
directors.
The Company has a derivatives committee. The committee meets periodically to
review derivatives investments made by the Funds. It monitors derivatives usage
<PAGE>
by the Funds and the procedures utilized by INVESCO to ensure that the use of
such instruments follows the policies on such instruments adopted by the
Company's board of directors. It reports on these matters to the Company's board
of directors.
The officers of the Company, all of whom are officers and employees of INVESCO,
are responsible for the day-to-day administration of the Company and the Funds.
The officers of the Company receive no direct compensation from the Company or
the Funds for their services as officers. INVESCO has the primary responsibility
for making investment decisions on behalf of the Funds. These investment
decisions are reviewed by the investment committee of INVESCO.
All of the officers and directors of the Company hold comparable positions with
the following funds, which, with the Company, are collectively referred to as
the "INVESCO Funds":
INVESCO Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.)
INVESCO Combination Stock & Bond Funds, Inc. (formerly, INVESCO Flexible
Funds, Inc.)
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios, Inc.)
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
The table below provides information about each of the Company's directors and
officers. 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.
Name, Address, and Age Position(s) Held With Principal Occupations(s)
Company During Past Five Years
Charles W. Brady *+ Director and Chairman Chairman of the Board of
1315 Peachtree St., N.E. of the Board INVESCO Global Health
Atlanta, Georgia Sciences Fund; Chief
Age: 64 Executive Officer and
Director of AMVESCAP
PLC, London, England and
various subsidiaries of
AMVESCAP PLC.
<PAGE>
Fred A. Deering +# Director and Vice Trustee of INVESCO Global
Security Life Center Chairman of the Board Health Sciences Fund;
1290 Broadway formerly, Chairman of the
Denver, Colorado Executive Committee and
Age: 71 Chairman of the Board of
Security Life of Denver
Insurance Company;
Director of ING American
Holdings Company and First
ING Life Insurance Company
of New York.
Mark H. Williamson *+ President, Chief President, Chief Executive
7800 E. Union Avenue Executive Officer Officer and Director of
Denver, Colorado and Director INVESCO Distributors,
Age: 48 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 NationsBanc
Advisors, Inc.; formerly,
Chairman of NationsBanc
Investments, Inc.
<PAGE>
Victor L. Andrews, Ph.D. Director Professor Emeritus,
**! Chairman Emeritus and
34 Seawatch Drive Chairman of the CFO
Savannah, Georgia Roundtable of the
Age: 69 Department of Finance of
Georgia State University;
President, Andrews Finan-
cial Associates, Inc.(con-
sulting firm); formerly,
member of the faculties of
the Harvard Business
School and the Sloan
School of Management of
MIT; Director of The
Sheffield Funds, Inc.
Bob R. Baker +** Director President and Chief
AMC Cancer Research Center Executive Officer of
1600 Pierce Street AMC Cancer Research
Denver, Colorado Center, Denver,
Age: 62 Colorado, since January
1989; until mid-December
1988, Vice Chairman of the
Board of First Columbia
Financial Corporation,
Englewood, Colorado;
formerly, Chairman of the
Board and Chief Executive
Officer of First Columbia
Financial Corporation.
Lawrence H. Budner # @ Director Trust Consultant;
7608 Glen Albens Circle prior to June 30,
Dallas, Texas 1987, Senior Vice
Age: 69 President and Senior
Trust Officer of
InterFirst Bank,
Dallas, Texas.
<PAGE>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company During Past Five Years
Wendy L. Gramm, Ph.D.**! Director Self-employed (since
4201 Yuma Street, N.W. 1993); Professor of
Washington, DC Economics and Public
Age: 54 Administration,
University of Texas at
Arlington; formerly,
Chairman, Commodity
Futures Trading
Commission; Administrator
for Information and
Regulatory Affairs at the
Office of Management and
Budget; Executive Direc-
tor of the Presidential
Task Force on Regulatory
Relief; and Director of
the Federal Trade Commis-
sion's Bureau of Econom
ics; also, Director of
Chicago Mercantile
Exchange, Enron Corpora
tion, IBP, Inc., State
Farm Insurance Company,
Inde pendent Women's
Forum, International
Republic Institute, and
the Republi can Women's
Federal Forum. Also,
Member of Board of
Visitors, College of
Business Administration,
University of Iowa, and
Member of Board of
Visitors, Center for Study
of Public Choice, George
Mason University.
<PAGE>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company During Past Five Years
Kenneth T. King +#@ Director Retired. Formerly,
4080 North Circulo Chairman of the Board
Manzanillo of The Capitol Life
Tucson, Arizona Insurance Company,
Age: 73 Providence Washington
Insurance Company and
Director of numerous U.S.
subsidiaries thereof;
formerly, Chairman of the
Board of The Providence
Capitol Companies in the
United Kingdom and
Guernsey; Chairman of the
Board of the Symbion
Corporation until 1987.
John W. McIntyre + #@ Director Retired. Formerly,
7 Piedmont Center Vice Chairman of the
Suite 100 Board of Directors of
Atlanta, Georgia the Citizens and
Age: 68 Southern Corporation and
Chairman of the Board and
Chief Executive Officer
of the Citizens and
Southern Georgia Corp. and
the Citizens and Southern
National Bank; Trustee of
INVESCO Global Health
Sciences Fund, Gables
Residential Trust,
Employee's Retirement
System of GA, Emory
University and J.M. Tull
Charitable Foundation;
Director of Kaiser Foun-
dation Health Plans of
Georgia, Inc.
<PAGE>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company During Past Five Years
Larry Soll, Ph.D.!** Director Retired. Formerly,
345 Poorman Road Chair man of the Board
Boulder, Colorado (1987 to 1994), Chief
Age: 57 Executive Officer (1982 to
1989 and 1993 to 1994) and
President (1982 to 1989)
of Synergen Inc.; Director
of Synergen since
incorporation in 1982;
Director of Isis
Pharmaceuticals, Inc.;
Trustee of INVESCO Global
Health Sciences Fund.
Glen A. Payne Secretary Senior Vice President,
7800 E. Union Avenue General Counsel and
Denver, Colorado Secretary of INVESCO
Age: 51 Funds Group, Inc.; Senior
Vice President, Secretary
and General Counsel of
INVESCO Distributors,
Inc.; Secretary, INVESCO
Global Health Sciences
Fund; formerly, General
Counsel of INVESCO Trust
Company (1989 to 1998);
formerly, employee of a
U.S. regulatory agency,
Washington, D.C. (1973 to
1989).
<PAGE>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company During Past Five Years
Ronald L. Grooms Chief Accounting Senior Vice President
7800 E. Union Avenue Officer, Chief and Treasurer of
Denver, Colorado Financial Officer and INVESCO Funds Group,
Age: 52 Treasurer Inc.; Senior Vice
President and Trea
surer of INVESCO Dis
tributors, Inc.;
Treasurer, Principal
Financial and
Accounting Officer of
INVESCO Global Health
Sciences Fund;
formerly, Senior Vice
President and
Treasurer of INVESCO
Trust Company (1988 to
1998).
William J. Galvin, Jr. Assistant Secretary Senior Vice President
7800 E. Union Avenue of INVESCO Funds
Denver, Colorado Group, Inc.; Senior
Age: 42 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: 39 Assistant Vice
President (1996 to
1997), Director -
Portfolio Accounting
(1994 to 1996),
Portfolio Accounting
Manager (1993 to 1994)
and Assistant
Accounting Manager
(1990 to 1993).
Alan I. Watson Assistant Secretary Vice President of
7800 E. Union Avenue INVESCO Funds Group,
Denver, Colorado Inc.; formerly, Trust
Age: 57 Officer of INVESCO
Trust Company.
<PAGE>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company During Past Five Years
Judy P. Wiese Assistant Secretary Vice President 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.
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
<PAGE>
as directors or trustees during the year ended December 31, 1998. As of December
31, 1998, there were 53 funds in the INVESCO Complex.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Name of Person Aggregate Compen- Benefits Accrued Estimated Annual Total Compensa-
and Position sation From As Part of Company Benefits Upon tion From
Company(1) Expenses(2) Retirement(3) INVESCO Com-
plex Paid To
Directors(6)
- -------------------------------------------------------------------------------------------------------
Fred A. $6,164 $8,033 $5,425 $103,700
Deering, Vice
Chairman of
the Board
- -------------------------------------------------------------------------------------------------------
Victor L. Andrews 5,589 7,684 5,981 80,350
- -------------------------------------------------------------------------------------------------------
Bob R. Baker 5,672 6,862 8,016 84,000
- -------------------------------------------------------------------------------------------------------
Lawrence H. Budner 5,561 7,684 5,981 79,350
- -------------------------------------------------------------------------------------------------------
Daniel D. Chabris(4) 2,366 7,852 4,921 70,000
- -------------------------------------------------------------------------------------------------------
Wendy L. Gramm 5,449 0 0 79,000
- -------------------------------------------------------------------------------------------------------
Kenneth T. King 6,014 8,199 4,921 77,050
- -------------------------------------------------------------------------------------------------------
John W. McIntyre 6,135 0 0 98,500
- -------------------------------------------------------------------------------------------------------
Larry Soll 5,449 0 0 96,000
- -------------------------------------------------------------------------------------------------------
Total 48,399 46,314 35,245 767,950
- -------------------------------------------------------------------------------------------------------
% of Net Assets 0.0010%(5) 0.0010%(5) 0.0035%(6)
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) The vice chairman of the board, the chairmen of the Funds' committees
who are Independent Directors, and the members of the Funds'committees who are
Independent Directors each receive compensation for serving in such capacities
in addition to the compensation paid to all Independent Directors.
(2) Represents estimated benefits accrued with respect to the Defined
Benefit Deferred Compensation Plan discussed below, and not compensation
deferred at the election of the directors.
(3) These amounts represent the Company's share of the estimated annual
benefits payable by the INVESCO Funds upon the directors' retirement, calculated
using the current method of allocating director compensation among the INVESCO
Funds. These estimated benefits assume retirement at age 72 and that the basic
retainer payable to the directors will be adjusted periodically for inflation,
for increases in the number of funds in the INVESCO Funds, and for other reasons
during the period in which retirement benefits are accrued on behalf of the
respective directors. This results in lower estimated benefits for directors who
<PAGE>
are closer to retirement and higher estimated benefits for directors who are
further from retirement. With the exception of Drs. Soll and Gramm, each of
these directors has served as a director or trustee of one or more of the funds
in the INVESCO Funds for the minimum five-year period required to be eligible to
participate in the Defined Benefit Deferred Compensation Plan. Although Mr.
McIntyre became eligible to participate in the Defined Benefit Deferred
Compensation Plan as of November 1, 1998, he will not be included in the
calculation of retirement benefits until November 1, 1999.
(4) Mr. Chabris retired as a director of the Company on September 30, 1998.
(5) Totals as a percentage of the Company's net assets as of July 31, 1999.
(6) Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1998.
Messrs. Brady and Williamson, as "interested persons" of the Company and the
other INVESCO Funds, receive compensation as officers or employees of INVESCO or
its affiliated companies, and do not receive any director's fees or other
compensation from the Company or the other funds in the INVESCO Funds for their
service as directors.
The boards of directors of the mutual funds in the INVESCO Funds have adopted a
Defined Benefit Deferred Compensation Plan (the "Plan") for the Independent
Directors of the funds. Under this Plan, each director who is not an interested
person of the funds (as defined in Section 2(a)(19) of the 1940 Act) and who has
served for at least five years (a "Qualified Director") is entitled to receive,
upon termination of service as a director (normally, at the retirement age of 72
or the retirement age of 73 or 74, if the retirement date is extended by the
boards for one or two years, but less than three years), continuation of payment
for one year (the "First Year Retirement Benefit") of the annual basic retainer
and annualized board meeting fees payable by the funds to the Qualified Director
at the time of his/her retirement (the "Basic Benefit"). Commencing with any
such director's second year of retirement, and commencing with the first year of
retirement of any director whose retirement has been extended by the board for
up to three years, a Qualified Director shall receive quarterly payments at an
annual rate equal to 50% of the Basic Benefit. These payments will continue for
the remainder of the Qualified Director's life or ten years, whichever is longer
(the "Reduced Benefit Payments"). If a Qualified Director dies or becomes
disabled after age 72 and before age 74 while still a director of the funds, the
First Year Retirement Benefit and Reduced Benefit Payments will be made to
him/her or to his/her beneficiary or estate. If a Qualified Director becomes
disabled or dies either prior to age 72 or during his/her 74th year while still
a director of the funds, the director will not be entitled to receive the First
Year Retirement Benefit; however, the Reduced Benefit Payments will be made to
his/her beneficiary or estate. The Plan is administered by a committee of three
directors who are also participants in the Plan and one director who is not a
Plan participant. The cost of the Plan will be allocated among the INVESCO Funds
in a manner determined to be fair and equitable by the committee. The Company
began making payments under the Plan to Mr. Chabris as of October 1, 1998. The
Company has no stock options or other pension or retirement plans for management
or other personnel and pays no salary or compensation to any of its officers. A
similar plan has been adopted by INVESCO Global Health Sciences Fund's board of
trustees. All trustees of INVESCO Global Health Sciences Fund are also directors
of INVESCO Funds.
<PAGE>
The Independent Directors have contributed to 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 SHAREHOLDERS
As of July 31, 1999, the following persons owned more than 5% of the outstanding
shares of the Funds indicated below. This level of share ownership is considered
to be a "principal shareholder" relationship with a Fund under the 1940 Act.
Shares that are owned "of record" are held in the name of the person indicated.
Shares that are owned "beneficially" are held in another name, but the owner has
the full economic benefit of ownership of those shares:
Blue Chip Growth Fund
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
None
- --------------------------------------------------------------------------------
Dynamics Fund
- --------------------------------------------------------------------------------
Name and Address Basis of OwnershiP Percentage Owned
(Record/Beneficial)
================================================================================
Charles Schwab & Co., Inc. Record 14.18%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
<PAGE>
Endeavor Fund
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Charles Schwab & Co., Inc. Record 28.64%
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 8.77%
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 14.02%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
Nat'l Financial Services Corp.
The Exclusive Benefit of Cust. Record 5.81%
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 14.27%
Insurance
c/o Liz Pezda M-110
P.O. Box 2975 H 19 B
Hartford, CT 06104-2975
- --------------------------------------------------------------------------------
Charles Schwab & Co., Inc. Record 9.42%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
S&P 500 Index Fund - Class I
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
INVESCO Trust Company Record 19.23%
Right Choice Managed Care Inc.
Supp Exec Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 17.48%
Right Choice Managed Care Inc.
Exec Def Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 14.37%
Compass Group USA
Non-Qualified Plan IRPS
Attn: Kelly Allen
P.O. Box 1350
Winston-Salem, NC 27102-1350
- --------------------------------------------------------------------------------
David Backstrom Record 10.78%
P.O. Box 970
Bridgeton, MO 63044-0970
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Ronald L. Grooms
7800 East Union Avenue Record 10.43%
Denver, CO 80237-2715
- --------------------------------------------------------------------------------
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 6.77%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 6.12%
Morris Communications Corp.
Employee's Profit Sharing
Retirement Plan
725 Broad Street
Augusta, GA 30901-1336
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 5.56%
The Ritz Carlton Hotel Company
LLC
Special Reserve Plan DC
400 Colony Square Suite 2200
1201 Peachtree Street NE
Atlanta, GA 30361-3500
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
INVESCO Trust Company
Carle Clinic Association Record 5.08%
Profit Sharing Plan
602 West University Avenue
Urbana, IL 61801-2530
- --------------------------------------------------------------------------------
As of August 25, 1999, officers and directors of the Company, as a group,
beneficially owned less than 1% of each of the Blue Chip Growth, Dynamics,
Endeavor, Growth & Income, Small Company Growth, S&P 500 Index Fund - Class II,
Value Equity Funds' outstanding shares and less than 11% of the S&P 500 Index
Fund - Class I's outstanding shares.
DISTRIBUTOR
INVESCO Distributors, Inc. ("IDI"), a wholly owned subsidiary of INVESCO, is the
distributor of the Funds. IDI receives no compensation and bears all expenses,
including the cost of printing and distributing prospectuses, incident to
marketing of the Funds' shares, except for such distribution expenses as are
paid out of Fund assets under the Company's 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.
<PAGE>
During the period ended July 31, 1999, the Funds made payments to IDI under
the Plan in the amounts of $2,507,538, $1,291,398, $9,244, $34,245, $138,369,
$88,491 and $915,156 for Blue Chip Growth, 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, $285,827, $541,380, $24,607,
$13,370, $101,305, $14,306 and $85,592 of additional distribution accruals had
been incurred for Blue Chip Growth, 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--$1,251,932.37;
Sales literature, printing, and postage--$259,216.50;
Direct Mail--$166,036.43;
Public Relations/Promotion--$112,721.81;
Compensation to securities dealers and other organizations--$396,205.03; and
Marketing personnel--$321,425.91.
Dynamics Fund
Advertising--$333,432.88;
Sales literature, printing, and postage--$82,179.48;
Direct Mail--$39,011.09;
Public Relations/Promotion--$62,799.29;
Compensation to securities dealers and other organizations--$636,303.50; and
Marketing personnel--$137,671.31.
Endeavor Fund
Advertising--$31,870.82;
Sales literature, printing, and postage--$3,067.35;
Direct Mail--$2,645.46;
Public Relations/Promotion--$2,056.27;
Compensation to securities dealers and other organizations--$6,725.66; and
Marketing personnel--$2,878.01.
Growth & Income Fund
Advertising--$25,827.93;
Sales literature, printing, and postage--$2,003.30;
Direct Mail--$1,342.87;
Public Relations/Promotion--$1,012.89;
Compensation to securities dealers and other organizations--$2,726.96; and
Marketing personnel--$1,330.91.
<PAGE>
Small Company Growth Fund
Advertising--$6,604.98;
Sales literature, printing, and postage--$9,551.33;
Direct Mail--$8,894.95;
Public Relations/Promotion--$11,675.10;
Compensation to securities dealers and other organizations--$76,798.69; and
Marketing personnel--$24,843.49.
S&P 500 Index Fund - Class II
Advertising--$24,615.95;
Sales literature, printing, and postage--$22,774.65;
Direct Mail--$2,759.43;
Public Relations/Promotion--$4,380.13;
Compensation to securities dealers and other organizations--$20,335.39; and
Marketing personnel--$13,625.18.
Value Equity Fund
Advertising--$134,414.11;
Sales literature, printing, and postage--$68,375.63;
Direct Mail--$19,218.14;
Public Relations/Promotion--$26,708.56;
Compensation to securities dealers and other organizations--$573,142.13; and
Marketing personnel--$93,297.02.
The services which are provided by securities dealers and other organizations
may vary by dealer but include, among other things, processing new shareholder
account applications, preparing and transmitting to the Company's Transfer Agent
computer-processable tapes of all Fund transactions by customers, serving as the
primary source of information to customers in answering questions concerning the
Funds, and assisting in other customer transactions with the Funds.
The 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
<PAGE>
following any temporary suspension or limitation of the offering of Fund shares;
however, the Company is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of a Fund's shares would
not, of course, affect a shareholder's ability to redeem his or her shares.
So long as the 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
<PAGE>
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.
OTHER SERVICE PROVIDERS
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500, Denver,
Colorado, are the independent accountants of the Company. The independent
accountants are responsible for auditing the financial statements of the Funds.
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts, is the
custodian of the cash and investment securities of the Company. The custodian is
also responsible for, among other things, receipt and delivery of each Fund's
investment securities in accordance with procedures and conditions specified in
the custody agreement with the Company. The custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Funds to be held outside the United States in branches of U.S. banks and, to
the extent permitted by applicable regulations, in certain foreign banks and
securities depositories.
TRANSFER AGENT
INVESCO, 7800 E. Union Avenue, Denver, Colorado, is the Company's transfer
agent, registrar, and dividend disbursing agent. Services provided by INVESCO
include the issuance, cancellation and transfer of shares of the Funds, and the
maintenance of records regarding the ownership of such shares.
LEGAL COUNSEL
The firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., 2nd
Floor, Washington, D.C., is legal counsel for the Company. The firm of Moye,
Giles, O'Keefe, Vermeire & Gorrell LLP, 1225 17th Street, Suite 2900, Denver,
Colorado, acts as special counsel to the Company.
<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
As the investment adviser to the Funds, INVESCO places orders for the purchase
and sale of securities with broker-dealers based upon an evaluation of the
financial responsibility of the broker-dealers and the ability of the
broker-dealers to effect transactions at the best available prices.
While INVESCO seeks reasonably competitive commission rates, the Funds do not
necessarily pay the lowest commission or spread available. INVESCO is permitted
to, and does, consider qualitative factors in addition to price in the selection
of brokers. Among other things, INVESCO considers the quality of executions
obtained on a Fund's portfolio transactions, viewed in terms of the size of
transactions, prevailing market conditions in the security purchased or sold,
and general economic and market conditions. INVESCO has found that a broker's
consistent ability to execute transactions is at least as important as the price
the broker charges for those services.
In seeking to ensure that the commissions charged a Fund are consistent with
prevailing and reasonable commissions, INVESCO monitors brokerage industry
practices and commissions charged by broker-dealers on transactions effected for
other institutional investors like the Funds.
Consistent with the standard of seeking to obtain favorable execution on
portfolio transactions, INVESCO may select brokers that provide research
services to INVESCO and the Company, as well as other INVESCO mutual funds and
other accounts managed by INVESCO. Research services include statistical and
analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to INVESCO in making
informed investment decisions. Research services prepared and furnished by
brokers through which a Fund effects securities transactions may be used by
INVESCO in servicing all of its accounts and not all such services may be used
by INVESCO in connection with a particular Fund. Conversely, a Fund receives
benefits of research acquired through the brokerage transactions of other
clients of INVESCO.
In order to obtain reliable trade execution and research services, INVESCO may
utilize brokers that charge higher commissions than other brokers would charge
for the same transaction. This practice is known as "paying up." However, even
when paying up, INVESCO is obligated to obtain favorable execution of a Fund's
transactions.
Portfolio transactions also may be effected through broker-dealers that
recommend the Funds to their clients, or that act as agent in the purchase of a
Fund's shares for their clients. When a number of broker-dealers can provide
comparable best price and execution on a particular transaction, INVESCO may
consider the sale of a Fund's shares by a broker-dealer in selecting among
qualified broker-dealers.
<PAGE>
The aggregate dollar amount of brokerage commissions paid by each Fund for the
periods outlined in the table below were:
Blue Chip Growth Fund
Period Ended July 31, 1999(a) $3,975,896
Year Ended August 31, 1998 $2,574,626
Year Ended August 31, 1997 $5,300,030
Year Ended August 31, 1996 $2,703,470
Dynamics Fund
Period Ended July 31, 1999(b) $3,309,214
Year Ended April 30, 1999 $7,689,483
Year Ended April 30, 1998 $7,542,687
Year Ended April 30, 1997 $5,707,197
Endeavor Fund
Period Ended July 31, 1999(b) $1,463,690
Period Ended April 30, 1999(c) $ 466,439
Growth & Income Fund
Period Ended July 31, 1999(b) $ 165,787
Period Ended April 30, 1999(d) $ 438,309
Small Company Growth Fund
Period Ended July 31, 1999(e) $1,414,200
Year Ended May 31, 1998 $3,319,634
Year Ended May 31, 1997 $4,167,020
Year Ended May 31, 1996 $3,987,784
S&P 500 Index Fund
Year Ended July 31, 1999 $ 18,707
Year Ended July 31, 1998 $ 0
Value Equity Fund
Period Ended July 31, 1999(a) $ 272,645
Year Ended August 31, 1998 $ 194,473
Year Ended August 31, 1997 $ 470,619
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) From October 28, 1998 (commencement of operations) to April 30, 1999
(d) From July 1, 1998 (commencement of operations) to April 30, 1999
(e) From June 1, 1999 to July 31, 1999
(f) From September 1, 1998 to July 31, 1999
<PAGE>
For the fiscal year ended July 31, 1999, brokers providing research services
received $4,720,262 in commissions on portfolio transactions effected for the
Funds. The aggregate dollar amount of such portfolio transactions was
$3,759,723,892. Commissions totaling $0 were allocated to certain brokers in
recognition of their sales of shares of the Funds on portfolio transactions of
the Funds effected during the fiscal year ended July 31, 1999.
At July 31, 1999, each Fund held debt securities of its regular brokers or
dealers, or their parents, as follows:
- --------------------------------------------------------------------------------
Fund Broker or Dealer Value of Securities
at July 31, 1999
================================================================================
Blue Chip Growth General Electric $50,662,110
- --------------------------------------------------------------------------------
Dynamics PaineWebber Group $ 5,400,000
- --------------------------------------------------------------------------------
State Street Bank & Trust 5,853,000
- --------------------------------------------------------------------------------
American Express Credit 45,000,000
- --------------------------------------------------------------------------------
GE Companies 30,000,000
- --------------------------------------------------------------------------------
Endeavor State Street Bank & Trust $ 3,745,000
- --------------------------------------------------------------------------------
General Electric 1,486,215
- --------------------------------------------------------------------------------
Growth & Income State Street Bank & Trust $ 1,145,000
- --------------------------------------------------------------------------------
American Express 615,273
- --------------------------------------------------------------------------------
General Electric 2,078,630
- --------------------------------------------------------------------------------
Small Company Growth State Street Bank & Trust $80,476,000
- --------------------------------------------------------------------------------
S&P 500 Index Morgan Stanley Dean Witter $ 296,421
- --------------------------------------------------------------------------------
Merrill Lynch 144,224
- --------------------------------------------------------------------------------
BankBoston Corp 79,324
- --------------------------------------------------------------------------------
PaineWebber Group 32,000
- --------------------------------------------------------------------------------
Morgan (JP) & Co. 117,261
- --------------------------------------------------------------------------------
State Street Bank & Trust 5,182,000
- --------------------------------------------------------------------------------
American Express 343,209
- --------------------------------------------------------------------------------
Ford Motor 344,654
- --------------------------------------------------------------------------------
General Electric 2,130,841
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Fund Broker or Dealer Value of Securities
at July 31, 1999
================================================================================
American General 105,230
- --------------------------------------------------------------------------------
Sears Roebuck 91,409
- --------------------------------------------------------------------------------
CIGNA Corp 109,970
- --------------------------------------------------------------------------------
State Street 71,300
- --------------------------------------------------------------------------------
Value Equity State Street Bank & Trust $ 5,686,000
- --------------------------------------------------------------------------------
Ford Motor 6,253,175
- --------------------------------------------------------------------------------
General Electric 7,902,500
- --------------------------------------------------------------------------------
American General 6,963,750
- --------------------------------------------------------------------------------
State Street 1,842,750
- --------------------------------------------------------------------------------
Neither INVESCO nor any affiliate of INVESCO receives any brokerage commissions
on portfolio transactions effected on behalf of the Funds, and there is no
affiliation between INVESCO or any person affiliated with INVESCO or the Funds
and any broker or dealer that executes transactions for the Funds.
CAPITAL STOCK
The Company is authorized to issue up to 2 billion shares of common stock with a
par value of $0.01 per share. As of July 31, 1999, the following shares of each
Fund were outstanding:
Blue Chip Growth Fund 182,560,140
Dynamics Fund 127,469,815
Endeavor Fund 6,592,972
Growth & Income Fund 3,990,389
Small Company Growth Fund 33,262,192
S&P 500 Index Fund - Class I 311,109
S&P 500 Index Fund - Class II 4,489,306
Value Equity Fund 12,497,029
<PAGE>
All shares of each Fund are of one class with equal rights as to voting,
dividends and liquidation. All shares issued and outstanding are, and all shares
offered hereby when issued will be, fully paid and nonassessable. The board of
directors has the authority to designate additional classes of common stock
without seeking the approval of shareholders and may classify and reclassify any
authorized but unissued shares.
Shares have no preemptive rights and are freely transferable on the books of
each Fund.
All shares of the Company have equal voting rights based on one vote for each
share owned. The Company is not generally required and does not expect to hold
regular annual meetings of shareholders. However, when requested to do so in
writing by the holders of 10% or more of the outstanding shares of the Company
or as may be required by applicable law or the Company's Articles of
Incorporation, the board of directors will call special meetings of
shareholders.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company. The Funds will assist shareholders in
communicating with other shareholders as required by the 1940 Act.
Fund shares have noncumulative voting rights, which means that the holders of a
majority of the shares of the Company voting for the election of directors of
the Company can elect 100% of the directors if they choose to do so. If that
occurs, the holders of the remaining shares voting for the election of directors
will not be able to elect any person or persons to the board of directors.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company.
TAX CONSEQUENCES OF OWNING SHARES OF A FUND
Each Fund intends to continue to conduct its business and satisfy the applicable
diversification of assets, distribution and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. Each Fund qualified as a regulated investment
company and intends to continue to qualify during its current fiscal year. It is
the policy of each Fund to distribute all investment company taxable income and
net capital gains. As a result of this policy and the Funds' qualification as
regulated investment companies, it is anticipated that none of the Funds will
pay federal income or excise taxes and that all of the Funds will be accorded
conduit or "pass through" treatment for federal income tax purposes. Therefore,
<PAGE>
any taxes that a Fund would ordinarily owe are paid by its shareholders on a
pro-rata basis. If a Fund does not distribute all of its net investment income
or net capital gains, it will be subject to income and excise tax on the amount
that is not distributed. If a Fund does not qualify as a regulated investment
company, it will be subject to corporate tax on its net investment income and
net capital gains at the corporate tax rates.
Dividends paid by a Fund from net investment income as well as distributions of
net realized short-term capital gains and net realized gains from certain
foreign currency transactions are taxable for federal income tax purposes as
ordinary income to shareholders. After the end of each calendar year, the Funds
send shareholders information regarding the amount and character of dividends
paid in the year, including the dividends eligible for the dividends received
deduction for corporations. Dividends eligible for the dividends received
deduction will be limited to the aggregate amount of qualifying dividends that a
Fund derives from its portfolio investments.
A Fund realizes a capital gain or loss when it sells a portfolio security for
more or less than it paid for that security. Capital gains and losses are
divided into short-term and long-term, depending on how long the Fund held the
security which gave rise to the gain or loss. If the security was held one year
or less the gain or loss is considered short-term, while holding a security for
more than one year will generate a long-term gain or loss. A capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends, as
discussed above. If total long-term gains on sales exceed total short-term
losses, including any losses carried forward from previous years, a Fund will
have a net capital gain. Distributions by a Fund of net capital gain are, for
federal income tax purposes, taxable to the shareholder as a long-term capital
gain regardless of how long a shareholder has held shares of the particular
Fund. Such distributions are not eligible for the dividends received deduction.
After the end of each calendar year, the Funds send information to shareholders
regarding the amount and character of distributions paid during the year.
All dividends and other distributions are taxable income to the shareholder,
whether or not such dividends and distributions are reinvested in additional
shares or paid in cash. If the net asset value of a Fund's shares should be
reduced below a shareholder's cost as a result of a distribution, such
distribution would be taxable to the shareholder although a portion would be a
return of invested capital. The net asset value of shares of a Fund reflects
accrued net investment income and undistributed realized capital and foreign
currency gains; therefore, when a distribution is made, the net asset value is
reduced by the amount of the distribution. If shares of a Fund are purchased
shortly before a distribution, the full price for the shares will be paid and
some portion of the price may then be returned to the shareholder as a taxable
dividend or capital gain. However, the net asset value per share will be reduced
by the amount of the distribution, which would reduce any gain (or increase any
loss) for tax purposes on any subsequent redemption of shares.
If it invests in foreign securities, a Fund may be subject to the withholding of
foreign taxes on dividends or interest it receives on foreign securities.
Foreign taxes withheld will be treated as an expense of the Fund unless the Fund
meets the qualifications and makes the election to enable it to pass these taxes
through to shareholders for use by them as a foreign tax credit or deduction.
Tax conventions between certain countries and the United States may reduce or
eliminate such taxes.
<PAGE>
A Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average value of at least 50% of its assets produce, or are held for the
production of, passive income. Each Fund intends to "mark to market" its stock
in any PFIC. In this context, "marking to market" means including in ordinary
income for each taxable year the excess, if any, of the fair market value of the
PFIC stock over the Fund's adjusted basis in the PFIC stock as of the end of the
year. In certain circumstances, a Fund will also be allowed to deduct from
ordinary income the excess, if any, of its adjusted basis in PFIC stock over the
fair market value of the PFIC stock as of the end of the year. The deduction
will only be allowed to the extent of any PFIC mark-to-market gains recognized
as ordinary income in prior years. A Fund's adjusted tax basis in each PFIC
stock for which it makes this election will be adjusted to reflect the amount of
income included or deduction taken under the election.
Gains or losses (1) from the disposition of foreign currencies, (2) from the
disposition of debt securities denominated in foreign currencies that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of a Fund's investment company taxable income to be
distributed to its shareholders.
INVESCO may provide Fund shareholders with information concerning the average
cost basis of their shares in order to help them prepare their tax returns. This
information is intended as a convenience to shareholders, and will not be
reported to the Internal Revenue Service (the "IRS"). The IRS permits the use of
several methods to determine the cost basis of mutual fund shares. The cost
basis information provided by INVESCO will be computed using the single-category
average cost method, although neither INVESCO nor the Funds recommend any
particular method of determining cost basis. Other methods may result in
different tax consequences. If you have reported gains or losses for a Fund in
past years, you must continue to use the method previously used, unless you
apply to the IRS for permission to change methods.
If you sell Fund shares at a loss after holding them for six months or less,
your loss will be treated as long-term (instead of short-term) capital loss to
the extent of any capital gain distributions that you may have received on those
shares.
Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and its net capital gains for the one-year period
ending on October 31 of that year, plus certain other amounts.
You should consult your own tax adviser regarding specific questions as to
federal, state and local taxes. Dividends and capital gain distributions will
generally be subject to applicable state and local taxes. Qualification as a
regulated investment company under the Internal Revenue Code of 1986, as
amended, for income tax purposes does not entail government supervision of
management or investment policies.
<PAGE>
PERFORMANCE
To keep shareholders and potential investors informed, INVESCO will occasionally
advertise the Funds' total return for one-, five-, and ten-year periods (or
since inception). Total return figures show the rate of return on a $10,000
investment in a Fund, assuming reinvestment of all dividends and capital gain
distributions for the periods cited.
Cumulative total return shows the actual rate of return on an investment for the
period cited; average annual total return represents the average annual
percentage change in the value of an investment. Both cumulative and average
annual total returns tend to "smooth out" fluctuations in a Fund's investment
results, because they do not show the interim variations in performance over the
periods cited. More information about the Funds' recent and historical
performance is contained in the Company's Annual Report to Shareholders. You can
get a free copy by calling or writing to INVESCO using the phone number or
address on the back cover of the Funds' prospectus.
When we quote mutual fund rankings published by Lipper Inc., we may compare a
Fund to others in its appropriate Lipper category, as well as the broad-based
Lipper general fund groupings. These rankings allow you to compare a Fund to its
peers. Other independent financial media also produce performance- or
service-related comparisons, which you may see in our promotional materials.
Performance figures are based on historical earnings and are not intended to
suggest future performance.
Average annual total return performance for the one-, five-, and ten-year
periods (or since inception) ended July 31, 1999 was:
Name of Fund 1 Year 5 Year 10 Year
Blue Chip Growth Fund 42.06%(a) 23.66% 16.87%
Dynamics Fund 6.83%(b) 25.43% 20.11%
Endeavor Fund 1.78%(b) N/A 66.10%(c)
Growth & Income Fund 5.71%(b) N/A 55.82%(d)
Small Company Growth Fund 12.67%(e) 18.45% 18.39%(f)
S&P 500 Index Fund - Class I 20.40% N/A 26.36%(g)
S&P 500 Index Fund - Class II 20.09% N/A 26.92%(g)
Value Equity Fund 25.41%(a) 18.78% 13.56%
<PAGE>
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) Since inception October 28, 1998
(d) Since inception July 1, 1998
(e) From June 1, 1999 to July 31, 1999
(f) Since inception December 27, 1991
(g) Since inception December 23, 1997
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1 + T)n = ERV
where: P = a hypothetical initial payment of $10,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were determined
by solving the above formula for "T" for each time period indicated.
In conjunction with performance reports, comparative data between a Fund's
performance for a given period and other types of investment vehicles, including
certificates of deposit, may be provided to prospective investors and
shareholders.
In conjunction with performance reports and/or analyses of shareholder services
for a Fund, comparative data between that Fund's performance for a given period
and recognized indices of investment results for the same period, and/or
assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
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
<PAGE>
Growth & Income Fund Growth and Income Funds
Small Company Growth 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
<PAGE>
FINANCIAL STATEMENTS
TEN LARGEST COMMON STOCK HOLDINGS
INVESCO Stock Funds, Inc.
July 31, 1999
DESCRIPTION VALUE
- -------------------------------------------------------------------------------
Blue Chip Growth Fund
Intel Corp $ 62,825,880
America Online 61,016,980
Schwab (Charles) Corp 55,919,719
Warner-Lambert Co 53,796,600
General Electric 50,662,110
Coca-Cola Co 50,354,906
SBC Communications 49,969,294
Microsoft Corp 49,313,011
Lilly (Eli) & Co 49,269,937
Citigroup Inc 49,088,134
Dynamics Fund
EchoStar Communications Class A Shrs $ 57,257,225
Tandy Corp 48,921,338
AMFM Inc 42,000,000
Gemstar International Group 35,112,500
Harrah's Entertainment 35,059,062
COLT Telecom Group PLC Sponsored ADR Representing 4 Ord Shrs 31,543,750
NEXTLINK Communications Class A Shrs 31,148,325
JDS Uniphase 30,709,425
VISX Inc 26,325,000
St Jude Medical 26,031,250
INVESCO Endeavor Fund
America Online $ 4,756,250
Microsoft Corp 3,063,506
Altera Corp 2,942,050
Amazon.com Inc 2,741,712
eToys Inc 2,579,962
Schwab (Charles) Corp 2,555,625
Intel Corp 2,456,400
Yahoo! Inc 2,439,503
COLT Telecom Group PLC Sponsored ADR Representing 4 Ord Shrs 2,397,325
NIKE Inc Class B Shrs 2,314,000
<PAGE>
TEN LARGEST COMMON STOCK HOLDINGS (CONTINUED)
DESCRIPTION VALUE
- -------------------------------------------------------------------------------
Growth & Income Fund
International Business Machines $ 2,713,593
Intel Corp 2,523,330
Microsoft Corp 2,374,432
Harrah's Entertainment 2,346,506
General Electric 2,078,630
Exxon Corp 2,053,034
BellSouth Corp 1,995,360
Coca-Cola Corp 1,897,733
Bristol-Myers Squibb 1,744,295
Johnson & Johnson 1,741,623
S&P 500 Index Fund
Microsoft Corp $ 2,614,707
General Electric 2,130,841
Intel Corp 1,369,512
International Business Machine 1,366,977
Cisco Systems 1,185,469
Lucent Technologies 1,164,554
Exxon Corp 1,152,446
Wal-Mart Stores 1,109,485
AT&T Corp 975,334
Merck & Co 939,096
Small Company Growth Fund
Genesys Telecommunications Laboratories $ 6,462,500
Business Objects SA Sponsored ADR Representing Ord Shrs 5,649,650
Pacific Sunwear of California 5,500,000
ANTEC Corp 5,397,356
Salem Communications Class A Shrs 4,880,400
Pinnacle Holdings 4,841,219
Priority Healthcare Class B Shrs 4,813,613
DII Group 4,799,594
Wild Oats Markets 4,728,750
Precision Drilling 4,643,625
Value Equity Fund
Bell Atlantic $ 9,683,625
Lowe's Cos 9,400,050
International Business Machines 9,049,500
Bristol-Myers Squibb 7,980,000
General Electric 7,902,500
Schering-Plough Corp 7,766,500
Fannie Mae 7,576,200
Merck & Co 7,520,081
Bank of America 7,391,786
Sun Microsystems 7,391,587
Composition of holdings is subject to change.
<PAGE>
STATEMENT OF INVESTMENT SECURITIES
INVESCO Stock Funds, Inc.
July 31, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
<S> <C> <C> <C>
Blue Chip Growth Fund
100.00 COMMON STOCKS
4.10 BEVERAGES
Coca-Cola Co 834,900 $ 50,354,906
==================================================================================================
4.39 BROADCASTING
AT&T Corp-Liberty Media Group Class A Shrs(a) 346,200 12,809,400
Clear Channel Communications(a) 510,285 35,496,700
EchoStar Communications Class A Shrs(a) 83,800 5,729,825
==================================================================================================
54,035,925
3.83 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Lucent Technologies 350,100 22,778,381
Nokia Corp Sponsored ADR Representing Ord Shrs 147,000 12,504,188
Tellabs Inc(a) 191,500 11,789,219
==================================================================================================
47,071,788
13.52 COMPUTER RELATED
Cisco Systems(a) 611,270 37,975,149
COVAD Communications Group(a) 135,500 6,233,000
Dell Computer(a) 1,126,450 46,043,644
EMC Corp(a) 310,000 18,774,375
International Business Machines 62,500 7,855,469
Microsoft Corp(a) 574,660 49,313,011
==================================================================================================
166,194,648
4.12 ELECTRICAL EQUIPMENT
General Electric 464,790 50,662,110
==================================================================================================
0.56 ELECTRONICS
JDS Uniphase(a) 76,700 6,931,762
==================================================================================================
8.48 ELECTRONICS -- SEMICONDUCTOR
Altera Corp(a) 408,290 14,800,512
Intel Corp 910,520 62,825,880
Maxim Integrated Products(a) 416,075 26,654,805
==================================================================================================
104,281,197
8.54 FINANCIAL
Citigroup Inc 1,101,557 49,088,134
Schwab (Charles) Corp 1,269,100 55,919,719
==================================================================================================
105,007,853
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
19.23 HEALTH CARE DRUGS -- PHARMACEUTICALS
Bristol-Myers Squibb 666,830 $ 44,344,195
Lilly (Eli) & Co 750,780 49,269,937
Merck & Co 686,580 46,472,884
Pfizer Inc 1,253,505 42,540,826
Warner-Lambert Co 815,100 53,796,600
==================================================================================================
236,424,442
2.12 HOUSEHOLD PRODUCTS
Procter & Gamble 287,300 26,000,650
==================================================================================================
3.76 INSURANCE
American International Group 397,920 46,208,460
==================================================================================================
8.30 RETAIL
Amazon.com Inc(a) 131,200 13,128,200
eToys Inc(a) 176,600 7,052,962
Home Depot 597,855 38,150,622
Wal-Mart Stores 1,035,400 43,745,650
==================================================================================================
102,077,434
4.96 SERVICES
America Online(a) 641,440 61,016,980
==================================================================================================
0.69 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Teligent Inc Class A Shrs(a) 118,300 8,532,387
==================================================================================================
5.90 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 651,380 33,831,049
Allegiance Telecom(a) 272,050 13,687,516
MCI WorldCom(a) 303,400 25,030,500
==================================================================================================
72,549,065
7.50 TELEPHONE
BellSouth Corp 880,600 42,268,800
SBC Communications 873,780 49,969,294
==================================================================================================
92,238,094
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $968,340,512)
(Cost for Income Tax Purposes $980,705,395) $1,229,587,701
==================================================================================================
Dynamics Fund
92.59 COMMON STOCKS
1.37 AEROSPACE & DEFENSE
Alliant Techsystems(a) 181,500 $ 15,007,781
General Dynamics 283,100 19,056,169
==================================================================================================
34,063,950
3.54 BANKS
First Tennessee National 483,000 17,689,875
National Commerce Bancorp 735,000 16,399,687
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
North Fork Bancorp 930,000 $ 19,181,250
US Trust 211,700 19,053,000
Zions Bancorp 272,400 15,799,200
==================================================================================================
88,123,012
0.61 BIOTECHNOLOGY
Gilead Sciences(a) 94,650 7,335,375
MedImmune Inc(a) 100,000 7,987,500
==================================================================================================
15,322,875
5.39 BROADCASTING
AMFM Inc(a) 800,000 42,000,000
Citadel Communications(a) 423,925 13,565,600
EchoStar Communications Class A Shrs(a) 837,400 57,257,225
Hispanic Broadcasting(a) 300,000 21,356,250
==================================================================================================
134,179,075
3.15 CABLE
Cablevision Systems Class A Shrs(a) 150,000 10,471,875
Jones Intercable Class A Shrs(a) 440,000 20,322,500
NTL Inc(a) 225,000 23,371,875
USA Networks(a) 507,000 24,304,313
==================================================================================================
78,470,563
1.95 COMMUNICATIONS-- EQUIPMENT & MANUFACTURING
ADC Telecommunications(a) 200,000 8,900,000
Comverse Technology(a) 337,500 25,502,344
Metromedia Fiber Network Class A Shrs(a) 440,000 14,135,000
==================================================================================================
48,537,344
9.59 COMPUTER RELATED
BroadVision Inc(a) 85,400 5,951,312
Citrix Systems(a) 152,000 7,913,500
COVAD Communications Group(a) 300,000 13,800,000
Exodus Communications(a) 188,000 22,571,750
Galileo International 250,000 12,796,875
Intuit Inc(a) 156,500 12,803,656
Legato Systems(a) 330,000 23,595,000
Lexmark International Group Class A Shrs(a) 122,000 7,686,000
Network Appliance(a) 313,340 17,077,030
NorthPoint Communications Group(a) 300,000 7,312,500
PSINet Inc(a) 350,000 18,101,571
Rhythms NetConnections(a) 235,000 10,222,500
Siebel Systems(a) 393,000 23,236,125
Synopsys Inc(a) 407,000 24,496,313
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Verio Inc(a) 295,000 $ 21,037,188
Whittman-Hart Inc(a) 408,000 10,327,500
==================================================================================================
238,928,820
1.96 ELECTRICAL EQUIPMENT
Grainger (WW) Inc 120,000 5,670,000
Molex Inc 535,000 18,691,562
Sanmina Corp(a) 375,000 24,492,188
==================================================================================================
48,853,750
1.31 ELECTRONICS
JDS Uniphase(a) 339,800 30,709,425
Waters Corp(a) 34,330 2,051,218
==================================================================================================
32,760,643
6.54 ELECTRONICS -- SEMICONDUCTOR
Altera Corp(a) 662,000 23,997,500
Conexant Systems(a) 100,000 6,287,500
Linear Technology 283,000 17,369,125
Maxim Integrated Products(a) 395,000 25,304,687
MIPS Technologies Class A Shrs(a) 354,000 13,098,000
PMC-Sierra Inc(a) 292,000 22,849,000
SDL Inc(a) 150,000 10,190,625
Vitesse Semiconductor(a) 322,000 20,567,750
Xilinx Inc(a) 372,000 23,203,500
==================================================================================================
162,867,687
0.92 ENTERTAINMENT
SFX Entertainment Class A Shrs(a) 513,000 22,988,813
==================================================================================================
1.95 EQUIPMENT -- SEMICONDUCTOR
KLA-Tencor Corp(a) 352,000 23,848,000
Teradyne Inc(a) 331,900 24,747,294
==================================================================================================
48,595,294
0.56 FINANCIAL
Ambac Financial Group 250,000 13,906,250
==================================================================================================
3.78 GAMING
Harrah's Entertainment(a) 1,645,000 35,059,062
MGM Grand(a) 423,000 19,114,312
Mandalay Resort Group(a) 1,155,000 19,707,187
Sun International Hotels Ltd(a) 500,000 20,375,000
==================================================================================================
94,255,561
4.52 HEALTH CARE RELATED
Bausch & Lomb 346,250 24,865,078
Biomet Inc 600,000 21,825,000
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Genzyme Corp-General Division(a) 240,000 $ 13,575,000
St Jude Medical(a) 700,000 26,031,250
VISX Inc(a) 260,000 26,325,000
==================================================================================================
112,621,328
0.96 HOUSEHOLD FURNITURE & APPLIANCES
Maytag Corp 343,000 23,881,375
==================================================================================================
2.78 INSURANCE
AFLAC Inc 540,000 25,042,500
Allmerica Financial(a) 180,000 10,653,750
Jefferson-Pilot Corp 142,000 10,374,875
Nationwide Financial Services Class A Shrs 374,525 16,151,391
Protective Life 195,000 6,959,062
==================================================================================================
69,181,578
3.55 INVESTMENT BANK/BROKER FIRM
Bear Stearns 125,000 5,289,063
Donaldson Lufkin & Jenrette(a) 450,000 9,703,125
E*TRADE Group(a) 327,000 9,850,875
Legg Mason 622,000 21,770,000
Lehman Brothers Holdings 100,000 5,375,000
Paine Webber Group 135,000 5,400,000
Price (T Rowe) Associates 505,000 17,675,000
Waddell & Reed Financial
Class A Shrs 235,700 5,980,888
Class B Shrs 292,000 7,300,000
==================================================================================================
88,343,951
1.38 LEISURE TIME
Premier Parks(a) 605,000 23,405,937
Royal Caribbean Cruises Ltd 235,000 11,045,000
==================================================================================================
34,450,937
0.69 OFFICE EQUIPMENT & SUPPLIES
Staples Inc(a) 600,000 17,325,000
==================================================================================================
8.21 OIL & GAS RELATED
Apache Corp 489,100 20,756,181
BJ Services(a) 590,000 18,031,875
Baker Hughes 725,000 25,239,062
Coflexip SA Sponsored ADR Representing 1/2 Ord Shr 349,500 15,465,375
Cooper Cameron(a) 405,300 14,692,125
Enron Oil & Gas 325,000 6,946,875
Global Industries Ltd(a) 750,000 8,250,000
Nabors Industries(a) 670,000 15,619,375
Noble Drilling(a) 600,000 13,612,500
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Petroleum Geo-Services A/S A Sponsored ADR
Representing Ord Shrs(a) 468,500 $ 9,370,000
Santa Fe International 585,000 12,211,875
Talisman Energy(a) 550,000 16,293,750
Transocean Offshore 350,000 10,740,625
Weatherford International(a) 440,000 17,242,500
==================================================================================================
204,472,118
1.20 PERSONAL CARE
Dial Corp 475,400 14,707,687
Estee Lauder Class A Shrs 320,000 15,220,000
==================================================================================================
29,927,687
1.41 PHOTOGRAPHY & IMAGING
Gemstar International Group(a) 530,000 35,112,500
==================================================================================================
0.88 POLLUTION CONTROL
Republic Services Class A Shrs(a) 1,090,000 22,004,375
==================================================================================================
2.23 PUBLISHING
Meredith Corp 500,000 17,968,750
New York Times Class A Shrs 475,000 18,673,437
Tribune Co 215,000 18,933,438
==================================================================================================
55,575,625
4.82 RETAIL
AnnTaylor Stores(a) 600,000 23,025,000
Circuit City Stores 500,000 23,625,000
eToys Inc(a) 200,000 7,987,500
Family Dollar Stores 432,500 9,055,469
Intimate Brands 171,780 7,397,276
Tandy Corp 953,400 48,921,338
==================================================================================================
120,011,583
1.14 SAVINGS & LOAN
Charter One Financial 910,000 23,546,250
St Paul Bancorp 200,000 4,850,000
==================================================================================================
28,396,250
5.38 SERVICES
Acxiom Corp(a) 415,000 11,153,125
Block (H & R) Inc 245,000 13,383,125
Concord EFS(a) 104,700 3,566,344
Harte-Hanks Inc 390,000 10,359,375
Lamar Advertising Class A Shrs(a) 427,900 17,383,437
Omnicom Group 260,000 18,427,500
Outdoor Systems(a) 550,000 18,390,625
Paychex Inc 347,500 9,751,719
VERITAS Software(a) 208,000 11,674,000
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
WPP Group PLC(a) 2,230,000 $ 19,977,678
==================================================================================================
134,066,928
3.38 TELECOMMUNICATIONS-- CELLULAR & WIRELESS
Crown Castle International(a) 938,700 19,771,369
VoiceStream Wireless(a) 574,000 25,901,750
Western Wireless Class A Shrs(a) 574,000 20,090,000
WinStar Communications(a) 350,000 18,375,000
==================================================================================================
84,138,119
0.81 TELECOMMUNICATIONS -- LONG DISTANCE
Allegiance Telecom(a) 401,700 20,210,531
==================================================================================================
5.71 TELEPHONE
Amdocs Ltd(a) 320,100 8,522,663
AT&T Canada Class B Shrs Depository Receipts(a) 325,000 20,495,313
CenturyTel Inc 371,250 15,870,937
COLT Telecom Group PLC Sponsored ADR
Representing 4 Ord Shrs(a) 350,000 31,543,750
Intermedia Communications(a) 545,800 15,043,612
McLeodUSA Inc(a) 659,200 19,652,400
NEXTLINK Communications Class A Shrs(a) 277,800 31,148,325
==================================================================================================
142,277,000
0.80 TEXTILE -- APPAREL MANUFACTURING
Jones Apparel Group(a) 610,000 20,053,750
==================================================================================================
0.12 TOYS
Hasbro Inc 116,550 3,030,300
==================================================================================================
TOTAL COMMON STOCKS (Cost $1,742,107,070) 2,306,934,572
==================================================================================================
0.55 PREFERRED STOCKS
0.55 AUTOMOBILES
Porsche AG Non-Voting Pfd (Cost $10,864,437) 5,500 13,863,061
==================================================================================================
6.86 SHORT-TERM INVESTMENTS
6.62 COMMERCIAL PAPER
1.20 ELECTRICAL EQUIPMENT
General Electric, 4.900%, 8/2/1999 $ 30,000,000 30,000,000
==================================================================================================
5.42 FINANCIAL
American Express Credit, 5.070%, 8/4/1999 $ 45,000,000 45,000,000
Chevron USA, 5.080%, 8/4/1999 $ 50,000,000 50,000,000
General Motors Acceptance, 5.070%, 8/6/1999 $ 40,000,000 40,000,000
==================================================================================================
135,000,000
TOTAL COMMERCIAL PAPER (Cost $165,000,000) 165,000,000
==================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.24 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 7/30/1999
due 8/2/1999 at 4.960%, repurchased at $5,855,419
(Collaterized by US Treasury Bonds, due 8/15/2013
at 12.000%, value $5,998,371) (Cost $5,853,000) $ 5,853,000 $ 5,853,000
==================================================================================================
TOTAL SHORT-TERM INVESTMENTS (Cost $170,853,000) 170,853,000
==================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $1,923,824,507)
(Cost for Income Tax Purposes $1,930,095,761) $ 2,491,650,633
==================================================================================================
INVESCO Endeavor Fund
94.65 COMMON STOCKS
1.43 AUTO PARTS
CSK Auto(a) 60,600 $ 1,537,725
==================================================================================================
1.11 BIOTECHNOLOGY
MedImmune Inc(a) 15,000 1,198,125
==================================================================================================
3.97 BROADCASTING
AMFM Inc(a) 41,700 2,189,250
Clear Channel Communications(a) 30,000 2,086,875
==================================================================================================
4,276,125
5.65 COMMUNICATIONS-- EQUIPMENT & MANUFACTURING
Comverse Technology(a) 27,310 2,063,612
Digital Microwave(a) 88,100 1,046,187
Gilat Satellite Networks Ltd(a) 21,000 1,107,750
Nokia Corp Sponsored ADR Representing Ord Shrs 22,000 1,871,375
==================================================================================================
6,088,924
14.01 COMPUTER RELATED
3Com Corp(a) 75,000 1,809,375
COVAD Communications Group(a) 19,000 874,000
Exodus Communications(a) 9,000 1,080,562
Genesys Telecommunications Laboratories(a) 51,000 1,402,500
Mercury Interactive(a) 20,900 964,013
Microsoft Corp(a) 35,700 3,063,506
Siebel Systems(a) 34,000 2,010,250
Visual Networks(a) 30,000 1,081,875
WatchGuard Technologies(a) 31,000 375,875
Yahoo! Inc(a) 17,880 2,439,503
==================================================================================================
15,101,459
1.38 ELECTRICAL EQUIPMENT
General Electric 13,635 1,486,215
==================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
1.17 ELECTRONICS
JDS Uniphase(a) 14,000 $ 1,265,250
==================================================================================================
11.15 ELECTRONICS -- SEMICONDUCTOR
Altera Corp(a) 81,160 2,942,050
Applied Micro Circuits(a) 14,200 1,334,800
Intel Corp 35,600 2,456,400
LSI Logic(a) 33,000 1,660,312
Maxim Integrated Products(a) 23,000 1,473,438
Texas Instruments 7,095 1,021,680
Xilinx Inc(a) 18,000 1,122,750
==================================================================================================
12,011,430
1.56 ENTERTAINMENT
Time Warner 23,300 1,677,600
==================================================================================================
4.73 EQUIPMENT -- SEMICONDUCTOR
Applied Materials(a) 30,000 2,158,125
Photronics Inc(a) 33,900 953,438
Teradyne Inc(a) 26,700 1,990,819
==================================================================================================
5,102,382
5.60 FINANCIAL
Capital One Financial 27,600 1,279,950
Citigroup Inc 49,290 2,196,486
Schwab (Charles) Corp 58,000 2,555,625
==================================================================================================
6,032,061
2.15 FOOTWEAR
NIKE Inc Class B Shrs 44,500 2,314,000
==================================================================================================
4.04 HEALTH CARE DRUGS -- PHARMACEUTICALS
Pfizer Inc 28,530 968,237
SmithKline Beecham PLC Sponsored ADR Representing
5 Ord Shrs 32,000 1,922,000
Warner-Lambert Co 22,200 1,465,200
==================================================================================================
4,355,437
2.59 HEALTH CARE RELATED
Bausch & Lomb 22,000 1,579,875
VISX Inc(a) 12,000 1,215,000
==================================================================================================
2,794,875
1.17 INVESTMENT BANK/BROKER FIRM
Legg Mason 36,100 1,263,500
==================================================================================================
1.58 MANUFACTURING
Tyco International Ltd 17,400 1,699,763
==================================================================================================
5.34 OIL & GAS RELATED
Atwood Oceanics(a) 55,300 1,655,544
Evergreen Resources(a) 50,000 1,306,250
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Grey Wolf(a) 250,000 $ 578,125
Nabors Industries(a) 95,000 2,214,688
==================================================================================================
5,754,607
1.99 PAPER & FOREST PRODUCTS
Champion International 41,450 2,145,037
==================================================================================================
1.48 PHOTOGRAPHY & IMAGING
Gemstar International Group Ltd(a) 24,000 1,590,000
==================================================================================================
10.75 RETAIL
Amazon.com Inc(a) 27,400 2,741,712
eBay Inc(a) 6,300 615,431
eToys Inc(a) 64,600 2,579,962
Home Depot 25,800 1,646,362
Pacific Sunwear of California(a) 43,000 1,075,000
Tandy Corp 44,000 2,257,750
Topps Co(a) 75,000 670,313
==================================================================================================
11,586,530
5.46 SERVICES
America Online(a) 50,000 4,756,250
Travel Services International(a) 80,000 1,130,000
==================================================================================================
5,886,250
2.06 TELECOMMUNICATIONS -- LONG DISTANCE
Viatel Inc(a) 60,000 2,220,000
==================================================================================================
4.28 TELEPHONE
AT&T Canada Class B Shrs Depository Receipts(a) 35,200 2,219,800
COLT Telecom Group PLC Sponsored ADR Representing
4 Ord Shrs(a) 26,600 2,397,325
==================================================================================================
4,617,125
TOTAL COMMON STOCKS (Cost $92,230,420) 102,004,420
==================================================================================================
1.87 PREFERRED STOCKS
1.87 AUTOMOBILES
Porsche AG, Non-Voting Pfd (Cost $1,725,014) 800 2,016,445
==================================================================================================
3.48 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 7/30/1999
due 8/2/1999 at 4.960%, repurchased at $3,746,548
(Collateralized by US Treasury Bonds due 8/15/2013
at 12.000%, value $3,837,512)(Cost $3,745,000) $ 3,745,000 3,745,000
==================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $97,700,434)
(Cost for Income Tax Purposes $98,256,503) $ 107,765,865
==================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Growth & Income Fund
97.50 COMMON STOCKS
1.40 AUTOMOBILES
General Motors 14,100 $ 859,219
==================================================================================================
1.37 BANKS
Firstar Corp 32,100 836,606
==================================================================================================
4.00 BEVERAGES
Coca-Cola Co 31,465 1,897,733
PepsiCo Inc 14,055 549,902
==================================================================================================
2,447,635
0.71 BROADCASTING
Infinity Broadcasting Class A Shrs(a) 15,805 435,625
==================================================================================================
0.86 CHEMICALS
du Pont (E I) de Nemours 7,275 524,255
==================================================================================================
2.56 COMMUNICATIONS-- EQUIPMENT & MANUFACTURING
Lucent Technologies 15,420 1,003,264
Nokia Corp Sponsored ADR Representing Ord Shrs 6,640 564,815
==================================================================================================
1,568,079
12.80 COMPUTER RELATED
Cisco Systems(a) 19,750 1,226,969
Dell Computer(a) 15,500 633,563
EMC Corp(a) 14,600 884,213
International Business Machines 21,590 2,713,593
Microsoft Corp(a) 27,670 2,374,432
==================================================================================================
7,832,770
3.40 ELECTRICAL EQUIPMENT
General Electric 19,070 2,078,630
==================================================================================================
0.55 ELECTRONICS
JDS Uniphase(a) 3,700 334,388
==================================================================================================
7.60 ELECTRONICS -- SEMICONDUCTOR
Altera Corp(a) 20,200 732,250
Intel Corp 36,570 2,523,330
Texas Instruments 9,680 1,393,920
==================================================================================================
4,649,500
0.94 ENTERTAINMENT
Time Warner 8,000 576,000
==================================================================================================
6.53 FINANCIAL
American Express 4,670 615,273
Citigroup Inc 38,767 1,727,554
Fannie Mae 11,705 807,645
Schwab (Charles) Corp 19,200 846,000
==================================================================================================
3,996,472
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
3.83 GAMING
Harrah's Entertainment 110,100 $ 2,346,506
==================================================================================================
10.95 HEALTH CARE DRUGS -- PHARMACEUTICALS
Bristol-Myers Squibb 26,230 1,744,295
Johnson & Johnson 18,905 1,741,623
Lilly (Eli) & Co 14,515 952,547
Merck & Co 16,840 1,139,857
Warner-Lambert Co 17,020 1,123,320
==================================================================================================
6,701,642
0.88 HEALTH CARE RELATED
Medtronic Inc 7,500 540,469
==================================================================================================
1.97 HOUSEHOLD FURNITURE & APPLIANCES
Maytag Corp 17,300 1,204,512
==================================================================================================
0.97 HOUSEHOLD PRODUCTS
Procter & Gamble 6,540 591,870
==================================================================================================
2.59 INSURANCE
American International Group 13,675 1,588,009
==================================================================================================
1.87 MANUFACTURING
Tyco International Ltd 11,690 1,141,967
==================================================================================================
6.05 OIL & GAS RELATED
Chevron Corp 13,245 1,208,606
Exxon Corp 25,865 2,053,034
Schlumberger Ltd 7,225 437,564
==================================================================================================
3,699,204
1.19 PAPER & FOREST PRODUCTS
Champion International 14,100 729,675
==================================================================================================
1.55 PERSONAL CARE
Gillette Co 21,610 946,788
==================================================================================================
10.40 RETAIL
Amazon.com Inc(a) 5,700 570,356
CVS Corp 18,660 928,335
Dayton Hudson 9,135 590,920
Home Depot 21,395 1,365,268
Safeway Inc(a) 23,670 1,275,221
Tandy Corp 6,600 338,663
Wal-Mart Stores 30,660 1,295,385
==================================================================================================
6,364,148
1.84 SERVICES
America Online(a) 6,200 589,775
Ecolab Inc 12,600 537,075
==================================================================================================
1,126,850
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.65 TELECOMMUNICATIONS-- CELLULAR & WIRELESS
Teligent Inc Class A Shrs(a) 5,500 $ 396,688
==================================================================================================
4.22 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 29,712 1,543,167
MCI WorldCom(a) 12,560 1,036,200
==================================================================================================
2,579,367
5.82 TELEPHONE
BellSouth Corp 41,570 1,995,360
SBC Communications 27,375 1,565,508
==================================================================================================
3,560,868
TOTAL COMMON STOCKS (Cost $52,502,373) 59,657,742
==================================================================================================
0.63 FIXED INCOME SECURITIES
0.63 PUBLISHING
Tribune Co, Exch Sub Deb, PHONES(b)
2.000%, 5/15/2029 (Cost $533,800) $ 340,000 385,475
==================================================================================================
1.87 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 7/30/1999
due 8/2/1999 at 4.960%, repurchased at $1,145,473
(Collateralized by US Treasury Bonds due 8/15/2013
at 12.000%, value $1,177,993) (Cost $1,145,000) $ 1,145,000 1,145,000
==================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $54,181,173)
(Cost for Income Tax Purposes $55,056,946) $ 61,188,217
==================================================================================================
S&P 500 Index Fund
92.05 COMMON STOCKS
1.12 AEROSPACE & DEFENSE
Boeing Co 5,656 $ 256,641
General Dynamics 634 42,676
Goodrich (BF) Co 410 17,015
Gulfstream Aerospace(a) 400 26,600
Lockheed Martin 2,256 78,537
Northrop Grumman 318 22,936
Raytheon Co Class B Shrs(a) 1,947 136,898
United Technologies 2,806 187,125
==================================================================================================
768,428
0.12 AIR FREIGHT
FDX Corp(a) 1,632 73,134
Laidlaw Inc 1,846 11,307
==================================================================================================
84,441
0.25 AIRLINES
AMR Corp(a) 920 59,685
Delta Air Lines 698 41,618
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Southwest Airlines 2,844 $ 52,614
US Airways Group(a) 513 18,276
==================================================================================================
172,193
0.22 ALUMINUM
Alcoa Inc 2,126 127,294
Reynolds Metals 400 22,650
==================================================================================================
149,944
0.35 AUTO PARTS
AutoZone Inc(a) 821 20,268
Cooper Tire & Rubber 411 9,247
Cummins Engine 100 6,469
Dana Corp 1,007 42,042
Genuine Parts 1,025 31,839
Goodyear Tire & Rubber 803 42,459
ITT Industries 517 19,323
Johnson Controls 412 28,248
Pep Boys-Manny Moe & Jack 300 4,988
TRW Inc 617 32,971
==================================================================================================
237,854
0.89 AUTOMOBILES
Ford Motor 7,088 344,654
General Motors 3,764 229,369
Navistar International(a) 400 17,775
PACCAR Inc 400 22,925
==================================================================================================
614,723
5.90 BANKS
AmSouth Bancorp 1,050 24,019
BB&T Corp 1,780 62,745
Bank of America 10,289 682,932
Bank of New York 4,494 165,997
Bank One 6,943 378,827
BankBoston Corp 1,690 79,324
Chase Manhattan 5,054 388,526
Comerica Inc 803 44,566
Fifth Third Bancorp 1,633 106,247
First Union 5,622 258,612
Firstar Corp 3,900 101,644
Fleet Financial Group 3,258 131,949
Huntington Bancshares 1,275 38,406
KeyCorp 2,588 81,522
Mellon Bank 3,034 102,397
Mercantile Bancorp 800 43,600
Morgan (J P) & Co 917 117,261
National City 3,680 109,480
Northern Trust 600 52,200
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
PNC Bank 1,700 $ 89,888
Regions Financial 1,200 42,675
Republic New York 530 36,968
Southtrust Corp 1,000 36,750
State Street 1,006 71,300
Summit Bancorp 900 33,300
SunTrust Banks 1,838 118,551
Synovus Financial 1,586 29,044
Union Planters 700 31,019
US Bancorp 4,183 130,196
Wachovia Corp 1,234 96,329
Wells Fargo 9,766 380,874
==================================================================================================
4,067,148
2.23 BEVERAGES
Anheuser-Busch Cos 2,722 214,868
Brown-Forman Corp Class B Shrs 400 24,800
Coca-Cola Co 14,524 875,979
Coca-Cola Enterprises 2,500 72,969
Coors (Adolph) Co Class B Shrs 100 5,325
PepsiCo Inc 8,696 340,231
==================================================================================================
1,534,172
0.32 BIOTECHNOLOGY
Amgen Inc(a) 2,874 220,939
==================================================================================================
0.46 BROADCASTING
CBS Corp(a) 4,062 178,474
Clear Channel Communications(a) 1,828 127,160
King World Productions(a) 400 13,950
==================================================================================================
319,584
0.37 BUILDING MATERIALS
Armstrong World Industries 100 5,500
Crane Co 350 8,881
Lowe's Cos 2,230 117,632
Masco Corp 1,916 57,001
Owens Corning 300 9,263
Sherwin-Williams Co 1,024 27,648
Vulcan Materials 600 26,400
==================================================================================================
252,325
0.61 CABLE
Comcast Corp Class A Shrs 4,398 169,323
MediaOne Group(a) 3,485 252,227
==================================================================================================
421,550
1.45 CHEMICALS
Air Products & Chemicals 1,244 41,596
Dow Chemical 1,349 167,276
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
du Pont (EI) de Nemours 6,643 $ 478,711
Eastman Chemical 411 21,244
Englehard Corp 720 16,065
Grace (WR) & Co(a) 420 7,901
Great Lakes Chemical 300 13,275
Hercules Inc 613 21,378
Nalco Chemical 400 20,575
PPG Industries 917 54,676
Praxair Inc 822 37,915
Rohm & Haas 1,276 54,390
Sigma-Aldrich Corp 614 20,646
Union Carbide 817 39,216
==================================================================================================
994,864
3.28 COMMUNICATIONS-- EQUIPMENT & MANUFACTURING
ADC Telecommunications(a) 800 35,600
Advanced Micro Devices(a) 820 14,094
Andrew Corp(a) 413 8,260
General Instrument(a) 1,021 46,328
Harris Corp 411 12,458
Lucent Technologies 17,899 1,164,554
Motorola Inc 3,592 327,770
Nortel Networks 3,972 352,019
QUALCOMM Inc(a) 900 140,400
Scientific-Atlanta Inc 411 15,002
Tellabs Inc(a) 2,338 143,933
==================================================================================================
2,260,418
12.12 COMPUTER RELATED
Adobe Systems 310 26,582
Apple Computer(a) 918 51,121
Autodesk Inc 300 7,950
BMC Software(a) 1,300 70,037
Cabletron Systems(a) 922 11,122
Cisco Systems(a) 19,082 1,185,469
Compaq Computer 9,985 239,640
Computer Associates International 3,076 141,111
Compuware Corp(a) 2,100 58,275
Data General(a) 300 4,181
Dell Computer(a) 14,912 609,528
EMC Corp(a) 5,852 354,412
Gateway Inc(a) 800 60,950
Hewlett-Packard Co 5,983 626,345
International Business Machines 10,876 1,366,977
Microsoft Corp(a) 30,470 2,614,707
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Network Appliance(a) 400 $ 21,800
Novell Inc(a) 1,849 47,612
Oracle Corp(a) 8,516 324,140
Parametric Technology(a) 1,636 23,109
Peoplesoft Inc(a) 1,400 19,075
Seagate Technology(a) 1,434 38,539
Silicon Graphics(a) 1,026 18,147
Sun Microsystems(a) 4,604 312,497
3Com Corp(a) 2,148 51,821
Unisys Corp(a) 1,625 66,320
==================================================================================================
8,351,467
0.63 CONGLOMERATES
Fortune Brands 924 36,498
Monsanto Co 3,589 140,420
National Service Industries 100 3,531
Tenneco Inc 1,024 23,360
Unilever NV New York Registered Shrs 3,253 227,303
==================================================================================================
431,112
0.26 CONSUMER FINANCE
Countrywide Credit Industries 615 22,909
Household International 2,752 118,164
SLM Holding 900 40,950
==================================================================================================
182,023
0.00 CONSUMER-- JEWELRY, NOVELTIES & GIFTS
Jostens Inc 100 2,025
==================================================================================================
0.16 CONTAINERS
Ball Corp 100 4,844
Bemis Co 300 11,100
Crown Cork & Seal 618 18,115
Owens-Illinois Inc(a) 820 20,449
Sealed Air(a) 419 26,921
Temple-Inland Inc 300 18,975
Tupperware Corp 300 7,088
==================================================================================================
107,492
0.02 DISTRIBUTION
SUPERVALU Inc 600 13,650
==================================================================================================
1.87 ELECTRIC UTILITIES
AES Corp(a) 1,100 65,862
Ameren Corp 714 27,846
American Electric Power 1,125 39,797
CMS Energy 700 26,162
Carolina Power & Light 821 33,764
Central & South West 1,130 24,083
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
CINergy Corp 822 $ 24,609
Consolidated Edison 1,254 54,549
Constellation Energy Group 821 24,066
DTE Energy 720 28,170
Dominion Resources 1,026 45,208
Duke Energy 2,036 107,781
Edison International 2,053 51,967
Entergy Corp 1,434 43,468
FPL Group 919 49,569
FirstEnergy Corp 1,432 40,901
Florida Progress 500 20,469
GPU Inc 717 27,515
New Century Energies 600 20,812
Niagara Mohawk Holdings(a) 1,020 16,065
Northern States Power 800 18,000
PG&E Corp 2,261 71,504
PP&L Resources 823 23,816
PacifiCorp 1,741 31,773
PECO Energy 1,231 52,164
Public Service Enterprise Group 1,232 49,665
Reliant Energy 1,740 47,741
Southern Co 3,996 105,644
Texas Utilities 1,662 70,531
Unicom Corp 1,130 44,353
==================================================================================================
1,287,854
3.71 ELECTRICAL EQUIPMENT
Emerson Electric 2,491 148,682
General Electric 19,549 2,130,841
Grainger (WW) Inc 426 20,128
Honeywell Inc 684 81,952
Rockwell International 1,137 66,870
Solectron Corp(a) 1,400 90,213
Thomas & Betts 300 13,575
==================================================================================================
2,552,261
0.08 ELECTRONICS
EG&G Inc 300 10,069
PE Corp-PE Biosystems Group 600 33,638
Tektronix Inc 300 9,506
==================================================================================================
53,213
2.67 ELECTRONICS -- SEMICONDUCTOR
Intel Corp 19,848 1,369,512
LSI Logic(a) 720 36,225
Micron Technology(a) 1,430 88,839
National Semiconductor(a) 923 22,844
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Texas Instruments 2,256 $ 324,864
==================================================================================================
1,842,284
0.04 ENGINEERING & CONSTRUCTION
Fluor Corp 412 16,506
Foster Wheeler 100 1,219
McDermott International 300 8,456
==================================================================================================
26,181
1.67 ENTERTAINMENT
Disney (Walt) Co 12,129 335,064
Seagram Co Ltd 2,550 130,847
Time Warner 7,136 513,792
Viacom Inc Class B Shrs(a) 3,998 167,666
==================================================================================================
1,147,369
0.25 EQUIPMENT -- SEMICONDUCTOR
Applied Materials(a) 2,051 147,544
KLA-Tencor Corp(a) 412 27,913
==================================================================================================
175,457
3.75 FINANCIAL
American Express 2,605 343,209
Associates First Capital Class A Shrs 4,332 165,970
Capital One Financial 1,200 55,650
Citigroup Inc 19,879 885,858
Fannie Mae 5,897 406,893
Franklin Resources 1,500 57,187
Freddie Mac 4,056 232,713
MBIA Inc 512 29,312
MBNA Corp 4,743 135,175
Providian Financial 719 65,429
Schwab (Charles) Corp 4,722 208,063
==================================================================================================
2,585,459
1.47 FOODS
Archer-Daniels-Midland Co 3,341 46,774
Bestfoods Inc 1,588 77,415
Campbell Soup 2,500 110,000
ConAgra Inc 2,766 70,706
General Mills 804 66,581
Heinz (H J) Co 2,041 96,182
Hershey Foods 794 46,052
Kellogg Co 2,370 82,506
Nabisco Group Holdings 1,800 33,750
Pioneer Hi-Bred International 1,454 56,524
Quaker Oats 719 48,937
Ralston Purina 1,910 57,181
Sara Lee 5,230 115,060
Sysco Corp 1,824 59,622
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Wrigley (William) Jr Co 576 $ 45,900
==================================================================================================
1,013,190
0.13 FOOTWEAR
NIKE Inc Class B Shrs 1,591 82,732
Reebok International Ltd(a) 300 3,638
==================================================================================================
86,370
0.04 GAMING
Harrah's Entertainment(a) 714 15,217
Mirage Resorts(a) 1,025 14,414
==================================================================================================
29,631
0.15 GOLD & PRECIOUS METALS MINING
ASARCO Inc 100 1,775
Barrick Gold 2,152 39,947
Battle Mountain Gold 1,332 2,581
Freeport-McMoran Copper & Gold Class B Shrs 827 13,956
Homestake Mining 1,520 12,160
Newmont Mining 922 17,057
Placer Dome 1,833 18,674
==================================================================================================
106,150
0.03 HARDWARE & TOOLS
Snap-on Inc 300 10,500
Stanley Works 412 11,510
==================================================================================================
22,010
7.84 HEALTH CARE DRUGS -- PHARMACEUTICALS
Abbott Laboratories 9,004 386,609
Allergan Inc 300 28,350
ALZA Corp(a) 592 28,786
American Home Products 7,754 395,454
Bristol-Myers Squibb 11,706 778,449
Johnson & Johnson 7,883 726,221
Lilly (Eli) & Co 6,528 428,400
Longs Drug Stores 100 3,444
Merck & Co 13,874 939,096
Pfizer Inc 22,347 758,401
Pharmacia & Upjohn 2,933 157,832
Schering-Plough Corp 8,662 424,438
Warner-Lambert Co 4,937 325,842
Watson Pharmaceuticals(a) 500 17,219
==================================================================================================
5,398,541
1.58 HEALTH CARE RELATED
Bard (C R) Inc 300 14,587
Bausch & Lomb 300 21,544
Baxter International 1,684 115,670
Becton Dickinson & Co 1,434 39,345
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Biomet Inc 616 $ 22,407
Boston Scientific(a) 2,256 91,509
Cardinal Health 1,519 103,672
Columbia/HCA Healthcare 3,690 82,102
Guidant Corp 1,694 99,205
HCR Manor Care(a) 600 12,225
HEALTHSOUTH Corp(a) 2,455 30,074
Humana Inc(a) 923 10,038
Mallinckrodt Inc 410 13,889
McKesson HBOC 1,586 49,265
Medtronic Inc 3,308 238,383
St Jude Medical(a) 413 15,358
Shared Medical Systems 100 5,988
Tenet Healthcare(a) 1,700 30,494
United Healthcare 924 56,364
Wellpoint Health Networks(a) 400 32,850
==================================================================================================
1,084,969
0.03 HOMEBUILDING
Centex Corp 300 10,106
Kaufman & Broad Home 300 6,244
Pulte Corp 300 6,806
==================================================================================================
23,156
0.08 HOUSEHOLD FURNITURE & APPLIANCES
Maytag Corp 413 28,755
Whirlpool Corp 400 28,675
==================================================================================================
57,430
1.51 HOUSEHOLD PRODUCTS
Black & Decker 513 29,626
Clorox Co 668 74,816
Colgate-Palmolive Co 3,188 157,407
Newell Rubbermaid 1,653 71,492
Procter & Gamble 7,782 704,271
==================================================================================================
1,037,612
2.93 INSURANCE
Aetna Inc 798 65,436
AFLAC Inc 1,500 69,562
Allstate Corp 4,664 165,572
American General 1,360 105,230
American International Group 7,256 842,603
Aon Corp 1,515 56,718
Chubb Corp 1,059 63,341
CIGNA Corp 1,247 109,970
Cincinnati Financial 845 31,793
Conseco Inc 1,941 55,925
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Hartford Financial Services Group 1,256 $ 67,824
Jefferson-Pilot Corp 515 37,627
Lincoln National 1,134 56,700
Loews Corp 576 40,392
MGIC Investment 675 33,286
Progressive Corp 419 53,527
SAFECO Corp 720 27,405
St Paul Cos 1,232 38,346
Torchmark Corp 720 23,670
UnumProvident Corp 1,430 74,003
==================================================================================================
2,018,930
0.17 INSURANCE BROKERS
Marsh & McLennan 1,568 119,168
==================================================================================================
0.78 INVESTMENT BANK/BROKER FIRM
Bear Stearns 710 30,042
Lehman Brothers Holdings 700 37,625
Merrill Lynch & Co 2,119 144,224
Morgan Stanley Dean Witter & Co 3,289 296,421
Paine Webber Group 800 32,000
==================================================================================================
540,312
0.09 IRON & STEEL
Allegheny Teledyne 1,024 21,952
Bethlehem Steel(a) 716 5,594
Nucor Corp 412 19,982
USX-US Steel Group 412 10,686
Worthington Industries 414 6,055
==================================================================================================
64,269
0.26 LEISURE TIME
Brunswick Corp 514 14,071
Carnival Corp 3,500 162,531
==================================================================================================
176,602
0.09 LODGING -- HOTELS
Hilton Hotels 1,435 18,745
Marriott International Class A Shrs 1,168 40,953
==================================================================================================
59,698
0.57 MACHINERY
Briggs & Stratton 100 6,019
Case Corp 420 20,002
Caterpillar Inc 2,044 119,829
Cooper Industries 517 28,370
Danaher Corp 700 39,944
Deere & Co 1,266 48,424
Dover Corp 1,246 49,217
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Ingersoll-Rand Co 1,023 $ 65,792
Milacron Inc 100 1,712
NACCO Industries Class A Shrs 100 7,825
Timken Co 400 6,600
==================================================================================================
393,734
0.00 MANUFACTURED HOUSING
Fleetwood Enterprises 100 2,306
==================================================================================================
1.86 MANUFACTURING
AlliedSignal Inc 3,179 205,642
Corning Inc 1,352 94,640
Eaton Corp 411 40,663
FMC Corp(a) 100 6,975
Illinois Tool Works 1,364 101,362
Millipore Corp 300 12,225
Minnesota Mining & Manufacturing 2,368 208,236
Pall Corp 618 13,017
Parker-Hannifin Corp 616 29,068
Raychem Corp 412 15,708
Textron Inc 808 66,458
Thermo Electron(a) 821 14,111
Tyco International Ltd 4,833 472,124
==================================================================================================
1,280,229
0.12 METALS MINING
Alcan Aluminium Ltd 1,332 40,127
Cyprus Amax Minerals 413 5,421
Inco Ltd 1,123 19,933
Phelps Dodge 300 17,794
==================================================================================================
83,275
0.67 NATURAL GAS
Coastal Corp 1,230 48,662
Columbia Energy Group 450 26,775
Consolidated Natural Gas 513 32,127
Eastern Enterprises 100 3,894
Enron Corp 2,109 179,660
NICOR Inc 300 11,588
ONEOK Inc 100 3,181
Peoples Energy 100 3,681
Sempra Energy 1,118 24,806
Sonat Inc 612 21,535
Williams Cos 2,510 105,577
==================================================================================================
461,486
0.67 OFFICE EQUIPMENT & SUPPLIES
Avery Dennison 614 37,684
IKON Office Solutions 819 10,801
Moore Ltd 412 3,425
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Office Depot(a) 2,100 $ 39,375
Pitney Bowes 1,590 101,164
Staples Inc(a) 2,600 75,075
Xerox Corp 3,928 191,490
==================================================================================================
459,014
5.70 OIL & GAS RELATED
Amerada Hess 513 30,363
Anadarko Petroleum 600 22,912
Apache Corp 513 21,770
Ashland Inc 400 15,200
Atlantic Richfield 1,911 172,109
Baker Hughes 1,894 65,935
Burlington Resources 925 40,873
Chevron Corp 3,931 358,704
Exxon Corp 14,519 1,152,446
Halliburton Co 2,496 115,128
Helmerich & Payne 300 7,669
Kerr-McGee Corp 516 26,574
Mobil Corp 4,615 471,884
Occidental Petroleum 2,047 40,044
Phillips Petroleum 1,473 75,583
Rowan Cos(a) 412 7,751
Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 12,608 769,088
Schlumberger Ltd 3,125 189,258
Sunoco Inc 500 15,250
Texaco Inc 3,077 191,736
USX-Marathon Group 1,689 51,303
Union Pacific Resources Group 1,535 27,342
Unocal Corp 1,462 58,023
==================================================================================================
3,926,945
0.87 PAPER & FOREST PRODUCTS
Boise Cascade 300 11,569
Champion International 513 26,548
Fort James 1,237 45,150
Georgia-Pacific Group 1,026 46,106
International Paper 2,392 122,291
Kimberly-Clark Corp 3,076 187,636
Louisiana-Pacific Corp 615 13,492
Mead Corp 515 21,115
Potlatch Corp 100 4,056
Westvaco Corp 614 18,075
Weyerhaeuser Co 1,231 79,630
Willamette Industries 516 23,220
==================================================================================================
598,888
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.57 PERSONAL CARE
Alberto-Culver Co Class B Shrs 300 $ 7,669
Avon Products 1,574 71,617
Gillette Co 6,536 286,358
International Flavors & Fragrances 615 27,867
==================================================================================================
393,511
0.20 PHOTOGRAPHY & IMAGING
Eastman Kodak 1,913 132,236
Polaroid Corp 300 6,900
==================================================================================================
139,136
0.22 POLLUTION CONTROL
Allied Waste Industries(a) 1,100 19,731
Browning-Ferris Industries 928 41,644
Waste Management 3,453 88,267
==================================================================================================
149,642
0.59 PUBLISHING
American Greetings Class A Shrs 410 12,044
Donnelley (R R) & Sons 720 25,200
Dow Jones & Co 513 25,586
Gannett Inc 1,686 121,813
Harcourt General 410 19,039
Knight-Ridder Inc 412 22,093
McGraw-Hill Cos 1,028 52,299
Meredith Corp 300 10,781
New York Times Class A Shrs 926 36,403
Times Mirror Series A Shrs 413 24,883
Tribune Co 617 54,335
==================================================================================================
404,476
0.47 RAILROADS
Burlington Northern Santa Fe 2,709 86,688
CSX Corp 1,143 55,364
Kansas City Southern Industries 700 38,675
Norfolk Southern 2,253 65,900
Union Pacific 1,462 79,405
==================================================================================================
326,032
0.58 RESTAURANTS
Darden Restaurants 721 15,727
McDonald's Corp 8,004 333,667
Tricon Global Restaurants(a) 821 33,404
Wendy's International 618 17,961
==================================================================================================
400,759
5.40 RETAIL
Albertson's Inc 2,466 122,529
Best Buy(a) 1,200 89,550
CVS Corp 2,226 110,743
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Circuit City Stores-Circuit City Group 1,028 $ 48,573
Consolidated Stores(a) 629 9,828
Costco Cos(a) 1,240 92,690
Dayton Hudson 2,486 160,813
Dillard's Inc Class A Shrs 615 18,950
Dollar General 1,218 32,201
Federated Department Stores(a) 1,238 63,525
Gap Inc 5,094 238,144
Great Atlantic & Pacific Tea 100 3,456
Home Depot 8,760 558,997
Kmart Corp(a) 2,768 40,136
Kohl's Corp(a) 1,000 76,062
Kroger Co(a) 4,834 127,195
Limited Inc 1,179 53,866
May Department Stores 2,028 78,458
Nordstrom Inc 800 25,150
Penney (JC) Co 1,464 64,050
Rite Aid 1,534 32,502
Safeway Inc(a) 2,800 150,850
Sears Roebuck & Co 2,257 91,409
TJX Cos 1,846 61,033
Tandy Corp 1,028 52,749
Toys "R" Us(a) 1,340 21,775
Walgreen Co 5,346 151,359
Wal-Mart Stores 26,260 1,109,485
Winn-Dixie Stores 821 32,532
==================================================================================================
3,718,610
0.21 SAVINGS & LOAN
Golden West Financial 315 30,220
Washington Mutual 3,361 115,324
==================================================================================================
145,544
2.34 SERVICES
America Online(a) 6,500 618,312
Automatic Data Processing 3,684 147,590
Block (H & R) Inc 515 28,132
Cendant Corp(a) 4,519 90,945
Ceridian Corp(a) 722 20,216
Computer Sciences(a) 802 51,629
Deluxe Corp 411 15,412
Dun & Bradstreet 824 26,162
Ecolab Inc 700 29,837
Electronic Data Systems 2,800 168,875
Equifax Inc 821 26,990
First Data 2,560 126,880
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
IMS Health 1,912 $ 53,297
Interpublic Group of Cos 1,436 60,312
Omnicom Group 1,043 73,923
Paychex Inc 1,400 39,288
Ryder System 400 9,425
Service Corp International 1,465 23,257
==================================================================================================
1,610,482
0.35 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Nextel Communications Class A Shrs(a) 1,700 91,056
Sprint Corp-PCS Group Series 1 Shrs(a) 2,491 151,017
==================================================================================================
242,073
3.12 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 18,779 975,334
MCI WorldCom(a) 10,985 906,263
Sprint Corp 5,164 266,914
==================================================================================================
2,148,511
4.46 TELEPHONE
ALLTEL Corp 1,770 127,108
Ameritech Corp 6,519 477,517
Bell Atlantic 9,120 581,400
BellSouth Corp 11,102 532,896
CenturyTel Inc 800 34,200
Frontier Corp 1,023 56,713
GTE Corp 5,729 422,156
SBC Communications 11,604 663,604
US WEST 3,043 174,402
==================================================================================================
3,069,996
0.07 TEXTILE -- APPAREL MANUFACTURING
Fruit of the Loom Class A Shrs(a) 410 3,254
Liz Claiborne 400 15,525
Russell Corp 100 1,919
VF Corp 617 24,372
==================================================================================================
45,070
0.01 TEXTILE -- HOME FURNISHINGS
Springs Industries Class A Shrs 100 3,975
==================================================================================================
0.81 TOBACCO
Philip Morris 14,192 528,652
UST Inc 1,026 31,806
==================================================================================================
560,458
0.13 TOYS
Hasbro Inc 1,177 30,602
Mattel Inc 2,491 58,538
==================================================================================================
89,140
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.08 TRUCKS & PARTS
Delphi Automotive Systems 3,230 $ 58,140
==================================================================================================
TOTAL COMMON STOCKS (Cost $56,397,980) 63,405,900
==================================================================================================
7.95 SHORT-TERM INVESTMENTS
0.43 US GOVERNMENT OBLIGATIONS
US Treasury Bills, 10/14/1999(c) (Amortized Cost $297,184) $ 300,000 297,184
==================================================================================================
7.52 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 7/30/1999
due 8/2/1999 at 4.960%, repurchased at $5,184,142
(Collateralized by US Treasury Bonds, due 8/15/2013
at 12.000%, value $5,311,810)(Cost $5,182,000) $ 5,182,000 5,182,000
==================================================================================================
TOTAL SHORT-TERM INVESTMENTS (Amortized Cost $5,479,184) 5,479,184
==================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $61,877,164)
(Cost for Income Tax Purposes $61,883,923) $ 68,885,084
==================================================================================================
Small Company Growth Fund
82.66 COMMON STOCKS & RIGHTS
1.72 AEROSPACE & DEFENSE
Aeroflex Inc(a) 163,700 $ 3,100,069
Alliant Techsystems(a) 23,000 1,901,812
Moog Inc Class A Shrs(a) 95,600 2,963,600
==================================================================================================
7,965,481
1.55 AUTO PARTS
CSK Auto(a) 150,200 3,811,325
O'Reilly Automotive(a) 79,000 3,367,375
==================================================================================================
7,178,700
1.65 BANKS
City National 74,180 2,540,665
Hudson United Bancorp 86,000 2,795,000
US Trust 26,000 2,340,000
==================================================================================================
7,675,665
1.85 BROADCASTING
Citadel Communications(a) 115,600 3,699,200
Salem Communications Class A Shrs(a) 174,300 4,880,400
==================================================================================================
8,579,600
0.44 BUILDING MATERIALS
Elcor Corp 50,000 2,056,250
==================================================================================================
5.72 COMMUNICATIONS-- EQUIPMENT & MANUFACTURING
Advanced Fibre Communications(a) 87,000 1,446,375
ANTEC Corp(a) 128,700 5,397,356
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Digital Microwave(a) 374,400 $ 4,446,000
Excel Switching(a) 120,000 3,270,000
Gilat Satellite Networks Ltd(a) 87,600 4,620,900
Powerwave Technologies(a) 96,700 3,444,938
REMEC Inc(a) 174,150 2,187,759
Terayon Communication Systems(a) 45,000 1,760,625
==================================================================================================
26,573,953
14.81 COMPUTER RELATED
Advantage Learning Systems(a) 124,500 4,108,500
Business Objects SA Sponsored ADR Representing Ord Shrs(a) 125,200 5,649,650
Electronics for Imaging(a) 50,000 2,740,625
Entrust Technologies(a) 82,000 2,460,000
Gadzoox Networks(a) 30,000 2,257,500
Genesys Telecommunications Laboratories(a) 235,000 6,462,500
InfoSpace.com Inc(a) 32,000 1,470,000
Internet Capital Group Rights(d) 2,020 0
Kronos Inc(a) 66,500 3,216,937
Macromedia Inc(a) 99,000 3,452,625
Mercury Interactive(a) 79,800 3,680,775
Metro Information Services(a) 79,100 1,359,531
MICROS Systems(a) 75,200 2,570,900
NetIQ Corp(a) 100,000 1,675,000
Netopia Inc(a) 90,000 2,238,750
OneMain.com Inc(a) 123,000 2,913,563
Packeteer Inc(a) 30,500 899,750
Peregrine Systems(a) 119,000 3,555,125
Primus Knowledge Solutions(a) 120,000 2,887,500
Research in Motion Ltd(a) 87,600 2,047,650
Rhythms NetConnections(a) 40,250 1,750,875
SoftNet Systems(a) 90,000 2,216,250
USWeb Corp(a) 90,310 1,890,866
Verity Inc(a) 33,000 1,633,500
Visual Networks(a) 109,100 3,934,419
WebTrends Corp(a) 50,300 1,659,900
==================================================================================================
68,732,691
0.52 CONSUMER FINANCE
Towne Services(a) 301,300 2,429,231
==================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.93 DISTRIBUTION
Insight Enterprises(a) 148,400 $ 4,303,600
==================================================================================================
1.61 ELECTRICAL EQUIPMENT
DII Group(a) 129,500 4,799,594
Universal Electronics(a) 93,600 2,655,900
==================================================================================================
7,455,494
1.19 ELECTRONICS
Anaren Microwave(a) 128,900 3,045,262
LeCroy Corp(a) 6,675 123,487
Mettler-Toledo International(a) 81,800 2,367,088
==================================================================================================
5,535,837
5.08 ELECTRONICS -- SEMICONDUCTOR
ANADIGICS Inc(a) 86,100 2,669,100
Applied Micro Circuits(a) 20,500 1,927,000
Cree Research(a) 24,800 1,534,500
Cypress Semiconductor(a) 200,000 4,000,000
Galileo Technology Ltd(a) 46,000 2,466,750
QLogic Corp(a) 14,400 2,403,000
TranSwitch Corp(a) 47,500 2,084,063
Unitrode Corp(a) 78,000 2,881,125
Zoran Corp(a) 148,000 3,626,000
==================================================================================================
23,591,538
0.65 ENTERTAINMENT
SFX Entertainment Class A Shrs(a) 66,900 2,997,956
==================================================================================================
2.75 EQUIPMENT -- SEMICONDUCTOR
American Xtal Technology(a) 97,000 2,982,750
Brooks Automation(a) 119,100 3,230,587
Cymer Inc(a) 105,000 3,327,187
Photronics Inc(a) 115,000 3,234,375
==================================================================================================
12,774,899
0.69 GAMING
Harrah's Entertainment(a) 151,200 3,222,450
==================================================================================================
3.75 HEALTH CARE DRUGS -- PHARMACEUTICALS
Accredo Health(a) 62,200 1,982,625
Alkermes Inc(a) 92,000 2,403,500
ChiRex Inc(a) 120,900 3,959,475
Priority Healthcare Class B Shrs(a) 99,764 4,813,613
Roberts Pharmaceutical(a) 154,750 4,245,953
==================================================================================================
17,405,166
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
1.87 HEALTH CARE RELATED
Laser Vision Centers(a) 15,600 $ 980,850
MedQuist Inc(a) 40,000 1,735,000
Pharmaceutical Product Development(a) 85,300 2,233,794
Province Healthcare(a) 162,400 2,740,500
ResMed Inc(a) 34,200 974,700
==================================================================================================
8,664,844
0.74 INSURANCE
HCC Insurance Holdings 151,800 3,443,962
==================================================================================================
1.22 INVESTMENT BANK/BROKER FIRM
Affiliated Managers Group(a) 40,000 4,112,500
National Discount Brokers Group(a) 41,200 1,573,325
==================================================================================================
5,685,825
0.92 LEISURE TIME
Action Performance(a) 51,200 1,772,800
Intrawest Corp 165,000 2,505,938
==================================================================================================
4,278,738
0.37 MANUFACTURING
Pentair Inc 40,000 1,737,500
==================================================================================================
5.88 OIL & GAS RELATED
Atwood Oceanics(a) 96,800 2,897,950
Basin Exploration(a) 127,500 2,677,500
Evergreen Resources(a) 132,500 3,461,562
Global Marine(a) 180,700 3,026,725
Louis Dreyfus Natural Gas(a) 134,200 2,566,575
Nabors Industries(a) 107,000 2,494,438
Newfield Exploration(a) 90,500 2,618,844
Precision Drilling(a) 203,000 4,643,625
Unit Corp(a) 375,000 2,929,688
==================================================================================================
27,316,907
0.59 PERSONAL CARE
Playtex Products(a) 170,000 2,720,000
==================================================================================================
0.76 RESTAURANTS
Papa John's International(a) 82,600 3,546,638
==================================================================================================
7.44 RETAIL
Ames Department Stores(a) 64,200 2,632,200
Children's Place(a) 67,100 2,667,225
Cost Plus(a) 50,000 2,200,000
Footstar Inc(a) 86,100 3,099,600
InterTAN Inc(a) 215,000 4,232,812
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Men's Wearhouse(a) 129,200 $ 3,213,850
Pacific Sunwear of California(a) 220,000 5,500,000
Sharper Image(a) 167,400 1,715,850
Tuesday Morning(a) 92,600 2,141,375
Wild Oats Markets(a) 130,000 4,728,750
Yankee Candle(a) 107,700 2,423,250
==================================================================================================
34,554,912
0.39 SAVINGS & LOAN
FirstFed Financial(a) 112,600 1,801,600
==================================================================================================
11.14 SERVICES
ACNielsen Corp(a) 105,000 3,038,437
AHL Services(a) 144,350 3,680,925
Corporate Executive Board(a) 47,300 1,791,487
Harte-Hanks Inc 136,900 3,636,406
Integrated Electrical Services(a) 72,000 1,215,000
InterVoice Inc(a) 221,200 3,345,650
IntraNet Solutions(a) 235,000 1,997,500
Jack Henry & Associates 68,220 2,950,515
Media Metrix(a) 43,700 1,676,988
NCO Group(a) 100,700 3,939,888
Navigant Consulting(a) 82,200 3,472,950
NetGravity Inc(a) 139,500 3,007,969
Pegasus Systems(a) 62,000 2,092,500
ProBusiness Services(a) 74,200 2,365,125
Profit Recovery Group International(a) 33,200 1,709,800
Provant Inc(a) 123,600 1,714,950
Safeguard Scientifics(a) 20,200 1,292,800
Sykes Enterprises(a) 140,000 3,928,750
Sylvan Learning Systems(a) 84,000 2,147,250
TSI International Software Ltd(a) 141,000 2,687,813
US Interactive Rights(d) 1,010 0
==================================================================================================
51,692,703
2.35 TELECOMMUNICATIONS-- CELLULAR & WIRELESS
Aironet Wireless Communications(a) 196,000 2,058,000
Metro One Telecommunications(a) 133,600 1,837,000
Pinnacle Holdings(a) 196,100 4,841,219
Proxim Inc(a) 39,900 2,167,069
==================================================================================================
10,903,288
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
1.64 TELECOMMUNICATIONS -- LONG DISTANCE
Dycom Industries(a) 52,450 $ 2,504,487
Orckit Communications Ltd(a) 90,000 2,767,500
Viatel Inc(a) 63,000 2,331,000
==================================================================================================
7,602,987
0.84 TELEPHONE
CTC Communications(a) 165,000 2,897,812
Inet Technologies(a) 41,200 999,100
==================================================================================================
3,896,912
0.84 TEXTILE -- APPAREL MANUFACTURING
Quiksilver Inc(a) 156,500 3,892,938
==================================================================================================
0.76 TEXTILE -- HOME FURNISHINGS
Linens 'n Things(a) 76,600 3,542,750
==================================================================================================
TOTAL COMMON STOCKS & RIGHTS (Cost $326,154,732) 383,761,015
==================================================================================================
17.34 SHORT-TERM INVESTMENTS-- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 7/30/1999
due 8/2/1999 at 4.960%, repurchased at $80,509,263
(Collateralized by US Treasury Bonds, due 8/15/2013
at 12.000% and 5/15/2016 at 7.250%, respectively,
value $82,399,128) (Cost $80,476,000) $ 80,476,000 80,476,000
==================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $406,630,732)
(Cost for Income Tax Purposes $407,730,129) $ 464,237,015
==================================================================================================
Value Equity Fund
98.46 COMMON STOCKS
1.44 AEROSPACE & DEFENSE
Raytheon Co Class B Shrs 75,800 $ 5,329,687
==================================================================================================
1.81 AIRLINES
Southwest Airlines 362,550 6,707,175
==================================================================================================
1.69 AUTOMOBILES
Ford Motor 128,600 6,253,175
==================================================================================================
8.63 BANKS
Bank of America 111,364 7,391,786
Bank One 129,600 7,071,300
Chase Manhattan 71,600 5,504,250
Commerce Bancshares 66,600 2,688,975
First Union 60,000 2,760,000
State Street 26,000 1,842,750
Wachovia Corp 60,000 4,683,750
==================================================================================================
31,942,811
5.32 BUILDING MATERIALS
Lowe's Cos 178,200 9,400,050
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Sherwin-Williams Co 132,700 $ 3,582,900
Vulcan Materials 152,700 6,718,800
==================================================================================================
19,701,750
0.80 CABLE
MediaOne Group(a) 41,100 2,974,613
==================================================================================================
0.74 CHEMICALS
Dow Chemical 22,000 2,728,000
==================================================================================================
9.55 COMPUTER RELATED
Cadence Design Systems(a) 128,700 1,359,394
Compaq Computer 148,200 3,556,800
Computer Associates International 113,225 5,194,197
Compuware Corp(a) 86,800 2,408,700
International Business Machines 72,000 9,049,500
Oracle Corp(a) 167,500 6,375,469
Sun Microsystems(a) 108,900 7,391,587
==================================================================================================
35,335,647
1.82 CONGLOMERATES
Hanson PLC Sponsored ADR Representing 5 Ord Shrs 150,000 6,750,000
==================================================================================================
1.48 DISTRIBUTION
SUPERVALU Inc 240,000 5,460,000
==================================================================================================
4.07 ELECTRIC UTILITIES
DTE Energy 137,000 5,360,125
GPU Inc 45,000 1,726,875
Southern Co 135,000 3,569,063
TECO Energy 215,600 4,392,850
==================================================================================================
15,048,913
3.25 ELECTRICAL EQUIPMENT
General Electric 72,500 7,902,500
Rockwell International 70,000 4,116,875
==================================================================================================
12,019,375
0.97 ELECTRONICS -- SEMICONDUCTOR
Intel Corp 52,000 3,588,000
==================================================================================================
2.75 FINANCIAL
Associates First Capital Class A Shrs 67,408 2,582,569
Fannie Mae 109,800 7,576,200
==================================================================================================
10,158,769
10.95 HEALTH CARE DRUGS -- PHARMACEUTICALS
Abbott Laboratories 94,000 4,036,125
American Home Products 100,000 5,100,000
Bristol-Myers Squibb 120,000 7,980,000
Merck & Co 111,100 7,520,081
Mylan Laboratories 138,000 3,139,500
Schering-Plough Corp 158,500 7,766,500
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Warner-Lambert Co 75,600 $ 4,989,600
==================================================================================================
40,531,806
1.66 HEALTH CARE RELATED
Biomet Inc 168,900 6,143,737
==================================================================================================
7.82 INSURANCE
American General 90,000 6,963,750
American International Group 44,225 5,135,628
Jefferson-Pilot Corp 86,362 6,309,824
MGIC Investment 100,000 4,931,250
Torchmark Corp 170,000 5,588,750
==================================================================================================
28,929,202
1.85 INSURANCE BROKERS
Marsh & McLennan 90,000 6,840,000
==================================================================================================
0.72 IRON & STEEL
Nucor Corp 55,200 2,677,200
==================================================================================================
0.54 MACHINERY
Dover Corp 50,600 1,998,700
==================================================================================================
2.94 MANUFACTURING
Federal Signal 90,400 1,937,950
Illinois Tool Works 30,000 2,229,375
Precision Castparts 10,000 393,750
Textron Inc 31,500 2,590,875
York International 83,700 3,740,344
==================================================================================================
10,892,294
2.06 OFFICE EQUIPMENT & SUPPLIES
Pitney Bowes 49,000 3,117,625
Xerox Corp 92,600 4,514,250
==================================================================================================
7,631,875
5.70 OIL & GAS RELATED
Exxon Corp 70,550 5,599,906
Norsk Hydro A/SA Sponsored ADR Representing Ord Shrs 90,000 3,543,750
Repsol SA Sponsored ADR Representing Ord Shrs 316,200 6,541,387
Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 88,304 5,386,544
==================================================================================================
21,071,587
1.36 PAPER & FOREST PRODUCTS
Kimberly-Clark Corp 82,700 5,044,700
==================================================================================================
1.36 POLLUTION CONTROL
Browning-Ferris Industries 112,100 5,030,487
==================================================================================================
0.98 PUBLISHING
Gannett Co 50,000 3,612,500
==================================================================================================
1.34 RETAIL
Rite Aid 234,000 4,957,875
==================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
4.74 SERVICES
Deluxe Corp 109,000 $ 4,087,500
Dun & Bradstreet 230,000 7,302,500
Electronic Data Systems 64,800 3,908,250
GATX Corp 55,800 2,225,025
==================================================================================================
17,523,275
2.16 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 64,400 3,344,775
MCI WorldCom(a) 56,100 4,628,250
==================================================================================================
7,973,025
4.88 TELEPHONE
Ameritech Corp 75,000 5,493,750
Bell Atlantic 151,900 9,683,625
US WEST 50,000 2,865,625
==================================================================================================
18,043,000
1.28 TEXTILE -- APPAREL MANUFACTURING
VF Corp 120,000 4,740,000
==================================================================================================
1.09 TOBACCO
Philip Morris 108,200 4,030,450
==================================================================================================
0.71 TOYS
Mattel Inc 112,500 2,643,750
==================================================================================================
TOTAL COMMON STOCKS (Cost $226,018,149) 364,313,378
==================================================================================================
1.54 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 7/30/1999
due 8/2/1999 at 4.960%, repurchased at $5,688,350
(Collateralized by US Treasury Bonds due 8/15/2013
at 12.000%, value $5,824,924) (Cost $5,686,000) $ 5,686,000 5,686,000
==================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $231,704,149)(e) $ 369,999,378
==================================================================================================
</TABLE>
(a) Security is non-income producing.
(b) PHONES -- Participation Hybrid Option Notes Exchangeable Securities
(c) Securiy has been designated as collateral for futures contracts.
(d) Security has no market value at July 31, 1999.
(e) Also represents cost for income tax purposes.
See Notes to Financial Statements
<PAGE>
FUTURES CONTRACTS
OPEN AT JULY 31, 1999
- --------------------------------------------------------------------------------
NUMBER OF FACE MARKET
POSITION CONTRACTS AMOUNT VALUE
- --------------------------------------------------------------------------------
S&P 500 Index Fund
S&P 500 Index
(Expires September 1999) Long 16 $ 4,000 $ 5,327,200
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITES
INVESCO Stock Funds, Inc.
July 31, 1999
<TABLE>
<CAPTION>
BLUE CHIP
GROWTH DYNAMICS
FUND FUND
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment Securities:
At Cost(a) $ 968,340,512 $ 1,923,824,507
==================================================================================================
At Value(a) $ 1,229,587,701 $ 2,491,650,633
Cash 5,298,089 3,851,561
Receivables:
Investment Securities Sold 38,855,835 12,071,000
Fund Shares Sold 3,399,231 20,501,950
Dividends and Interest 921,553 427,264
Prepaid Expenses and Other Assets 166,620 170,229
==================================================================================================
TOTAL ASSETS 1,278,229,029 2,528,672,637
==================================================================================================
LIABILITIES
Payables:
Distributions to Shareholders 3,116 0
Investment Securities Purchased 43,824,407 48,658,732
Fund Shares Repurchased 1,133,410 7,942,490
Accrued Distribution Expenses 277,286 524,406
Accrued Expenses and Other Payables 83,048 65,354
==================================================================================================
TOTAL LIABILITIES 45,321,267 57,190,982
==================================================================================================
NET ASSETS AT VALUE $ 1,232,907,762 $ 2,471,481,655
==================================================================================================
NET ASSETS
Paid-in Capital(b) $ 863,038,638 $ 1,744,886,113
Accumulated Undistributed Net Investment Loss (49,145) (65,063)
Accumulated Undistributed Net Realized Gain on
Investment Securities and Foreign Currency Transactions 108,671,080 158,834,479
Net Appreciation of Investment Securities and Foreign
Currency Transactions 261,247,189 567,826,126
==================================================================================================
NET ASSETS AT VALUE $ 1,232,907,762 $ 2,471,481,655
==================================================================================================
Shares Outstanding 182,560,140 127,469,815
NET ASSET VALUE, Offering and Redemption
Price per Share $ 6.75 $ 19.39
==================================================================================================
</TABLE>
(a)Investment securities at cost and value at July 31, 1999 include a
repurchase agreement of $5,853,000 for Dynamics Fund.
(b)The Fund has 2 billion authorized shares of common stock, par value of $0.01
per share. Of such shares, 200 million have been allocated to Blue Chip
Growth Fund and 200 million have been allocated to Dynamics Fund.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
INVESCO Stock Funds, Inc.
July 31, 1999
<TABLE>
<CAPTION>
INVESCO
ENDEAVOR GROWTH &
FUND INCOME FUND
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment Securities:
At Cost(a) $ 97,700,434 $ 54,181,173
==================================================================================================
At Value(a) $ 107,765,865 $ 61,188,217
Cash 0 31,149
Receivables:
Investment Securities Sold 2,167,521 2,453,052
Fund Shares Sold 612,695 278,908
Dividends and Interest 15,715 45,689
Prepaid Expenses and Other Assets 56,955 52,920
==================================================================================================
TOTAL ASSETS 110,618,751 64,049,935
==================================================================================================
LIABILITIES
Payables:
Custodian 14,938 0
Investment Securities Purchased 583,000 2,568,428
Fund Shares Repurchased 462,916 148,791
Accrued Distribution Expenses 23,848 12,940
Accrued Expenses and Other Payables 2,119 3,885
==================================================================================================
TOTAL LIABILITIES 1,086,821 2,734,044
==================================================================================================
NET ASSETS AT VALUE $ 109,531,930 $ 61,315,891
==================================================================================================
NET ASSETS
Paid-in Capital(b) $ 89,592,887 $ 48,226,841
Accumulated Undistributed Net Investment Loss 0 (277)
Accumulated Undistributed Net Realized Gain on
Investment Securities and Foreign Currency Transactions 9,873,612 6,082,283
Net Appreciation of Investment Securities and
Foreign Currency Transactions 10,065,431 7,007,044
==================================================================================================
NET ASSETS AT VALUE $ 109,531,930 $ 61,315,891
==================================================================================================
Shares Outstanding 6,592,972 3,990,389
NET ASSET VALUE, Offering and Redemption
Price per Share $ 16.61 $ 15.37
==================================================================================================
</TABLE>
(a)Investment securities at cost and value at July 31, 1999 include repurchase
agreements of $3,745,000 and $1,145,000 for INVESCO Endeavor and Growth &
Income Funds, respectively.
(b)The Fund has 2 billion authorized shares of common stock, par value of $0.01
per share. Of such shares, 100 million have been allocated to INVESCO
Endeavor Fund and 100 million have been allocated to Growth & Income Fund.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITES (CONTINUED)
INVESCO Stock Funds, Inc.
July 31, 1999
S & P
500 INDEX
FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 61,877,164
================================================================================
At Value(a) $ 68,885,084
Receivables:
Investment Securities Sold 5,971
Fund Shares Sold 441,417
Dividends and Interest 12,271
Prepaid Expenses and Other Assets 17,341
================================================================================
TOTAL ASSETS 69,362,084
================================================================================
LIABILITIES
Payables:
Custodian 67,662
Distributions to Shareholders 2,500
Investment Securities Purchased 81,949
Fund Shares Repurchased 73,322
Variation Margin on Futures Contracts 74,674
Accrued Distribution Expenses - Class II 13,861
Accrued Expenses and Other Payables 14,860
================================================================================
TOTAL LIABILITIES 328,828
================================================================================
NET ASSETS AT VALUE $ 69,033,256
================================================================================
NET ASSETS
Paid-in Capital(b) $ 61,415,883
Accumulated Undistributed Net Investment Income 2,317
Accumulated Undistributed Net Realized Gain on Investment Securities,
Foreign Currency Transactions and Futures Contracts 695,480
Net Appreciation of Investment Securities and Futures Contracts 6,919,576
================================================================================
NET ASSETS AT VALUE, Applicable to Shares Outstanding $ 69,033,256
================================================================================
NET ASSETS AT VALUE:
Class I $ 4,419,797
================================================================================
Class II $ 64,613,459
================================================================================
Shares Outstanding
Class I 311,109
Class II 4,489,306
NET ASSET VALUE, Offering and Redemption Price per Share
Class I $ 14.21
Class II $ 14.39
================================================================================
(a)Investment securities at cost and value at July 31, 1999 include a
repurchase agreement of $5,182,000.
(b)The Fund has 2 billion authorized shares of common stock, par value of $0.01
per share. Of such shares, 100 million have been allocated to each individual
class.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITES (CONTINUED)
INVESCO Stock Funds, Inc.
July 31, 1999
<TABLE>
<CAPTION>
SMALL VALUE
COMPANY EQUITY
GROWTH FUND FUND
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment Securities:
At Cost(a) $ 406,630,732 $ 231,704,149
==================================================================================================
At Value(a) $ 464,237,015 $ 369,999,378
Cash 64,682 652
Receivables:
Investment Securities Sold 15,166,796 0
Fund Shares Sold 1,967,989 751,297
Dividends and Interest 32,325 517,652
Prepaid Expenses and Other Assets 87,845 52,782
==================================================================================================
TOTAL ASSETS 481,556,652 371,321,761
==================================================================================================
LIABILITIES
Payables:
Distributions to Shareholders 0 2,787
Investment Securities Purchased 21,932,782 917,978
Fund Shares Repurchased 6,612,918 305,548
Accrued Distribution Expenses 100,988 83,038
Accrued Expenses and Other Payables 48,762 30,904
==================================================================================================
TOTAL LIABILITIES 28,695,450 1,340,255
==================================================================================================
NET ASSETS AT VALUE $ 452,861,202 $ 369,981,506
==================================================================================================
NET ASSETS
Paid-in Capital(b) $ 349,717,318 $ 227,996,293
Accumulated Undistributed (Distribution in Excess of)
Net Investment Income (Loss) (22,140) (6,492)
Accumulated Undistributed Net Realized Gain on
Investment Securities and Foreign Currency Transactions 45,559,741 3,696,476
Net Appreciation of Investment Securities and
Foreign Currency Transactions 57,606,283 138,295,229
==================================================================================================
NET ASSETS AT VALUE $ 452,861,202 $ 369,981,506
==================================================================================================
Shares Outstanding 33,262,192 12,497,029
NET ASSET VALUE, Offering and Redemption
Price per Share $ 13.61 $ 29.61
==================================================================================================
</TABLE>
(a)Investment securities at cost and value at July 31, 1999 include repurchase
agreements of $80,476,000 and $5,686,000 for Small Company Growth and Value
Equity Funds, respectively.
(b)The Fund has 2 billion authorized shares of common stock, par value of $0.01
per share. Of such shares, 200 million have been allocated to Small Company
Growth Fund and 100 million have been allocated to Value Equity Fund.
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
Blue Chip Growth Fund
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
JULY 31 AUGUST 31
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 1998
(Note 1)
INVESTMENT INCOME
INCOME
Dividends $ 9,617,031 $ 11,263,873
Interest 271,592 148,388
Foreign Taxes Withheld (38,007) (108,534)
==================================================================================================
TOTAL INCOME 9,850,616 11,303,727
==================================================================================================
EXPENSES
Investment Advisory Fees 5,712,698 4,561,574
Distribution Expenses 2,630,696 2,027,117
Transfer Agent Fees 1,500,795 1,160,513
Administrative Fees 248,879 131,098
Custodian Fees and Expenses 118,441 108,512
Directors' Fees and Expenses 48,222 49,585
Professional Fees and Expenses 57,195 59,734
Registration Fees and Expenses 114,495 100,310
Reports to Shareholders 316,486 180,511
Other Expenses 101,468 49,665
==================================================================================================
TOTAL EXPENSES 10,849,375 8,428,619
Fees and Expenses Paid Indirectly (132,784) (93,130)
==================================================================================================
NET EXPENSES 10,716,591 8,335,489
==================================================================================================
NET INVESTMENT INCOME (LOSS) (865,975) 2,968,238
==================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on:
Investment Securities 112,169,586 104,055,439
Foreign Currency Transactions 0 45,981
==================================================================================================
Total Net Realized Gain 112,169,586 104,101,420
==================================================================================================
Change in Net Appreciation (Depreciation) of Investment Securities 233,360,777 (9,504,119)
==================================================================================================
NET GAIN ON INVESTMENT SECURITIES AND FOREIGN
SECURITY TRANSACTIONS 345,530,363 94,597,301
==================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 344,664,388 $ 97,565,539
==================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
Dynamics Fund
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
JULY 31 APRIL 30
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 1999
(Note 1)
INVESTMENT INCOME
INCOME
Dividends $ 2,023,318 $ 5,260,908
Interest 1,947,447 3,806,182
Foreign Taxes Withheld (39,258) (39,151)
==================================================================================================
TOTAL INCOME 3,931,507 9,027,939
==================================================================================================
EXPENSES
Investment Advisory Fees 2,927,803 7,750,919
Distribution Expenses 1,413,582 3,613,324
Transfer Agent Fees 993,382 2,693,081
Administrative Fees 236,694 226,800
Custodian Fees and Expenses 79,363 243,127
Directors' Fees and Expenses 20,711 66,958
Professional Fees and Expenses 18,912 66,440
Registration Fees and Expenses 36,700 138,207
Reports to Shareholders 81,241 303,983
Other Expenses 9,441 45,889
==================================================================================================
TOTAL EXPENSES 5,817,829 15,148,728
Fees and Expenses Paid Indirectly (79,027) (234,356)
==================================================================================================
NET EXPENSES 5,738,802 14,914,372
==================================================================================================
NET INVESTMENT LOSS (1,807,295) (5,886,433)
==================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 110,481,800 57,564,185
Foreign Currency Transactions (179,590) (51,357)
==================================================================================================
Total Net Realized Gain 110,302,210 57,512,828
==================================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 31,185,843 284,174,283
Foreign Currency Transactions 256,695 (1,078,803)
==================================================================================================
Total Net Appreciation 31,442,538 283,095,480
==================================================================================================
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 141,744,748 340,608,308
==================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 139,937,453 $ 334,721,875
==================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
INVESCO Endeavor Fund
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
JULY 31 APRIL 30
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 1999
(Note 1) (Note 1)
INVESTMENT INCOME
INCOME
Dividends $ 57,353 $ 153,450
Interest 92,901 89,701
Foreign Taxes Withheld (750) (1,375)
==================================================================================================
TOTAL INCOME 149,504 241,776
==================================================================================================
EXPENSES
Investment Advisory Fees 173,488 206,836
Distribution Expenses 57,829 68,945
Transfer Agent Fees 57,863 52,532
Administrative Fees 12,209 9,217
Custodian Fees and Expenses 4,608 7,372
Directors' Fees and Expenses 2,560 3,025
Professional Fees and Expenses 5,201 17,809
Registration Fees and Expenses 21,052 23,652
Reports to Shareholders 9,066 10,330
Other Expenses 445 1,096
==================================================================================================
TOTAL EXPENSES 344,321 400,814
Fees and Expenses Paid Indirectly (3,255) (4,275)
==================================================================================================
NET EXPENSES 341,066 396,539
==================================================================================================
NET INVESTMENT LOSS (191,562) (154,763)
==================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 5,545,114 4,675,087
Foreign Currency Transactions (64) (200)
==================================================================================================
Total Net Realized Gain 5,545,050 4,674,887
==================================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities (5,328,329) 15,473,389
Foreign Currency Transactions 18,935 (98,564)
==================================================================================================
Total Net Appreciation (Depreciation) (5,309,394) 15,374,825
==================================================================================================
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 235,656 20,049,712
==================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 44,094 $ 19,894,949
==================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
Growth & Income Fund
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
JULY 31 APRIL 30
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 1999
(Note 1) (Note 1)
INVESTMENT INCOME
INCOME
Dividends $ 137,302 $ 294,923
Interest 14,298 55,415
Foreign Taxes Withheld 0 (935)
==================================================================================================
TOTAL INCOME 151,600 349,403
==================================================================================================
EXPENSES
Investment Advisory Fees 107,949 209,172
Distribution Expenses 35,983 69,724
Transfer Agent Fees 47,918 70,040
Administrative Fees 8,442 12,517
Custodian Fees and Expenses 3,192 14,482
Directors' Fees and Expenses 2,450 5,297
Professional Fees and Expenses 4,647 18,142
Registration Fees and Expenses 31,610 65,749
Reports to Shareholders 8,152 15,211
Other Expenses 232 1,210
==================================================================================================
TOTAL EXPENSES 250,575 481,544
Fees and Expenses Absorbed by Investment Adviser (33,201) (53,659)
Fees and Expenses Paid Indirectly (2,072) (7,906)
==================================================================================================
NET EXPENSES 215,302 419,979
==================================================================================================
NET INVESTMENT LOSS (63,702) (70,576)
==================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on Investment Securities 2,936,850 5,112,480
Change in Net Appreciation of Investment Securities 107,107 6,899,937
==================================================================================================
NET GAIN ON INVESTMENT SECURITIES 3,043,957 12,012,417
==================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,980,255 $ 11,941,841
==================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
S&P 500 Index Fund
<TABLE>
<CAPTION>
YEAR
ENDED
JULY 31
- --------------------------------------------------------------------------------
<S> <C>
1999
INVESTMENT INCOME
INCOME
Dividends $ 537,825
Interest 177,443
Foreign Taxes Withheld (6,610)
================================================================================
TOTAL INCOME 708,658
================================================================================
EXPENSES
Investment Advisory Fees 108,359
Distribution Expenses-Class II 99,282
Transfer Agent Fees 78,792
Administrative Fees 20,844
Custodian Fees and Expenses 22,356
Directors' Fees and Expenses 9,330
Professional Fees and Expenses 15,747
Registration Fees and Expenses
Class I 21,610
Class II 31,285
Reports to Shareholders 27,060
Other Expenses 1,689
================================================================================
TOTAL EXPENSES 436,354
Fees and Expenses Absorbed by Investment Adviser (185,078)
Fees and Expenses Paid Indirectly (14,152)
================================================================================
NET EXPENSES 237,124
================================================================================
NET INVESTMENT INCOME 471,534
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on:
Investment Securities and Foreign Currency Transactions 163,561
Futures Contracts 514,495
================================================================================
Total Net Realized Gain 678,056
================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 6,282,321
Futures Contracts (70,540)
================================================================================
Total Net Appreciation 6,211,781
================================================================================
NET GAIN ON INVESTMENT SECURITIES, FOREIGN
CURRENCY TRANSACTIONS AND FUTURES CONTRACTS 6,889,837
================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,361,371
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
Small Company Growth Fund
</TABLE>
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
JULY 31 MAY 31
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 1999
(Note 1)
INVESTMENT INCOME
INCOME
Dividends $ 35,128 $ 244,603
Interest 532,995 2,179,990
Foreign Taxes Withheld (1,337) (2,455)
==================================================================================================
TOTAL INCOME 566,786 2,422,138
==================================================================================================
EXPENSES
Investment Advisory Fees 512,934 1,973,393
Distribution Expenses 177,839 657,798
Transfer Agent Fees 327,104 1,116,282
Administrative Fees 33,164 54,324
Custodian Fees and Expenses 14,103 62,805
Directors' Fees and Expenses 4,741 21,595
Professional Fees and Expenses 13,736 31,952
Registration Fees and Expenses 16,974 69,165
Reports to Shareholders 51,453 177,855
Other Expenses 1,311 14,054
==================================================================================================
TOTAL EXPENSES 1,153,359 4,179,223
Fees and Expenses Absorbed by Investment Adviser (84,361) (201,069)
Fees and Expenses Paid Indirectly (8,856) (35,321)
==================================================================================================
NET EXPENSES 1,060,142 3,942,833
==================================================================================================
NET INVESTMENT LOSS (493,356) (1,520,695)
==================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on:
Investment Securities 25,477,829 22,194,189
Foreign Currency Transactions 0 106,985
==================================================================================================
Total Net Realized Gain 25,477,829 22,301,174
==================================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 23,498,647 17,430,661
Foreign Currency Transactions 0 (13,154)
==================================================================================================
Total Net Appreciation 23,498,647 17,417,507
==================================================================================================
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 48,976,476 39,718,681
==================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 48,483,120 $ 38,197,986
==================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
Value Equity Fund
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
JULY 31 AUGUST 31
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 1998
(Note 1)
INVESTMENT INCOME
INCOME
Dividends $ 6,413,414 $ 7,314,414
Interest 607,639 987,978
Foreign Taxes Withheld (78,146) (73,487)
==================================================================================================
TOTAL INCOME 6,942,907 8,228,905
==================================================================================================
EXPENSES
Investment Advisory Fees 2,756,316 3,080,351
Distribution Expenses 918,772 520,628
Transfer Agent Fees 1,011,717 918,694
Administrative Fees 89,785 71,607
Custodian Fees and Expenses 53,145 61,090
Directors'/Trustees' Fees and Expenses 24,562 29,153
Professional Fees and Expenses 26,325 28,494
Registration Fees and Expenses 50,573 83,210
Reports to Shareholders 119,709 82,270
Other Expenses 16,461 15,529
==================================================================================================
TOTAL EXPENSES 5,067,365 4,891,026
Fees and Expenses Absorbed by Investment Adviser (397,754) (164,235)
Fees and Expenses Paid Indirectly (32,463) (26,514)
==================================================================================================
NET EXPENSES 4,637,148 4,700,277
==================================================================================================
NET INVESTMENT INCOME 2,305,759 3,528,628
==================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 3,751,288 39,715,930
Foreign Currency Transactions (680) 218
==================================================================================================
Total Net Realized Gain 3,750,608 39,716,148
==================================================================================================
Change in Net Appreciation (Depreciation) of Investment Securities
and Foreign Currency Transactions 81,638,227 (45,560,535)
==================================================================================================
NET GAIN (LOSS) ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 85,388,835 (5,844,387)
==================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 87,694,594 $ (2,315,759)
==================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Blue Chip Growth Fund
<TABLE>
<CAPTION>
PERIOD YEAR YEAR
ENDED ENDED ENDED
JULY 31 AUGUST 31 AUGUST 31
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 1998 1997
(Note 1)
OPERATIONS
Net Investment Income (Loss) $ (865,975) $ 2,968,238 $ 1,584,172
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 112,169,586 104,101,420 185,903,395
Change in Net Appreciation (Depreciation)
of Investment Securities 233,360,777 (9,504,119) (23,243,958)
================================================================================================================
NET INCREASE IN NET ASSETS FROM
OPERATIONS 344,664,388 97,565,539 164,243,609
================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (2,912,112) (1,500,483)
In Excess of Net Investment Income (69,191) 0 0
Net Realized Gain on Investment
Securities (84,849,471) (187,061,864) (84,751,427)
================================================================================================================
TOTAL DISTRIBUTIONS (84,918,662) (189,973,976) (86,251,910)
================================================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 1,033,836,692 547,827,536 647,469,283
Reinvestment of Distributions 75,265,536 168,012,124 77,405,695
================================================================================================================
1,109,102,228 715,839,660 724,874,978
Amounts Paid for Repurchases of Shares (883,678,836) (584,913,034) (690,372,256)
================================================================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 225,423,392 130,926,626 34,502,722
================================================================================================================
TOTAL INCREASE IN NET ASSETS 485,169,118 38,518,189 112,494,421
NET ASSETS
Beginning of Period 747,738,644 709,220,455 596,726,034
================================================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in Excess of)
Net Investment Income (Loss) of
($49,145), $34,771 and ($24,778),
respectively) $ 1,232,907,762 $ 747,738,644 $ 709,220,455
================================================================================================================
---------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 160,399,762 94,746,511 113,639,331
Shares Issued from Reinvestment
of Distributions 12,459,923 34,540,804 14,903,327
================================================================================================================
172,859,685 129,287,315 128,542,658
Shares Repurchased (135,422,302) (101,276,736) (121,110,949)
================================================================================================================
NET INCREASE IN FUND SHARES 37,437,383 28,010,579 7,431,709
================================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Dynamics Fund
<TABLE>
<CAPTION>
PERIOD YEAR YEAR
ENDED ENDED ENDED
JULY 31 APRIL 30 APRIL 30
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 1999 1998
(Note 1)
OPERATIONS
Net Investment Loss $ (1,807,295) $ (5,886,433) $ (4,623,573)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 110,302,210 57,512,828 220,083,978
Change in Net Appreciation of Investment
Securities and Foreign Currency
Transactions 31,442,538 283,095,480 236,377,288
================================================================================================================
NET INCREASE IN NET ASSETS FROM
OPERATIONS 139,937,453 334,721,875 451,837,693
================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 0 (115,015,920) (133,519,730)
================================================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 869,941,998 2,129,570,413 1,320,495,638
Reinvestment of Distributions 0 113,049,160 130,727,993
================================================================================================================
869,941,998 2,242,619,573 1,451,223,631
Amounts Paid for Repurchases of Shares (582,718,812) (1,758,303,356) (1,191,638,369)
================================================================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 287,223,186 484,316,217 259,585,262
================================================================================================================
TOTAL INCREASE IN NET ASSETS 427,160,639 704,022,172 577,903,225
NET ASSETS
Beginning of Period 2,044,321,016 1,340,298,844 762,395,619
================================================================================================================
End of Period(Including Accumulated
Undistributed Net Investment Loss
of ($65,063), ($61,368) and
($37,999), respectively) $ 2,471,481,655 $2,044,321,016 $ 1,340,298,844
================================================================================================================
---------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 45,635,822 135,833,566 88,367,135
Shares Issued from Reinvestment
of Distributions 0 8,011,923 9,785,039
================================================================================================================
45,635,822 143,845,489 98,152,174
Shares Repurchased (30,807,994) (112,899,930) (79,868,425)
================================================================================================================
NET INCREASE IN FUND SHARES 14,827,828 30,945,559 18,283,749
================================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
INVESCO Endeavor Fund
<TABLE>
<CAPTION>
PERIOD PERIOD
ENDED ENDED
JULY 31 APRIL 30
- --------------------------------------------------------------------------------------
<S> <C> <C>
1999 1999
(Note 1) (Note 1)
OPERATIONS
Net Investment Loss $ (191,562) $ (154,763)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 5,545,050 4,674,887
Change in Net Appreciation (Depreciation) of
Investment Securities and Foreign
Currency Transactions (5,309,394) 15,374,825
======================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 44,094 19,894,949
======================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 82,344,436 154,292,260
Amounts Paid for Repurchases of Shares (45,448,995) (101,594,814)
======================================================================================
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS 36,895,441 52,697,446
======================================================================================
TOTAL INCREASE IN NET ASSETS 36,939,535 72,592,395
NET ASSETS
Beginning of Period (Note 1) 72,592,395 0
======================================================================================
End of Period (Including Accumulated Undistributed Net
Investment Loss of $0 and ($154,763),
respectively) $ 109,531,930 $ 72,592,395
======================================================================================
---------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold (Note 1) 4,829,435 11,384,455
Shares Repurchased (2,684,902) (6,936,016)
======================================================================================
NET INCREASE IN FUND SHARES 2,144,533 4,448,439
======================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Growth & Income Fund
<TABLE>
<CAPTION>
PERIOD PERIOD
ENDED ENDED
JULY 31 APRIL 30
- --------------------------------------------------------------------------------------
<S> <C> <C>
1999 1999(a)
(Note 1)
OPERATIONS
Net Investment Loss $ (63,702) $ (70,576)
Net Realized Gain on Investment Securities 2,936,850 5,112,480
Change in Net Appreciation of Investment
Securities 107,107 6,899,937
======================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 2,980,255 11,941,841
======================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain on Investment Securities 0 (1,833,046)
======================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 19,917,033 103,261,159
Reinvestment of Distributions 0 1,763,814
======================================================================================
19,917,033 105,024,973
Amounts Paid for Repurchases of Shares (15,575,219) (61,389,946)
======================================================================================
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS 4,341,814 43,635,027
======================================================================================
TOTAL INCREASE IN NET ASSETS 7,322,069 53,743,822
======================================================================================
NET ASSETS
Initial Subscription (Note 1) 0 250,000
Beginning of Period 53,993,822 0
======================================================================================
End of Period (Including Accumulated
Undistributed Net Investment Loss
of ($277) and ($186), respectively) $ 61,315,891 $ 53,993,822
======================================================================================
-----------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Initial Subscription (Note 1) 0 25,000
Shares Sold 1,304,788 8,250,996
Shares Issued from Reinvestment of Distributions 0 137,476
======================================================================================
1,304,788 8,413,472
Shares Repurchased (1,027,866) (4,700,005)
======================================================================================
NET INCREASE IN FUND SHARES 276,922 3,713,467
======================================================================================
</TABLE>
(a) From July 1, 1998, commencement of investment operations, to April 30, 1999.
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
S&P 500 Index Fund
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
JULY 31 JULY 31
- --------------------------------------------------------------------------------------
<S> <C> <C>
1999 1998
(Note 1)
OPERATIONS
Net Investment Income $ 471,534 $ 91,804
Net Realized Gain on Investment Securities,
Foreign Currency Transactions and Futures
Contracts 678,056 132,729
Change in Net Appreciation of Investment
Securities and Futures Contracts 6,211,781 707,795
======================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 7,361,371 932,328
======================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income
Class I (52,661) (21,188)
Class II (418,861) (68,129)
Net Realized Gain on Investment Securities, Foreign
Currency Transactions and Futures Contracts
Class I (11,013) 0
Class II (104,474) 0
======================================================================================
TOTAL DISTRIBUTIONS (587,009) (89,317)
======================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares
Class I 1,376,114 14,330,953
Class II 65,043,426 17,781,602
Reinvestment of Distributions
Class I 63,674 21,188
Class II 514,657 66,331
======================================================================================
66,997,871 32,200,074
======================================================================================
Amounts Paid for Repurchases of Shares
Class I (764,087) (12,386,716)
Class II (22,298,285) (3,332,974)
======================================================================================
(23,062,372) (15,719,690)
======================================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 43,935,499 16,480,384
======================================================================================
TOTAL INCREASE IN NET ASSETS 50,709,861 17,323,395
NET ASSETS
Initial Subscription (Note 1) 0 1,000,000
Beginning of Period 18,323,395 0
======================================================================================
End of Period (Including Accumulated
Undistributed Net Investment Income
of $2,317 and $2,494, respectively) $ 69,033,256 $ 18,323,395
======================================================================================
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
S&P 500 Index Fund (Continued)
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
JULY 31 JULY 31
- --------------------------------------------------------------------------------------
<S> <C> <C>
1999 1998
(Note 1)
FUND SHARE TRANSACTIONS
Initial Subscription (Note 1)
Class I 0 90,000
Class II 0 10,000
Shares Sold
Class I 100,399 1,263,674
Class II 4,876,896 1,509,441
Shares Issued from Reinvestment of Distributions
Class I 4,741 1,782
Class II 37,760 5,493
======================================================================================
5,019,796 2,880,390
======================================================================================
Shares Repurchased
Class I (65,360) (1,084,127)
Class II (1,666,513) (283,771)
======================================================================================
(1,731,873) (1,367,898)
======================================================================================
NET INCREASE IN FUND SHARES 3,287,923 1,512,492
======================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Small Company Growth Fund
<TABLE>
<CAPTION>
PERIOD YEAR YEAR
ENDED ENDED ENDED
JULY 31 MAY 31 MAY 31
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 1999 1998
(Note 1)
OPERATIONS
Net Investment Loss $ (493,356) $ (1,520,695) $ (1,309,186)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 25,477,829 22,301,174 74,467,963
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 23,498,647 17,417,507 (10,293,630)
================================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 48,483,120 38,197,986 62,865,147
================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 0 (26,845,319) (70,523,447)
================================================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 206,787,274 606,918,472 517,944,195
Reinvestment of Distributions 0 26,316,463 68,478,048
Net Assets Received from Acquisition of
Small Company Value Fund (Note 3) 37,196,562 0 0
================================================================================================================
243,983,836 633,234,935 586,422,243
Amounts Paid for Repurchases of Shares (157,715,200) (599,096,847) (600,416,027)
================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 86,268,636 34,138,088 (13,993,784)
================================================================================================================
TOTAL INCREASE (DECREASE) IN
NET ASSETS 134,751,756 45,490,755 (21,652,084)
NET ASSETS
Beginning of Period 318,109,446 272,618,691 294,270,775
================================================================================================================
End of Period (Including Accumulated
Undistributed Net Investment Loss
of ($22,140), ($21,512) and ($15,689),
respectively) $ 452,861,202 $ 318,109,446 $ 272,618,691
================================================================================================================
----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 15,863,285 54,131,470 38,262,375
Shares Issued from Reinvestment of
Distributions 0 2,518,300 6,425,767
Shares Issued in Connection with Acquisition
of Small Company Value Fund (Note 3) 3,019,096 0 0
================================================================================================================
18,882,381 56,649,770 44,688,142
Shares Repurchased (11,949,112) (53,229,883) (44,729,581)
================================================================================================================
NET INCREASE (DECREASE) IN
FUND SHARES 6,933,269 3,419,887 (41,439)
================================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Value Equity Fund
<TABLE>
<CAPTION>
PERIOD YEAR YEAR
ENDED ENDED ENDED
JULY 31 AUGUST 31 AUGUST 31
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 1998 1997
(Note 1)
OPERATIONS
Net Investment Income $ 2,305,759 $ 3,528,628 $ 4,046,156
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 3,750,608 39,716,148 20,055,067
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 81,638,227 (45,560,535) 57,254,344
================================================================================================================
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS 87,694,594 (2,315,759) 81,355,567
================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (2,294,923) (3,546,111) (4,071,368)
In Excess of Net Investment Income (5,812) (11,054) 0
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (31,654,557) (26,588,368) (5,507,949)
================================================================================================================
TOTAL DISTRIBUTIONS (33,955,292) (30,145,533) (9,579,317)
================================================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 275,439,791 451,339,743 517,380,902
Reinvestment of Distributions 33,721,744 28,948,214 9,315,225
================================================================================================================
309,161,535 480,287,957 526,696,127
Amounts Paid for Repurchases of Shares (342,903,195) (467,608,421) (428,752,415)
================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS (33,741,660) 12,679,536 97,943,712
================================================================================================================
TOTAL INCREASE (DECREASE) IN
NET ASSETS 19,997,642 (19,781,756) 169,719,962
NET ASSETS
Beginning of Period 349,983,864 369,765,620 200,045,658
================================================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in Excess of)
Net Investment Income (Loss) of ($6,492),
($10,836) and $17,483, respectively) $ 369,981,506 $ 349,983,864 $ 369,765,620
================================================================================================================
----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 9,361,699 15,256,421 20,198,347
Shares Issued from Reinvestment
of Distributions 1,186,215 1,058,632 378,067
================================================================================================================
10,547,914 16,315,053 20,576,414
Shares Repurchased (11,678,504) (15,751,418) (16,506,962)
================================================================================================================
NET INCREASE (DECREASE) IN
FUND SHARES (1,130,590) 563,635 4,069,452
================================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Notes to financial statements - INVESCO Stock Funds, Inc.
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Stock Funds,
Inc. (formerly known as INVESCO Equity Funds, Inc. which was formerly known as
INVESCO Capital Appreciation Funds, Inc.) (the "Fund") is incorporated in
Maryland and presently consists of seven separate Funds: Blue Chip Growth Fund,
Dynamics Fund, INVESCO Endeavor Fund, Growth & Income Fund, S&P 500 Index Fund,
Small Company Growth Fund and Value Equity Fund. On August 4, 1998, the board of
directors of the Fund approved a name change to INVESCO Stock Funds, Inc. The
Fund's fiscal year-end was changed from April 30 to July 31. INVESCO Endeavor
Fund commenced investment operations on October 28, 1998. The Fund is registered
under the Investment Company Act of 1940 (the "Act") as a diversified, open-end
management investment company.
On May 20, 1999, shareholders of Blue Chip Growth, S&P 500 Index, Small Company
Growth and Value Equity Funds approved an Agreement and Plan of Conversion and
Termination whereby Blue Chip Growth Fund, formerly the sole portfolio
constituting INVESCO Growth Funds, Inc., S&P 500 Index Fund, formerly one of the
portfolios constituting INVESCO Specialty Funds, Inc., Small Company Growth
Fund, formerly the sole portfolio constituting INVESCO Emerging Opportunity
Funds, Inc. and Value Equity Fund, formerly one of the portfolios constituting
INVESCO Value Trust Funds, Inc. (collectively, the "Old Funds") were reorganized
into the Fund, effective July 15, 1999.
The business and operations of the Old Funds were assumed and carried on by the
Fund without any change in investment objectives or policies. As part of the
reorganization, the Blue Chip Growth, Small Company Growth and Value Equity
Funds' fiscal year-ends were changed from August 31, May 31 and August 31,
respectively, to July 31.
The investment objectives of the Funds' are: To seek long-term capital growth
for Blue Chip Growth and Small Company Growth Funds; to seek appreciation of
capital for Dynamics, INVESCO Endeavor and Growth & Income Funds; to provide
both price performance and income comparable to the Standard and Poor's 500
composite stock index for the S&P 500 Index Fund; and to achieve a high total
return on investments through capital appreciation and current income for Value
Equity Fund.
The S&P 500 Index Fund offers two classes of shares, referred to as Class I
shares and Class II shares. Class I shares are not subject to any distribution
fees, while Class II shares are subject to an annual distribution fee of 0.25%
of the Fund's annual average net assets attributable to Class II shares. Income,
expenses (other than those attributable to a specific class) and gains and
losses are allocated daily to each class of shares based on the relative
proportion of net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against operations of that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION -- Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales price
in the market where such securities are primarily traded. If last sales prices
are not available, securities are valued at the highest closing bid price
obtained from one or more dealers making a market for such securities or by a
pricing service approved by the Fund's board of directors.
<PAGE>
Debt securities are valued at evaluated bid prices as determined by a pricing
service approved by the Fund's board of directors. If evaluated bid prices are
not available, debt securities are valued by averaging the bid prices obtained
from one or more dealers making a market for such securities.
Foreign securities are valued at the closing price on the principal stock
exchange on which they are traded. In the event that closing prices are not
available for foreign securities, prices will be obtained from the principal
stock exchange at or prior to the close of the New York Stock Exchange. Foreign
currency exchange rates are determined daily prior to the close of the New York
Stock Exchange.
If market quotations or pricing service valuations are not readily available,
securities are valued at fair value as determined in good faith under procedures
established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which approximates market
value) if maturity is 60 days or less at the time of purchase, or market value
if maturity is greater than 60 days.
Assets and liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers on the date of valuation.
B. FUTURES CONTRACTS -- S&P 500 Index Fund may enter into futures contracts for
non-speculative purposes. Upon entering into a contract, S&P 500 Index Fund
deposits and maintains as collateral such initial margin as may be required by
the exchanges on which the transaction is effected. Pursuant to the contracts,
S&P 500 Index Fund agrees to receive from or pay to the broker an amount of cash
equal to the daily fluctuation in the value of the contract. Such receipts or
payments are known as "variation margin" and are recorded by S&P 500 Index Fund
as variation margin receivable or payable on futures contracts. During the
period the futures contracts are open, changes in the value of the contracts are
recognized on a daily basis to reflect the market value of the contracts at the
end of each day's trading and are recorded as unrealized gain or loss. When the
contract is closed, S&P 500 Index Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed. S&P 500 Index Fund's use of futures
contracts may subject it to certain risks as a result of unanticipated movements
in the market. In addition, there can be no assurance that a liquid secondary
market will exist for any contract purchased or sold.
C. REPURCHASE AGREEMENTS -- Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Fund's custodian. The collateral is evaluated daily to ensure
its market value exceeds the current market value of the repurchase agreements
including accrued interest. In the event of default on the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the other party to the agreement, realization and/or retention of
the collateral or proceeds may be subject to legal proceedings.
D. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security transactions
are accounted for on the trade date and dividend income is recorded on the ex
dividend date. Certain dividends from foreign securities will be recorded as
soon as the Fund is informed of the dividend if such information is obtained
subsequent to the ex dividend date. Interest income, which may be comprised of
stated coupon rate, market discount, original issue discount and amortized
premium, is recorded on the accrual basis. Income and expenses on foreign
securities are translated into U.S. dollars at rates of exchange prevailing when
accrued. Discounts and premiums on debt securities purchased are amortized over
the life of the respective security as adjustments to interest income. Cost is
determined on the specific identification basis. The cost of foreign securities
is translated into U.S. dollars at the rates of exchange prevailing when such
securities are acquired.
<PAGE>
The Fund may have elements of risk due to investments in specific industries or
foreign issuers located in a specific country. Such investments may subject the
Fund to additional risks resulting from future political or economic conditions
and/or possible impositions of adverse foreign governmental laws or currency
exchange restrictions. Net realized and unrealized gain or loss from investment
securities includes fluctuations from currency exchange rates and fluctuations
in market value.
The Fund's use of short-term forward foreign currency contracts may subject it
to certain risks as a result of unanticipated movements in foreign exchange
rates. The Fund does not hold short-term forward foreign currency contracts for
trading purposes. The Fund may hold foreign currency in anticipation of settling
foreign security transactions and not for investment purposes.
E. FEDERAL AND STATE TAXES -- The Fund has complied, and continues to comply,
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make sufficient
distributions of net investment income and net realized capital gains, if any,
to relieve it from all federal and state income taxes and federal excise taxes.
S&P 500 Index and Value Equity Funds incurred and elected to defer post-October
31 net foreign currency losses of $187 and $676, respectively, to the year ended
July 31, 2000.
To the extent future capital gains are offset by capital loss carryovers and
deferred post-October 31 losses, such gains will not be distributed to
shareholders. Of the ordinary income distributions declared for the period ended
July 31, 1999, 0.11%, 90.85% and 66.81% for Blue Chip Growth Fund, S&P 500 Index
Fund and Value Equity Fund, respectively, qualified for the dividends received
deduction available to the Fund's corporate shareholders.
Dividends paid by the Fund from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders.
Investment income received from foreign sources may be subject to foreign
withholding taxes. Dividend and interest income is shown gross of foreign
withholding taxes in the accompanying financial statements.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to
shareholders are recorded by the Fund on the ex dividend/distribution date. The
Fund distributes net realized capital gains, if any, to its shareholders at
least annually, if not offset by capital loss carryovers. Income distributions
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for market
discounts, amortized premiums, foreign currency transactions, nontaxable
dividends, net operating losses and expired capital loss carryforwards.
For the period ended July 31, 1999, the effects of such differences were as
follows:
ACCUMULATED
ACCUMULATED UNDISTRIBUTED
UNDISTRIBUTED NET REALIZED
NET GAIN ON
INVESTMENT INVESTMENT
FUND INCOME SECURITIES
- --------------------------------------------------------------------------------
Blue Chip Growth Fund $ 851,250 $ (851,250)
Dynamics Fund 1,803,600 (1,803,600)
INVESCO Endeavor Fund 346,325 (346,325)
Growth & Income Fund 63,611 (63,611)
S & P 500 Index Fund (189) 189
Small Company Growth Fund 492,728 (492,728)
Value Equity Fund (680) 680
Net investment income (loss), net realized gains, paid-in capital and net assets
were not affected.
G. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund enters into short-term forward
foreign currency contracts in connection with planned purchases or sales of
securities as a hedge against fluctuations in foreign exchange rates pending the
<PAGE>
settlement of transactions in foreign securities. A forward foreign currency
contract is an agreement between contracting parties to exchange an amount of
currency at some future time at an agreed upon rate. These contracts are
marked-to-market daily and the related appreciation or depreciation of the
contracts is presented in the Statement of Assets and Liabilities. Any realized
gain or loss incurred by the Fund upon the sale of securities is included in the
Statement of Operations.
H. EXPENSES -- Each Fund or Class bears expenses incurred specifically on its
behalf and, in addition, each Fund or Class bears a portion of general expenses,
based on the relative net assets of each Fund or Class.
Under an agreement between each Fund and the Fund's Custodian, agreed upon
Custodian Fees and Expenses are reduced by credits granted by the Custodian from
any temporarily uninvested cash. Similarly, Custodian Fees and Expenses for Blue
Chip Growth and Dynamics Funds, and Distribution Fees for Blue Chip Growth Fund
are reduced by credits earned by the Fund from security brokerage transactions
under certain broker/service arrangements with third parties. Such credits are
included in Fees and Expenses Paid Indirectly in the Statement of Operations.
For the period ended July 31, 1999, Fees and Expenses Paid Indirectly consisted
of the following:
CUSTODIAN FEES DISTRIBUTION
FUND AND EXPENSES FEES
- -------------------------------------------------------------------------
Blue Chip Growth Fund $ 118,232 $ 14,552
Dynamics Fund 79,027 0
INVESCO Endeavor Fund 3,255 0
Growth & Income Fund 2,072 0
S&P 500 Index Fund 14,152 0
Small Company Growth Fund 8,856 0
Value Equity Fund 32,463 0
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Funds' investment adviser. As compensation for its
services to the Funds, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee is based on the annual
rate of each Fund's average net assets as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------------------
$700 $2 $4 $6
$0 TO $350 TO MILLION BILLION BILLION BILLION OVER
$350 $700 TO $2 TO $4 TO $6 TO $8 $8
FUND MILLION MILLION BILLION BILLION BILLION BILLION BILLION
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Blue Chip Growth
Fund 0.60% 0.55% 0.50% 0.45%(a) 0.40%(a) 0.375%(a) 0.35%(a)
Dynamics Fund 0.60% 0.55% 0.50% 0.45%(a) 0.40%(a) 0.375%(a) 0.35%(a)
Small Company
Growth Fund 0.75% 0.65% 0.55% 0.45%(a) 0.40%(a) 0.375%(a) 0.35%(a)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------------------
$1 $2 $4 $6
$0 TO $500 TO BILLION BILLION BILLION BILLION OVER
$500 $1 TO $2 TO $4 TO $6 TO $8 $8
FUND MILLION BILLION BILLION BILLION BILLION BILLION BILLION
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESCO Endeavor
Fund(b) 0.75% 0.65% 0.55% 0.45% 0.40% 0.375% 0.35%
Growth & Income
Fund(b) 0.75% 0.65% 0.55% 0.45% 0.40% 0.375% 0.35%
Value Equity Fund 0.75% 0.65% 0.50% 0.45%(a) 0.40%(a) 0.375%(a) 0.35%(a)
</TABLE>
<PAGE>
S&P 500 Index Fund's investment advisory fee is based on the annual rate of
0.25% of average net assets.
(a) These additional contractual breakpoints became effective May 13, 1999.
(b) Prior to May 13, 1999, the investment advisory fee was computed at an annual
rate of 0.75% of each Fund's average net assets. Effective May 13, 1999, the
investment advisory fee became contractual and is computed at the above rates.
In accordance with a Sub-Advisory Agreement between IFG and World Asset
Management ("World"), unaffiliated with any IFG entity, investment decisions of
S&P 500 Index Fund are made by World. A separate Sub-Advisory Agreement between
IFG and INVESCO Capital Management, Inc. ("ICM"), an affiliate of IFG,
investment decisions of Value Equity Fund are made by ICM. Fees for such
sub-advisory services are paid by IFG.
A plan of distribution pursuant to Rule 12b-1 of the Act (the "Plan") provides
for compensation of marketing and advertising expenditures to INVESCO
Distributors, Inc. ("IDI" or the "Distributor"), a wholly owned subsidiary of
IFG, to a maximum of 0.25% of annual average net assets. For the period ended
July 31, 1999, Blue Chip Growth, Dynamics, INVESCO Endeavor, Growth & Income,
S&P 500 Index - Class II, Small Company Growth and Value Equity Funds paid the
Distributor $2,507,538, $1,291,398, $49,244, $34,245, $88,491, $138,369 and
$915,156, respectively, under the plan of distribution.
IFG receives a transfer agent fee from each Fund at an annual rate of $20.00 per
shareholder account, or, where applicable, per participant in an omnibus
account, per year. IFG may pay such fee for participants in omnibus accounts to
affiliates or third parties. The fee is paid monthly at one-twelfth of the
annual fee and is based upon the actual number of accounts in existence during
each month.
In accordance with an Administrative Agreement, each Fund paid IFG an annual fee
of $10,000, plus an additional amount computed at an annual rate of 0.015% of
average net assets to provide administrative, accounting and clerical services.
The fee is accrued daily and paid monthly. Effective May 13, 1999, each Fund
pays IFG an annual fee of $10,000, plus an additional amount computed at an
annual rate of 0.045% of average net assets.
IFG has voluntarily agreed, to absorb certain fees and expenses incurred by
Growth & Income, S&P 500 Index, Small Company Growth and Value Equity Funds.
A 1% redemption fee is retained by S&P 500 Index Fund to offset transaction
costs and other expenses associated with short-term redemptions and exchanges.
The fee is imposed on redemptions or exchanges of shares held less than three
months. The redemption fee is accounted for as an addition to Paid-in Capital by
S&P 500 Index Fund. Total redemption fees received by S&P 500 Index Fund for the
year ended July 31, 1999 were $33,197.
NOTE 3 -- ACQUISITION OF INVESCO DIVERSIFIED FUNDS, INC. -- SMALL COMPANY VALUE
FUND ("TARGET FUND"). On June 4, 1999, Small Company Growth Fund acquired all
the net assets of the Target Fund pursuant to an Agreement and Plan of
Reorganization and Termination approved by the Target Fund shareholders on May
20, 1999. The acquisition was accomplished by a tax-free exchange of 3,019,096
shares of Small Company Growth Fund (valued at $37,196,562) for 3,719,526 shares
of the Target Fund outstanding on June 4, 1999. The Target Fund's net assets at
that date ($37,196,562) including $3,216,394 of unrealized appreciation were
combined with those of Small Company Growth Fund. The aggregate net assets of
Small Company Growth Fund and the Target Fund immediately before the acquisition
were $341,636,283 and $37,196,562, respectively. The net assets of Small Company
Growth Fund after the acquisition were $378,832,845.
NOTE 4 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the period ended
July 31, 1999, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were as follows:
<PAGE>
FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Blue Chip Growth Fund $ 1,636,446,248 $ 1,500,237,376
Dynamics Fund 739,823,788 471,630,753
INVESCO Endeavor Fund 74,672,373 39,279,224
Growth & Income Fund 29,212,878 25,775,403
S&P 500 Index Fund 41,684,828 870,276
Small Company Growth Fund 171,921,698 137,480,550
Value Equity Fund 83,034,987 147,177,538
There were no purchases or sales of U.S. Government securities.
NOTE 5 -- APPRECIATION AND DEPRECIATION. At July 31, 1999, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation by Fund were as follows:
GROSS GROSS NET
FUND APPRECIATION DEPRECIATION APPRECIATION
- --------------------------------------------------------------------------------
Blue Chip Growth Fund $ 274,703,513 $ 25,821,207 $ 248,882,306
Dynamics Fund 597,656,093 36,101,221 561,554,872
INVESCO Endeavor Fund 15,030,252 5,520,890 9,509,362
Growth & Income Fund 7,789,648 1,658,377 6,131,271
S&P 500 Index Fund 9,068,811 2,067,650 7,001,161
Small Company Growth Fund 66,822,580 10,315,694 56,506,886
Value Equity Fund 145,245,276 6,950,047 138,295,229
NOTE 6 -- TRANSACTIONS WITH AFFILIATES. Certain of the Funds' officers and
directors are also officers and directors of IFG or IDI. At July 31, 1999,
10.76% of outstanding shares of S&P 500 Index Fund - Class I were held by IFG or
affiliated parties.
Each Fund has adopted an unfunded defined benefit deferred compensation plan
covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 50% of the sum of the
retainer fee at the time of retirement plus the meeting attendance fees.
Pension expenses for the period ended July 31, 1999, included in Directors' Fees
and Expenses in the Statement of Operations, and unfunded accrued pension costs
and pension liability included in Prepaid Expenses and Accrued Expenses,
respectively, in the Statement of Assets and Liabilities were as follows:
UNFUNDED
PENSION ACCRUED PENSION
FUND EXPENSES PENSION COSTS LIABILITY
- --------------------------------------------------------------------------------
Blue Chip Growth Fund $ 16,332 $ 33,980 $ 86,632
Dynamics Fund 5,161 37,426 102,477
Growth & Income Fund 96 491 770
S&P 500 Index Fund 272 463 727
Small Company Growth Fund 812 13,812 39,638
Value Equity Fund 7,843 11,070 31,559
Pension expenses, unfunded accrued pension costs and pension liabilities were
insignificant for the period ended July 31, 1999, for INVESCO Endeavor Fund.
The independent directors have contributed to a deferred fee agreement plan,
pursuant to which they have deferred receipt of a portion of the compensation
<PAGE>
which they would otherwise have been paid as directors of selected INVESCO
Funds. The deferred amounts may be invested in the shares of any of the INVESCO
Funds, excluding the INVESCO Variable Investment Funds.
NOTE 7 -- LINE OF CREDIT. Each Fund has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 10% of the Net Assets at Value of each respective
Fund. Each Fund agrees to pay annual fees and interest on the unpaid principal
balance based on prevailing market rates as defined in the agreement. At July
31, 1999, there were no such borrowings.
----------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
INVESCO Stock Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO Blue Chip Growth Fund
(formerly the sole portfolio constituting INVESCO Growth Fund, Inc.), INVESCO
Dynamics Fund, INVESCO Endeavor Fund, INVESCO Growth and Income Fund, INVESCO
S&P 500 Index Fund (formerly one of the portfolios constituting INVESCO
Specialty Funds, Inc.), INVESCO Small Company Growth Fund (formerly the sole
portfolio constituting INVESCO Emerging Opportunity Funds, Inc.) and INVESCO
Value Equity Fund (formerly one of the portfolios constituting INVESCO Value
Trust Funds, Inc.), collectively INVESCO Stock Funds, Inc. (formerly known as
INVESCO Equity Funds, Inc. which was formerly known as INVESCO Capital
Appreciation Funds, Inc., hereafter referred to as the "Fund") at July 31, 1999,
the results of each of their operations for each of the periods indicated, the
changes in each of their net assets for each of the periods indicated and the
financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at July 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
August 25, 1999
<PAGE>
FINANCIAL HIGHLIGHTS
Blue Chip Growth Fund
(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(a) 1998 1997 1996 1995 1994
PER SHARE DATA
Net Asset Value --
Beginning of Period $ 5.15 $ 6.06 $ 5.44 $ 5.33 $ 5.34 $ 5.28
================================================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income(b) 0.00 0.02 0.01 0.03 0.05 0.03
Net Gains on Securities
(Both Realized and Unrealized) 2.11 0.69 1.39 0.95 0.49 0.11
================================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS 2.11 0.71 1.40 0.98 0.54 0.14
================================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment
Income(c) 0.00 0.02 0.01 0.03 0.05 0.03
Distributions from Capital Gains 0.51 1.60 0.77 0.84 0.50 0.05
================================================================================================================
TOTAL DISTRIBUTIONS 0.51 1.62 0.78 0.87 0.55 0.08
================================================================================================================
Net Asset Value--
End of Period $ 6.75 $ 5.15 $ 6.06 $ 5.44 $ 5.33 $ 5.34
================================================================================================================
TOTAL RETURN 42.06%(d) 13.42% 28.14% 20.23% 12.05% 2.52%
RATIOS
Net Assets -- End of Period
($000 Omitted) $ 1,232,908 $ 747,739 $ 709,220 $ 596,726 $ 501,285 $ 488,411
Ratio of Expenses to Average
Net Assets 1.03%(e)(f) 1.04%(e) 1.07%(e) 1.05%(e) 1.06% 1.03%
Ratio of Net Investment Income
to Average Net Assets (0.08%)(f) 0.37% 0.22% 0.64% 1.07% 0.47%
Portfolio Turnover Rate 134%(d) 153% 286% 207% 111% 63%
</TABLE>
(a)From September 1, 1998 to July 31, 1999, the Fund's current fiscal year end.
(b)Net Investment Income for the period ended July 31, 1999, aggregated less
than $0.01 on a per share basis.
(c)Distributions in excess of net investment income for the period ended July
31, 1999 and for the year ended August 31, 1995, aggregated less than $0.01
on a per share basis.
(d)Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e)Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f)Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
Dynamics Fund
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED APRIL 30
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999(a) 1999 1998 1997 1996 1995
PER SHARE DATA
Net Asset Value --
Beginning of Period $ 18.15 $ 16.41 $ 12.02 $ 13.61 $ 11.38 $ 10.15
================================================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss)(b) 0.00 0.00 (0.05) (0.04) 0.02 0.03
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 1.24 3.04 6.39 (0.19) 3.94 1.34
================================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS 1.24 3.04 6.34 (0.23) 3.96 1.37
================================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment
Income(c) 0.00 0.00 0.00 0.00 0.02 0.03
Distributions from Capital Gains 0.00 1.30 1.95 1.36 1.71 0.11
================================================================================================================
TOTAL DISTRIBUTIONS 0.00 1.30 1.95 1.36 1.73 0.14
================================================================================================================
Net Asset Value--
End of Period $ 19.39 $ 18.15 $ 16.41 $ 12.02 $ 13.61 $ 11.38
================================================================================================================
TOTAL RETURN 6.83%(d) 20.83% 56.42% (2.34%) 36.32% 13.57%
RATIOS
Net Assets -- End of Period
($000 Omitted) $2,471,482 $2,044,321 $1,340,299 $ 762,396 $ 778,416 $ 421,600
Ratio of Expenses to Average
Net Assets 1.03%(e)(g) 1.05%(e) 1.08%(e) 1.16%(e) 1.14%(e) 1.20%(f)
Ratio of Net Investment Income
(Loss) to Average Net Assets (0.32%)(g) (0.41%) (0.43%) (0.31%) 0.16% 0.33%(f)
Portfolio Turnover Rate 23%(d) 129% 178% 204% 196% 176%
</TABLE>
(a)From May 1, 1999 to July 31, 1999, the Fund's current fiscal year end.
(b)Net Investment Income (Loss) aggregated less than $0.01 on a per share basis
for the period ended July 31, 1999 and for the year ended April 30, 1999.
(c)Distributions in excess of net investment income for the year ended April
30, 1996, aggregated less than $0.01 on a per share basis.
(d)Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e)Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f)Various expenses of the Fund were voluntarily absorbed by 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%.
(g)Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
INVESCO Endeavor Fund
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
PERIOD PERIOD
ENDED ENDED
JULY 31 APRIL 30
- -----------------------------------------------------------------------------------
<S> <C> <C>
1999(a)(b) 1999(c)
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 16.32 $ 10.00
===================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (0.03) (0.03)
Net Gains on Securities (Both Realized
and Unrealized) 0.32 6.35
===================================================================================
TOTAL FROM INVESTMENT OPERATIONS 0.29 6.32
===================================================================================
Net Asset Value-- End of Period $ 16.61 $ 16.32
===================================================================================
TOTAL RETURN 1.78%(d) 63.20%(d)
RATIOS
Net Assets-- End of Period ($000 Omitted) $ 109,532 $ 72,592
Ratio of Expenses to Average Net Assets(e) 1.49%(f) 1.43%(f)
Ratio of Net Investment Loss to Average
Net Assets (0.83%)(f) (0.55%)(f)
Portfolio Turnover Rate 47%(d) 107%(d)
</TABLE>
(a)From May 1, 1999 to July 31, 1999, the Fund's current fiscal year end.
(b)The per share information was computed using average shares.
(c)From October 28, 1998, commencement of investment operations, to April
30, 1999.
(d)Based on operations for the period shown and, accordingly, is not
representative of a full year.
(e)Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f)Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
Growth & Income Fund
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
PERIOD PERIOD
ENDED ENDED
JULY 31 APRIL 30
- -----------------------------------------------------------------------------------
<S> <C> <C>
1999(a) 1999(b)
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 14.54 $ 10.00
===================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss(c) 0.00 0.00
Net Gains on Securities (Both Realized
and Unrealized) 0.83 5.22
===================================================================================
TOTAL FROM INVESTMENT OPERATIONS 0.83 5.22
===================================================================================
LESS DISTRIBUTIONS
Distributions From Capital Gains 0.00 0.68
===================================================================================
Net Asset Value-- End of Period $ 15.37 $ 14.54
===================================================================================
TOTAL RETURN 5.71%(d) 53.07%(d)
RATIOS
Net Assets-- End of Period ($000 Omitted) $ 61,316 $ 53,994
Ratio of Expenses to Average Net
Assets(e)(f) 1.52%(g) 1.52%(g)
Ratio of Net Investment Loss to Average
Net Assets(f) (0.45%)(g) (0.25%)(g)
Portfolio Turnover Rate 46%(d) 121%(d)
</TABLE>
(a)From May 1, 1999 to July 31, 1999, the Fund's current fiscal year end.
(b)From July 1, 1998, commencement of investment operations, to April 30, 1999.
(c)Net Investment Loss aggregated less than $0.01 on a per share basis for the
periods ended July 31, 1999 and April 30, 1999.
(d)Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e)Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f)Various expenses of the Fund were voluntarily absorbed by IFG for the
periods ended July 31, 1999 and April 30, 1999. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have been
1.75% (annualized) and 1.71% (annualized) respectively, and ratio of net
investment loss to average net assets would have been (0.68%) (annualized)
and (0.44%) (annualized), respectively.
(g)Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
S & P 500 Index Fund
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
CLASS I CLASS II
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
JULY 31 JULY 31 JULY 31 JULY 31
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 1998(a) 1999 1998(a)
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 12.01 $ 10.00 $ 12.14 $ 10.00
====================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.18 0.11 0.14 0.07
Net Gains on Securities
(Both Realized and Unrealized) 2.26 1.98 2.29 2.14
====================================================================================================
TOTAL FROM INVESTMENT OPERATIONS 2.44 2.09 2.43 2.21
====================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.19 0.08 0.13 0.07
Distributions from Capital Gains 0.05 0.00 0.05 0.00
====================================================================================================
TOTAL DISTRIBUTIONS 0.24 0.08 0.18 0.07
====================================================================================================
Net Asset Value-- End of Period $ 14.21 $ 12.01 $ 14.39 $ 12.14
====================================================================================================
TOTAL RETURN(b) 20.40% 20.93%(c) 20.09% 22.11%(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 4,420 $ 3,259 $ 64,613 $ 15,065
Ratio of Expenses to Average Net Assets(d)(e) 0.35% 0.46%(f) 0.60% 0.62%(f)
Ratio of Net Investment Income to Average
Net Assets(e) 1.36% 1.96%(f) 1.06% 1.52%(f)
Portfolio Turnover Rate 2% 0%(c)(g) 2% 0%(c)(g)
</TABLE>
(a)From December 23, 1997, commencement of investment operations, through
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, if applicable, which is before any expense offset
arrangements.
(e)Various expenses of the Fund were voluntarily absorbed by IFG for the year
ended July 31, 1999 and the period ended July 31, 1998. If such expenses had
not been voluntarily absorbed, ratio of expenses to average net assets would
have been 1.17% and 2.51% (annualized) for Class I, respectively, and 0.99%
and 1.71% (annualized) for Class II, respectively, and ratio of net
investment income (loss) to average net assets would have been 0.54% and
(0.09%) (annualized) for Class I , respectively, and 0.67% and 0.42%
(annualized) for Class II, respectively.
(f)Annualized
(g)Portfolio Turnover Rate calculated to less than 0.10% for the period ended
July 31, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
Small Company Growth Fund
(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
PER SHARE DATA
Beginning of Period $ 12.08 $ 11.90 $ 12.82 $ 14.38 $ 9.37 $ 11.40
================================================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss)(b) 0.00 0.00 (0.06) (0.07) (0.06) 0.04
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 1.53 1.35 2.56 (0.96) 5.25 0.46
================================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS 1.53 1.35 2.50 (1.03) 5.19 0.50
================================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.00 0.00 0.00 0.00 0.00 0.04
Distributions from Capital Gains 0.00 1.17 3.42 0.53 0.18 2.49
================================================================================================================
TOTAL DISTRIBUTIONS 0.00 1.17 3.42 0.53 0.18 2.53
================================================================================================================
Net Asset Value--
End of Period $ 13.61 $ 12.08 $ 11.90 $ 12.82 $ 14.38 $ 9.37
================================================================================================================
TOTAL RETURN 12.67%(c) 12.91% 22.65% (7.08%) 55.78% 4.98%
RATIOS
Net Assets -- End of Period
($000 Omitted) $ 452,861 $ 318,109 $ 272,619 $ 294,259 $ 370,029 $ 153,727
Ratio of Expenses to Average
Net Assets(d) 1.50%(e)(f) 1.51%(e) 1.48%(e) 1.52%(e) 1.48%(e) 1.49%
Ratio of Net Investment Income
(Loss) to Average Net Assets(d) (0.69%)(f) (0.58%) (0.42%) (0.55%) (0.78%) 0.41%
Portfolio Turnover Rate 41%(c) 203% 158% 216% 221% 228%
</TABLE>
(a)From June 1, 1999 to July 31, 1999, the Fund's current fiscal year end.
(b)Net Investment Income (Loss) for the period ended July 31, 1999 and the year
ended May 31, 1999 aggregated less than $0.01 on a per share basis.
(c)Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d)Various expenses of the Fund were voluntarily absorbed by IFG for the period
ended July 31, 1999 and for the years ended May 31, 1999, 1997 and 1995. If
such expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 1.62% (annualized), 1.59%, 1.54% and 1.52%,
respectively, and ratio of net investment income (loss) to average net assets
would have been (0.81%) (annualized), (0.66%), (0.57%), and 0.38%,
respectively.
(e)Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f)Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
Value Equity Fund
(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(a) 1998 1997 1996 1995 1994
PER SHARE DATA
Beginning of Period $ 25.68 $ 28.30 $ 22.24 $ 19.53 $ 18.12 $ 17.79
================================================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.17 0.26 0.35 0.35 0.39 0.36
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 6.25 (0.43) 6.62 3.09 2.58 1.20
================================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS 6.42 (0.17) 6.97 3.44 2.97 1.56
================================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.17 0.26 0.35 0.35 0.39 0.31
In Excess of Net Investment
Income(b) 0.00 0.00 0.00 0.00 0.00 0.04
Distributions from Capital Gains 2.32 2.19 0.56 0.38 1.17 0.88
================================================================================================================
TOTAL DISTRIBUTIONS 2.49 2.45 0.91 0.73 1.56 1.23
================================================================================================================
Net Asset Value--
End of Period $ 29.61 $ 25.68 $ 28.30 $ 22.24 $ 19.53 $ 18.12
================================================================================================================
TOTAL RETURN 25.41%(c) (1.06%) 32.04% 17.77% 17.84% 9.09%
RATIOS
Net Assets -- End of Period
($000 Omitted) $ 369,982 $ 349,984 $ 369,766 $ 200,046 $ 153,171 $ 111,850
Ratio of Expenses to Average
Net Assets(d) 1.27%(e)(f) 1.15%(e) 1.04%(e) 1.01%(e) 0.97% 1.01%
Ratio of Net Investment Income
to Average Net Assets(d) 0.63%(f) 0.86% 1.35% 1.64% 2.17% 1.80%
Portfolio Turnover Rate 22%(c) 48% 37% 27% 34% 53%
</TABLE>
(a)From September 1, 1998 to July 31, 1999, the Fund's current fiscal year end.
(b)Distributions in excess of net investment income for the period ended July
31, 1999 and for the year ended August 31, 1998, aggregated less than $0.01
on a per share basis.
(c)Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d)Various expenses of the Fund were voluntarily absorbed by IFG for the period
ended July 31, 1999 and the year ended August 31, 1998. If such expenses had
not be voluntarily absorbed, ratio of expenses to average net assets would
have been 1.38% (annualized) and 1.19%, respectively, and ratio of net
investment income to average net assets would have been 0.52% (annualized)
and 0.82%, respectively.
(e)Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.
(f)Annualized
<PAGE>
OTHER INFORMATION
UNAUDITED
Blue Chip Growth Fund
On May 20, 1999, a special meeting of the shareholders of Blue Chip Growth Fund
was held at which the ten directors identified below were elected. The selection
of PricewaterhouseCoopers LLP as independent accountants (Proposal 1), the
approval of changes to the fundamental investment restrictions identified below
(Proposal 2), the approval of an Agreement and Plan of Conversion and
Termination providing for the conversion of Blue Chip Growth Fund from the only
series of INVESCO Growth Funds, Inc. to a separate series of INVESCO Stock
Funds, Inc. (Proposal 3) and the amendment to the Articles of Restatement of the
Articles of Incorporation (Proposal 4) were ratified. The following is a report
of the votes cast:
<TABLE>
<CAPTION>
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles W. Brady 110,922,165 N/A 3,976,814 114,898,979
Fred A. Deering 111,019,398 N/A 3,879,581 114,898,979
Mark H. Williamson 110,955,020 N/A 3,943,959 114,898,979
Dr. Victor L. Andrews 111,002,866 N/A 3,896,113 114,898,979
Bob R. Baker 111,011,063 N/A 3,887,916 114,898,979
Lawrence H. Budner 111,084,702 N/A 3,814,277 114,898,979
Dr. Wendy Lee Gramm 111,044,524 N/A 3,854,455 114,898,979
Kenneth T. Kin 111,027,085 N/A 3,871,894 114,898,979
John W. McIntyre 111,058,691 N/A 3,840,288 114,898,979
Dr. Larry Soll 111,051,935 N/A 3,847,044 114,898,979
Proposal 1 108,421,506 1,144,082 5,333,390 114,898,979
Proposal 2
Modification of Fundamental
Investment Restrictions on:
a --Loans 96,170,679 5,366,285 13,362,015 114,898,979
b --Investing in commodities 96,207,922 5,329,042 13,362,015 114,898,979
c --Real estate investments 96,273,595 5,263,369 13,362,015 114,898,979
d --Underwriting securities 96,243,584 5,293,380 13,362,015 114,898,979
e --Industry concentration 96,220,615 5,316,349 13,362,015 114,898,979
Elimination of Fundamental
Investment Restrictions on:
f -- Issuing preference shares
and creating funded debt and
adoption of fundamental
restriction on the issuance
of senior securities 96,123,721 5,413,243 13,362,015 114,898,979
g -- Investing in companies
for the purpose of exercising
control or management 96,264,671 5,272,293 13,362,015 114,898,979
</TABLE>
<PAGE>
OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- ---------------------------------------------------------------------------------------------------
Blue Chip Growth Fund (continued)
<S> <C> <C> <C> <C>
h -- Investing in illiquid
securities and adoption of
non-fundamental restriction
on investing in illiquid
securities 96,148,096 5,388,868 13,362,015 114,898,979
i --Ownership of securities
also owned by directors and
officers of the Fund or its
investment adviser 96,129,247 5,407,717 13,362,015 114,898,979
Proposal 3 97,559,713 4,973,288 12,365,978 114,898,978
Proposal 4
Elimination from Articles of
Fundamental Investment
Restrictions on:
a -- Short sales and margin
purchases and adoption of
non-fundamental restriction
on short sales and margin
purchases 96,478,355 5,188,637 13,231,987 114,898,979
b --Borrowing 96,471,710 5,195,282 13,231,987 114,898,979
c --Joint trading activities 96,500,399 5,166,593 13,231,987 114,898,979
d --Investing in another
investment company 96,565,435 5,101,557 13,231,987 114,898,979
e -- Issuer diversification 96,572,882 5,094,110 13,231,987 114,898,979
f -- Loans to affiliates 96,469,301 5,197,691 13,231,987 114,898,979
</TABLE>
<PAGE>
OTHER INFORMATION (CONTINUED)
UNAUDITED
On May 20, 1999, a special meeting of the shareholders of S&P 500 Index Fund was
held at which the ten directors identified below were elected. The selection of
PricewaterhouseCoopers LLP as independent accountants (Proposal 1), the approval
of changes to the fundamental investment restrictions identified below (Proposal
2) and the approval of an Agreement and Plan of Conversion and Termination
providing for the conversion of the Fund from a separate series of INVESCO
Specialty Funds, Inc. to a separate series of INVESCO Stock Funds, Inc.
(Proposal 3). The following is a report of the votes cast:
<TABLE>
<CAPTION>
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
S & P 500 Index Fund -- Class I
Charles W. Brady 268,955 N/A 0 268,955
Fred A. Deering 268,955 N/A 0 268,955
Mark H. Williamson 268,955 N/A 0 268,955
Dr. Victor L. Andrews 268,955 N/A 0 268,955
Bob R. Baker 268,955 N/A 0 268,955
Lawrence H. Budner 268,955 N/A 0 268,955
Dr. Wendy Lee Gramm 268,955 N/A 0 268,955
Kenneth T. King 268,955 N/A 0 268,955
John W. McIntyre 268,955 N/A 0 268,955
Dr. Larry Soll 268,955 N/A 0 268,955
Proposal 1 268,955 N/A 0 268,955
Proposal 2
Modification of Fundamental
Investment Restrictions on:
a -- Investment objectives of
Realty Fund 267,744 0 1,211 268,955
b --Issuer diversification 267,744 0 1,211 268,955
c --Borrowing securities and
adoption of non-fundamental
restriction on borrowing 267,744 0 1,211 268,955
d --Real estate investments 267,744 0 1,211 268,955
e --Investing in commodities 267,744 0 1,211 268,955
f --Loans 267,744 0 1,211 268,955
g --Underwriting securities 267,744 0 1,211 268,955
h --Industry concentration for
Latin American Growth Fund
only 267,744 0 1,211 268,955
i --Investing in another
investment company 267,744 0 1,211 268,955
Adoption of Fundamental
Restriction on:
j --Issuance of senior securities 267,744 0 1,211 268,955
Proposal 3 268,790 0 165 268,955
</TABLE>
<PAGE>
OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
S & P 500 Index Fund -- Class II
Charles W. Brady 2,119,724 N/A 92,065 2,211,789
Fred A. Deering 2,119,724 N/A 92,065 2,211,789
Mark H. Williamson 2,119,724 N/A 92,065 2,211,789
Dr. Victor L. Andrew 2,119,724 N/A 92,065 2,211,789
Bob R. Baker 2,119,724 N/A 92,065 2,211,789
Lawrence H. Budner 2,119,724 N/A 92,065 2,211,789
Dr. Wendy Lee Gramm 2,119,724 N/A 92,065 2,211,789
Kenneth T. King 2,119,724 N/A 92,065 2,211,789
John W. McIntyre 2,119,724 N/A 92,065 2,211,789
Dr. Larry Soll 2,119,724 N/A 92,065 2,211,789
Proposal 1 2,067,497 24,475 119,816 2,211,788
Proposal 2
Modification of Fundamental
Investment Restrictions on:
a -- Investment objectives of
Realty Fund 1,852,010 116,076 243,703 2,211,789
b --Issuer diversification 1,852,010 116,076 243,703 2,211,789
c --Borrowing securities and
adoption of non-fundamental
restriction on borrowing 1,852,010 116,076 243,703 2,211,789
d --Real estate investments 1,852,010 116,076 243,703 2,211,789
e --Investing in commodities 1,852,010 116,076 243,703 2,211,789
f --Loans 1,852,010 116,076 243,703 2,211,789
g --Underwriting securities 1,852,010 116,076 243,703 2,211,789
h --Industry concentration for
Latin American Growth Fund
only 1,852,010 116,076 243,703 2,211,789
I --Investing in another
investment company 1,852,010 116,076 243,703 2,211,789
Adoption of Fundamental
Restriction on:
j --Issuance of senior securities 1,852,010 116,076 243,703 2,211,789
Proposal 3 1,862,360 127,526 221,903 2,211,789
</TABLE>
<PAGE>
OTHER INFORMATION (CONTINUED)
UNAUDITED
On May 20, 1999, a special meeting of the shareholders of Value Equity Fund was
held at which the ten trustees identified below were elected. The selection of
PricewaterhouseCoopers LLP as independent accountants (Proposal 1), the approval
of changes to the fundamental investment restrictions identified below (Proposal
2) and the approval of an Agreement and Plan of Conversion and Termination
providing for the conversion of Value Equity Fund from a separate series of
INVESCO Value Trust to a separate series of a Maryland Corporation, INVESCO
Stock Funds, Inc. (Proposal 3) were ratified. The following is a report of the
votes cast:
<TABLE>
<CAPTION>
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value Equity Fund
Charles W. Brady 8,979,185 N/A 615,276 9,594,461
Fred A. Deering 8,982,098 N/A 612,363 9,594,461
Mark H. Williamson 8,981,788 N/A 612,673 9,594,461
Dr. Victor L. Andrews 8,983,188 N/A 611,273 9,594,461
Bob R. Baker 8,983,745 N/A 610,716 9,594,461
Lawrence H. Budner 8,982,569 N/A 611,892 9,594,461
Dr. Wendy Lee Gramm 8,980,094 N/A 614,367 9,594,461
Kenneth T. King 8,984,726 N/A 609,735 9,594,461
John W. McIntyre 8,984,460 N/A 610,001 9,594,461
Dr. Larry Soll 8,985,222 N/A 609,239 9,594,461
Proposal 1 8,798,252 202,783 593,424 9,594,459
Proposal 2
Modification of Fundamental
Investment Restrictions on:
a -- Industry concentration
and adoption of certain
non-fundamental restrictions 8,317,684 316,250 960,527 9,594,461
b --Issuer diversification 8,317,684 316,250 960,527 9,594,461
c --Underwriting securities 8,317,684 316,250 960,527 9,594,461
d --Borrowing and adoption of
non-fundamental policy on
borrowing 8,317,684 316,250 960,527 9,594,461
e --Issuance of senior securities 8,317,684 316,250 960,527 9,594,461
f --Real estate investments 8,317,684 316,250 960,527 9,594,461
g --Investing in commodities 8,317,684 316,250 960,527 9,594,461
h --Loans 8,317,684 316,250 960,527 9,594,461
i --Investing in another
investment company and
adoption of non-fundamental
investment policy regarding
investment in securities issued
by other investment companies 8,317,684 316,250 960,527 9,594,461
</TABLE>
<PAGE>
OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value Equity Fund (continued)
Elimination of Fundamental
Investment Restrictions on:
j -- Investing in companies for
the purpose of exercising control
or management 8,317,684 316,250 960,527 9,594,461
k --Mortgaging, pledging or
hypothecating securities 8,317,684 316,250 960,527 9,594,461
l --Short sales and margin
purchases and adoption of
non-fundamental restriction
on short sales and margin
purchases 8,317,684 316,250 960,527 9,594,461
m --Investing in illiquid
securities and adoption of
non-fundamental restriction
on investing in illiquid
securities 8,317,684 316,250 960,527 9,594,461
Proposal 3 8,577,646 72,134 944,681 9,594,459
<PAGE>
APPENDIX A
BOND RATINGS
The following is a description of Moody's and S&P's bond ratings:
Moody's Corporate Bond Ratings
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes, and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B - Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or maintenance of other terms of
the contract over any longer period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
<PAGE>
S&P Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to default and
are dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Articles of Incorporation filed April 2, 1993.(2)
(1) Articles of Amendment to Articles of
Incorporation filed June 26, 1997.(3)
(2) Articles Supplementary to Articles of Incorporation filed
May 18, 1998.(5)
(3) Articles of Amendment of Articles of Incorporation filed
August 28, 1998.(6)
(4) Articles of Amendment to Articles of Incorporation filed
October 29, 1998.(8)
(5) Articles of Amendment to Articles of Incorporation filed
May 24, 1999.(7)
(6) Articles of Amendment to Articles of Incorporation filed
July 15, 1999.(8)
(7) Articles of Transfer of INVESCO Growth Funds, Inc. and
INVESCO Stock Funds, Inc., filed July 15, 1999.
(8) Articles of Transfer of INVESCO Emerging Opportunity
Funds, Inc. and INVESCO Stock Funds, Inc., filed July 15,
1999.
(b) Bylaws, as amended July 21, 1993.(2)
(c) Not applicable.
(d)(1) Investment Advisory Agreement dated February 28, 1997.(3)
(a) Amendment dated June 30, 1998 to Advisory
Agreement.(4)
(b) Amendment dated September 18, 1998 to Advisory
Agreement.(8)
(c) Amendment dated May 13, 1999 to Advisory
Agreement.
(e)(1) General Distribution Agreement dated February 28, 1997.(3)
(2) Distribution Agreement between Registrant and INVESCO
Distributors, Inc. dated September 30, 1997.(4)
(f)(1) Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees.(5)
(g) Custody Agreement between Registrant and State Street Bank
and Trust Company dated July 1, 1993(1)
(1) Amendment to Custody Agreement dated
October 25, 1995.(3)
(2)Data Access Services Addendum.(4)
(3)Additional Fund Letter dated April 15, 1998.(4)
<PAGE>
(4)Additional Fund Letter dated August 27, 1998.(8)
(5)Form of Additional Fund Letter dated August __, 1999.
(h)(1) Transfer Agency Agreement dated February 28, 1997.(3)
(a) Amendment dated October 28, 1998 to Transfer Agency
Agreement.
(2) Administrative Services Agreement between the Fund and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(a) Amendment dated June 29, 1998 to Administrative
Services Agreement.
(b) Amendment dated October 16, 1998 to Administrative
Services Agreement.
(c) Amendment dated May 13, 1999 to Administrative
Services Agreement.
(i)(1) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will, when
sold, be legally issued, fully paid and non-assessable dated
January 16, 1968.(4)
(2) Opinion and consent of counsel with respect to INVESCO
Blue Chip Growth Fund, INVESCO Small Company Growth Fund,
INVESCO S&P 500 Index Fund and INVESCO Value Equity Fund as to
the legality of the securities being registered dated July 14,
1999.(7)
(j) Consent of Independent Accountants.
(k) Not applicable.
(l) Not applicable.
(m) (1) Amended Plan and Agreement of Distribution dated January
1, 1997 adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940.(3)
(n) Not Applicable.
(o)Plan pursuant to Rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO S&P 500 Index Fund adopted
February 3, 1999.
(1)Previously filed with Post-Effective Amendment No. 44 to the Registration
Statement on June 22, 1993, and incorporated by reference herein.
(2)Previously filed with Post-Effective Amendment No. 45 to the Registration
Statement on August 27, 1996 and incorporated by reference herein.
(3)Previously filed with Post-Effective Amendment No. 46 to the Registration
Statement on June 30, 1997, and incorporated by reference herein.
(4)Previously filed with Post-Effective Amendment No. 47 to the Registration
Statement on April 16, 1998, and incorporated by reference herein.
(5)Previously filed with Post-Effective Amendment No. 48 to the Registration
Statement on July 10, 1998, and incorporated by reference herein.
<PAGE>
(6)Previously filed with Post-Effective Amendment No. 49 to the Registration
Statement on August 28, 1998, and incorporated by reference herein.
(7)Previously filed with Post-Effective Amendment No. 50 to the Registration
Statement on July 14, 1999, and incorporated by reference herein.
(8)Previously filed with Post-Effective Amendment No. 51 to the Registration
Statement on July 15, 1999 and incorporated by reference herein.
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.
- --------------------------------------------------------------------------------
Position
Name with Adviser Principal Occupation and Company
Affiliation
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark H. Williamson Chairman, President & Chief Executive
Director and Officer
Officer INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Raymond Roy Cunningham Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ronald L. Grooms Officer Senior Vice President & Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard W. Healey Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
William Ralph Keithler Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Timothy J. Miller Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Glen A. Payne Officer Senior Vice President, Secretary
& General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Marie E. Aro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Stacie Cowell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dawn Daggy-Mangerson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Elroy E. Frye, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian B. Hayward Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Campbell C. Judge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Peter M. Lovell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
James F. Lummanick Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Corey M. McClintock Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Douglas J. McEldowney Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Frederick R. (Fritz) Meyer Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stephen A. Moran Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jon B. Pauley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Anthony R. Rogers Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
James B. Sandidge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Tane T. Tyler Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas R. Wald Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Reagan A. Shopp Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kent T. Schmeckpeper Officer Assistant Vice President
Account Relationship Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
ITEM 27.(A) PRINCIPAL UNDERWRITERS
INVESCO Bond Funds, Inc.
INVESCO Combination Stock & Bond Funds, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
INVESCO Variable Investment Funds, Inc.
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter the Fund
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
<PAGE>
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Timothy J. Miller Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
Pamela J. Piro Assistant Treasurer Assistant Treasurer
7800 E. Union Avenue
Denver, CO 80237
Judy P. Wiese Vice President Asst. Secretary
7800 E. Union Avenue and Assistant
Denver, CO 80237 Secretary
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 certifies that it meets all of the requirements
for effectiveness of this registration statement under Rule 485(b) under the
Securities Act and 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 31st day of August, 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(7) 213
a(8) 216
d(1)(c) 219
g(5) 221
h(1)(a) 222
h(2)(a) 223
h(2)(b) 224
h(2)(c) 225
j 227
o 228
</TABLE>
ARTICLES OF TRANSFER
OF
INVESCO GROWTH FUNDS, INC.
AND
INVESCO STOCK FUNDS, INC.
These Articles of Transfer are entered into and effective as of July 15,
1999 pursuant to the provisions of Section 3-109 of the Corporations and
Associations Article of the Annotated Code of Maryland, by and between the
undersigned corporation, INVESCO Stock Funds, Inc., a Maryland corporation, and
the undersigned corporation, INVESCO Growth Funds, Inc., a Maryland corporation
on behalf of its sole series, INVESCO Blue Chip Growth Fund ("Fund"), with
respect to the transfer of all the assets and liabilities of the Fund in
exchange for shares of common stock in INVESCO Blue Chip Growth Fund, a series
of INVESCO Stock Funds, Inc. in accordance with an Agreement and Plan of
Conversion and Termination made as of March 21, 1999 ("Plan").
FIRST: INVESCO Growth Funds, Inc. agrees to transfer all of its
property and assets to INVESCO Stock Funds, Inc. in accordance with the Plan.
SECOND: INVESCO Stock Funds, Inc. is a corporation incorporated under
the laws of the State of Maryland.
THIRD: INVESCO Blue Chip Growth Fund is the only series of INVESCO Growth
Funds, Inc., a corporation organized under the laws of the State of Maryland.
FOURTH: The address and principal place of business of INVESCO Growth
Funds, Inc. is:
7800 East Union Avenue
Denver, Colorado 80237
FIFTH: The principal office of INVESCO Stock Funds, Inc. in the State
of Maryland is:
c/o The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
SIXTH: The principal office of INVESCO Growth Funds, Inc. in the State
of Maryland is:
c/o The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
SEVENTH: Neither INVESCO Stock Funds, Inc. nor INVESCO Growth Funds,
Inc. owns an interest in land located in the State of Maryland.
EIGHTH: The terms and conditions of the transfer as set forth in the Plan
and incorporated by reference into these Articles were advised, authorized, and
approved in the manner and by any vote required by INVESCO Stock Funds, Inc.'s
Articles of Incorporation, as amended, and the Maryland General Corporation Law,
and INVESCO Growth Funds, Inc.'s Articles of Incorporation, as amended, and the
Maryland General Corporation Law. The Plan was approved by INVESCO Growth Funds,
Inc.'s Board of Directors at a meeting on August 5, 1998, and the holders of a
majority of the outstanding shares of INVESCO Growth Funds, Inc.'s common stock
entitled to vote at a meeting of shareholders on May 20, 1999. The Plan was
approved by INVESCO Stock Funds, Inc.'s Board of Directors at a meeting on
August 5, 1998; no approval by shareholders of INVESCO Stock Funds, Inc. was
required.
<PAGE>
NINTH: The nature and amount of the consideration paid by INVESCO
Stock Funds, Inc. for the transfer of assets of INVESCO Blue Chip Growth Fund
to INVESCO Stock Funds, Inc. has been determined in accordance with the terms
and conditions of the Plan.
IN WITNESS WHEREOF, INVESCO Stock Funds, Inc. and INVESCO Growth Funds,
Inc., on behalf of INVESCO Blue Chip Growth Fund, has each caused these presents
to be signed in its name and on its behalf by the undersigned officers.
INVESCO STOCK FUNDS, INC.,
on behalf of INVESCO Blue Chip
Growth Fund
Attest:
By: /s/ Glen A. Payne By: /s/ Mark H. Williamson
----------------------- ------------------------
Glen A. Payne, Mark H. Williamson,
Secretary President
INVESCO GROWTH FUNDS, INC.,
on behalf of INVESCO Blue Chip
Growth Fund
Attest:
By: /s/ Glen A. Payne By: /s/ Mark H. Williamson
------------------------ ------------------------
Glen A. Payne, Mark H. Williamson,
Secretary President
THE UNDERSIGNED, the President of INVESCO Stock Funds, Inc., a corporation
organized under the laws of the State of Maryland on April 2, 1993, who executed
on behalf of said Corporation the foregoing Articles of Transfer of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Articles of Transfer to be the corporate act of
said Corporation and further certifies that to the best of his/her knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
INVESCO STOCK FUNDS, INC.
/s/ Mark H. Williamson
----------------------------------------
Mark H. Williamson,
President
<PAGE>
THE UNDERSIGNED, the President of INVESCO Growth Funds, Inc., a
corporation organized under the laws of the State of Maryland on January 8,
1935, who executed on behalf of said Corporation the foregoing Articles of
Transfer of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said Corporation, the foregoing Articles of Transfer to be
the corporate act of said Corporation and further certifies that to the best of
his/her knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under the penalties of perjury.
INVESCO GROWTH FUNDS, INC.
/s/ Mark H. Williamson
-----------------------------------
Mark H. Williamson,
President
ARTICLES OF TRANSFER
OF
INVESCO EMERGING OPPORTUNITY FUNDS, INC.
AND
INVESCO STOCK FUNDS, INC.
These Articles of Transfer are entered into and effective as of July 15,
1999 pursuant to the provisions of Section 3-109 of the Corporations and
Associations Article of the Annotated Code of Maryland, by and between the
undersigned corporation, INVESCO Stock Funds, Inc., a Maryland corporation, and
the undersigned corporation, INVESCO Emerging Opportunity Funds, Inc., a
Maryland corporation on behalf of its sole series, INVESCO Small Company Growth
Fund ("Fund"), with respect to the transfer of all the assets and liabilities of
the Fund in exchange for shares of common stock in INVESCO Small Company Growth
Fund, a series of INVESCO Stock Funds, Inc. in accordance with an Agreement and
Plan of Conversion and Termination made as of March 21, 1999 ("Plan").
FIRST: INVESCO Emerging Opportunity Funds, Inc. agrees to transfer all
of its property and assets to INVESCO Stock Funds, Inc. in accordance with
the Plan.
SECOND: INVESCO Stock Funds, Inc. is a corporation incorporated under
the laws of the State of Maryland.
THIRD: INVESCO Small Company Growth Fund is the only series of INVESCO
Emerging Opportunity Funds, Inc., a corporation organized under the laws of the
State of Maryland.
FOURTH: The address and principal place of business of INVESCO
Emerging Opportunity Funds, Inc. is:
7800 East Union Avenue
Denver, Colorado 80237
FIFTH: The principal office of INVESCO Stock Funds, Inc. in the State
of Maryland is:
c/o The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
SIXTH: The principal office of INVESCO Growth Funds, Inc. in the State
of Maryland is:
c/o The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
SEVENTH: Neither INVESCO Stock Funds, Inc. nor INVESCO Emerging
Opportunity Funds, Inc. owns an interest in land located in the State of
Maryland.
EIGHTH: The terms and conditions of the transfer as set forth in the Plan
and incorporated by reference into these Articles were advised, authorized, and
approved in the manner and by any vote required by INVESCO Stock Funds, Inc.'s
Articles of Incorporation, as amended, and the Maryland General Corporation Law,
and INVESCO Emerging Opportunity Funds, Inc.'s Articles of Incorporation, as
amended, and the Maryland General Corporation Law. The Plan was approved by
INVESCO Emerging Opportunity Funds, Inc.'s Board of Directors at a meeting on
February 3, 1999, and the holders of a majority of the outstanding shares of
INVESCO Emerging Opportunity Funds, Inc.'s common stock entitled to vote at a
meeting of shareholders on May 20, 1999. The Plan was approved by INVESCO Stock
Funds, Inc.'s Board of Directors at a meeting on February 3, 1999; no approval
by shareholders of INVESCO Stock Funds, Inc. was required.
<PAGE>
NINTH: The nature and amount of the consideration paid by INVESCO
Stock Funds, Inc. for the transfer of assets of INVESCO Small Company Growth
Fund to INVESCO Stock Funds, Inc. has been determined in accordance with the
terms and conditions of the Plan.
IN WITNESS WHEREOF, INVESCO Stock Funds, Inc. and INVESCO Emerging
Opportunity Funds, Inc., on behalf of INVESCO Small Company Growth Fund, has
each caused these presents to be signed in its name and on its behalf by the
undersigned officers.
INVESCO STOCK FUNDS, INC.,
on behalf of INVESCO Small Company
Growth Fund
Attest:
By: /s/ Glen A. Payne By: /s/ Mark H. Williamson
---------------------------- -------------------------------
Glen A. Payne, Mark H. Williamson,
Secretary President
INVESCO EMERGING OPPORTUNITY
FUNDS, INC., on behalf of INVESCO
Small Company Growth Fund
Attest:
By: /s/ Glen A. Payne By: /s/ Mark H. Williamson
--------------------------- -------------------------------
Glen A. Payne, Mark H. Williamson,
Secretary President
THE UNDERSIGNED, the President of INVESCO Stock Funds, Inc., a corporation
organized under the laws of the State of Maryland on April 2, 1993, who executed
on behalf of said Corporation the foregoing Articles of Transfer of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Articles of Transfer to be the corporate act of
said Corporation and further certifies that to the best of his/her knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
INVESCO STOCK FUNDS, INC.
/s/ Mark H. Williamson
---------------------------------------
Mark H. Williamson,
President
<PAGE>
THE UNDERSIGNED, the President of INVESCO Emerging Opportunity Funds,
Inc., a corporation organized under the laws of the State of Maryland on
December 6, 1990, who executed on behalf of said Corporation the foregoing
Articles of Transfer of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles of Transfer to be the corporate act of said Corporation and further
certifies that to the best of his/her knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
INVESCO EMERGING OPPORTUNITY
FUNDS, INC.
/s/ Mark H. Williamson
---------------------------------------
Mark H. Williamson,
President
AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO Dynamics Fund, Inc. a Maryland corporation (the "Fund") and
INVESCO Funds Group, Inc., a Delaware corporation (the "Adviser") as of the 28th
day of February 1997 (the "Agreement").
WHEREAS, effective as of June 26, 1997, the Fund changed its name to
"INVESCO Capital Appreciation Funds, Inc.;" and
WHEREAS, effective as of August 28, 1998, the Fund changed its name to
"INVESCO Equity Funds, Inc.;" and
WHEREAS, effective as of October 29, 1998, the Fund has changed its name
to "INVESCO Stock Funds, Inc.;" and
WHEREAS, the Fund and the Adviser are affiliated companies; and
WHEREAS, the Fund desires to add additional breakpoints to the existing
advisory fees that it pays to the Adviser for the management of the Fund's
separate portfolios of investments, the INVESCO Dynamics Fund, the INVESCO
Growth & Income Fund and the INVESCO Endeavor Fund (each a "Portfolio");
NOW, THEREFORE, the name of the Fund is "INVESCO Stock Funds, Inc.;" and
In consideration of the premises and mutual covenants contained in the
Agreement, it is agreed that the first paragraph of the provisions in paragraph
4 of the Agreement entitled "Compensation of the Adviser" is hereby amended to
read as follows:
For the services rendered and the charges and expenses to be assumed
by the Adviser hereunder, the Fund shall pay to the Adviser an advisory
fee which will be computed on a daily basis and paid as of the last day of
each month, using for each daily calculation of the most recently
determined net asset value of each Portfolio in the Fund, as determined by
valuations made in accordance with the Fund's procedure for calculating
the Portfolios' net asset value as described in each of the Portfolio's
Prospectus and/or Statement of Additional Information. On an annual basis,
the advisory fee applicable to each Portfolio shall be as follows:
(a) INVESCO Growth & Income Fund and INVESCO
Endeavor Fund: 0.75% of the
first $500 million of each Portfolio's average net
assets, 0.65% of the next $500 million of each
Portfolio's average net assets, 0.55% of each
Portfolio's average net assets from $1 billion,
0.45% of each Portfolio's average net assets from
$2 billion, 0.40% of each Portfolio's average net
assets from $4 billion, 0.375% of each Portfolio's
average net assets from $6 billion, and 0.35% of
each Portfolio's average net assets over $8
billion.
(b) INVESCO Dynamics Fund: 0.60% of the first $350
million of the Portfolio's average net assets,
0.55% of the next $350 million of the Portfolio's
average net assets, 0.50% of the Portfolio's
average net assets from $700 million, 0.45% of the
Portfolio's average net assets from $2 billion,
0.40% of the Portfolio's average net assets from
$4 billion, 0.375% of the Portfolio's average net
assets from $6 billion, and 0.35% of the Portfolio's
average net assets over $8 billion.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of
the 13th day of May, 1999.
INVESCO FUNDS GROUP, INC.
By: /s/ Mark H. Williamson
----------------------------------
Mark H. Williamson,
President
ATTEST:
/s/ Glen A. Payne
- --------------------------------
Glen A. Payne,
Secretary
INVESCO STOCK FUNDS, INC.
By: /s/ Ronald L. Grooms
----------------------------------
Ronald L. Grooms,
Treasurer & Chief Financial &
Accounting Officer
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, 1999
Mr. Christopher J. Meyers
Assistant Vice President
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
RE: INVESCO Stock Funds, Inc.
Dear Mr. Meyers:
This is to advise you that INVESCO Blue Chip Growth Fund, the sole series of
INVESCO Growth Funds, Inc., INVESCO Small Company Growth Fund, the sole series
of INVESCO Emerging Opportunity Funds, Inc.; INVESCO S&P 500 Index Fund, a
series of INVESCO Specialty Funds, Inc. and INVESCO Value Equity, the sole
series of INVESCO Value Trust, have been reorganized into INVESCO Stock Funds,
Inc. (the "Company") effective July 15, 1999. In accordance with the Additional
Funds provision in Paragraph 17 of the Custodian Contract dated July 1, 1993
between the Company and State Street Bank and Trust Company, the Company hereby
requests that you act as Custodian for these series under the terms of the
Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Company and retaining one copy for your
records.
Sincerely,
/s/ Alan I. Watson
- ------------------------------
Alan I. Watson
Assistant Secretary
Agreed to this _____ day of August, 1999.
STATE STREET BANK AND TRUST COMPANY
By: ___________________________________
Vice President
AMENDMENT TO TRANSFER AGENCY AGREEMENT
This is an Amendment to the Transfer Agency Agreement made and entered
into between INVESCO Funds Group, Inc., a Delaware corporation ("INVESCO"), and
INVESCO Dynamics Fund, Inc., a Maryland corporation (the "Fund") as of the 28th
day of February, 1997 (the "Agreement").
WHEREAS, effective as of June 26, 1997, the Fund has changed its name to
"INVESCO Capital Appreciation Funds, Inc."; and
WHEREAS, effective as of August 28, 1998, the Fund has changed its name to
"INVESCO Equity Funds, Inc."; and
WHEREAS, effective as of October 29, 1998, the Fund has changed its name
to "INVESCO Stock Funds, Inc.;"
NOW, THEREFORE, the name of the Fund is "INVESCO Stock Funds, Inc."
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the 29th day of October, 1998.
INVESCO FUNDS GROUP, INC.
By: /s/ William J. Galvin
----------------------------------
William J. Galvin
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- ------------------------------
Glen A. Payne
Secretary
INVESCO DYNAMICS FUND, INC.
By: /s/ Ronald L. Grooms
----------------------------------
Ronald L. Grooms
Treasurer & Chief Financial
Officer & Accounting Officer
ATTEST:
/s/ Glen A. Payne
- ------------------------------
Glen A. Payne
Secretary
AMENDMENT TO ADMINISTRATIVE SERVICES AGREEMENT
This is an Amendment to the Administrative Services Agreement made and
entered into between INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), and INVESCO Capital Appreciation Funds, Inc., a Maryland
corporation (the "Fund") as of the 28th day of February, 1997 (the "Agreement").
WHEREAS, the Fund is engaged in business as an open-end management
investment company, is registered as such under the Investment Company Act of
1940, as amended (the "Act"), and is authorized to issue shares representing
interests in separate portfolios of investments (the "Portfolios"); and
NOW, THEREFORE, the Fund is authorized to issue shares representing
interests in the Portfolio, the INVESCO Growth & Income Fund.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of
the 29th day of June, 1998.
INVESCO FUNDS GROUP, INC.
By: /s/ William J. Galvin
----------------------------------
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- -------------------------------
Glen A. Payne
Secretary
INVESCO CAPITAL APPRECIATION FUNDS,
INC.
By: /s/ Ronald L. Grooms
-----------------------------------
Ronald L. Grooms
Treasurer & Chief Financial
Officer & Accounting Officer
ATTEST:
/s/ Glen A. Payne
- --------------------------------
Glen A. Payne
Secretary
AMENDMENT TO TRANSFER AGENCY AGREEMENT
This is an Amendment to the Transfer Agency Agreement made and entered
into between INVESCO Funds Group, Inc., a Delaware corporation ("INVESCO"), and
INVESCO Dynamics Fund, Inc., a Maryland corporation (the "Fund") as of the 28th
day of February, 1997 (the "Agreement").
WHEREAS, effective as of August 28, 1998, the Fund has changed its name to
"INVESCO Equity Funds, Inc."; and
WHEREAS, the Fund is engaged in business as an open-end management
investment company, is registered as such under the Investment Company Act of
1940, as amended (the "Act") and is authorized to issue shares representing
interests in separte portfolios of investments (the "Portfolios");
NOW, THEREFORE, the name of the Fund is "INVESCO Equity Funds, Inc.";
and
The Fund is authorized to issue shares representing interests in the
Portfolio, the INVESCO Endeavor Fund.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the 16th day of October, 1998.
INVESCO FUNDS GROUP, INC.
By: /s/ William J. Galvin
----------------------------------
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- ------------------------------
Glen A. Payne
Secretary
INVESCO CAPITAL APPRECIATION FUNDS,
INC.
By: /s/ Ronald L. Grooms
----------------------------------
Ronald L. Grooms
Treasurer & Chief Financial
Officer & Accounting Officer
ATTEST:
/s/ Glen A. Payne
- -------------------------------
Glen A. Payne
Secretary
AMENDMENT TO ADMINISTRATIVE SERVICES AGREEMENT
This is an Amendment to the Administrative Services Agreement made and
entered into between INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), and INVESCO Dynamics Fund, Inc., a Maryland corporation (the
"Fund") as of the 28th day of February, 1997 (the "Agreement").
WHEREAS, effective as of October 29, 1998, the Fund has changed its name
to "INVESCO Stock Funds, Inc.;"
WHEREAS, the Fund and INVESCO are affiliated companies; and
WHEREAS, the Fund desires to amend the amount of payment that it pays to
INVESCO for certain administrative, sub-accounting and recordkeeping services as
described in the Agreement;
NOW, THEREFORE, the name of the Fund is "INVESCO Stock Funds, Inc."; and
In consideration of the premises and mutual covenants contained in the
Agreement, it is agreed that paragraph 5 of the Agreement is hereby amended to
read as follows:
For the services rendered, facilities furnished, and expenses
assumed by INVESCO under this Agreement, the Fund shall pay to INVESCO a
$10,000 per year per Portfolio base fee, plus an additional fee, computed
on a daily basis and paid on a monthly basis. For purposes of each daily
calculation of this additional fee, the most recently determined net asset
value of each Portfolio, as determined by a valuation made in accordance
with the Fund's procedure for calculating each Portfolio's net asset value
as described in the Portfolios' Prospectus and/or Statement of Additional
Information, shall be used. The additional fee to INVESCO under this
Agreement shall be computed at the annual rate of 0.045% of each
Portfolio's daily net assets as so determined. During any period when the
determination of a Portfolio's net asset value is suspended by the
directors of the Fund, the net asset value of a share of that Portfolio as
of the last business day prior to such suspension shall, for the purpose
of this Paragraph 5, be deemed to be the net asset value at the close of
each succeeding business day until it is again determined.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of
the 13th day of May, 1999.
INVESCO FUNDS GROUP, INC.
By: /s/ Mark H. Williamson
--------------------------------
Mark H. Williamson
President
ATTEST:
/s/ Glen A. Payne
- ---------------------------
Glen A. Payne
Secretary
INVESCO EQUITY FUNDS, INC.
By: /s/ Ronald L. Grooms
--------------------------------
Ronald L. Grooms
Treasurer & Chief Financial
Officer & Accounting Officer
ATTEST:
/s/ Glen A. Payne
- ---------------------------
Glen A. Payne
Secretary
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting parts of this Post-Effective Amendment No. 52 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated August
25, 1999, relating to the financial statements and financial highlights of
INVESCO Blue Chip Growth Fund (formerly the sole portfolio constituting INVESCO
Growth Fund, Inc.), INVESCO Dynamics Fund, INVESCO Endeavor Fund, INVESCO Growth
and Income Fund, INVESCO S&P 500 Index Fund (formerly one of the portfolios
constituting INVESCO Specialty Funds, Inc.), INVESCO Small Company Growth Fund
(formerly the sole portfolio constituting INVESCO Emerging Opportunity Funds,
Inc.) and INVESCO Value Equity Fund (formerly one of the portfolios constituting
INVESCO Value Trust Funds, Inc.), collectively INVESCO Stock Funds, Inc.
(formerly known as INVESCO Equity Funds, Inc. which was formerly known as
INVESCO Capital Appreciation Funds, Inc.), which appears in such Statement of
Additional Information, and to the incorporation by reference of our report into
the Prospectus which constitutes part of this Registration Statement. We also
consent to the references to us under the heading "Financial Highlights" in the
Prospectus and under the heading "Independent Accountants" in the Statement of
Additional Information.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Denver, Colorado
August 31, 1999
INVESCO S&P 500 INDEX FUND PLAN PURSUANT TO RULE 18G-3
July 13, 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
<PAGE>
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
<PAGE>
(5) shall have in all other respects the same rights and
obligations as each other class.
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses of
the Fund or of one or more of its classes, but is not required to do so or
to continue to do so for any period of time. The quarterly report by the
Advisor to the Directors of Fund expense reimbursements shall disclose any
reimbursements that are not equal for all classes of the Fund.
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
<PAGE>
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Stock Funds, Inc. (the
"Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report
required by the Company's 12b-1 Plan. The report shall include
information on (i) the amounts expended pursuant to the 12b-1 Plan,
(ii) the purposes for which such expenditures were made and (iii)
the amount of INVESCO's unpaid distribution costs (if recovery of
such costs in future periods is permitted by that 12b-1 Plan), taking
into account 12b-1 Plan payments paid to INVESCO.
<PAGE>
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 February 3, 1999.
/s/ Glen A. Payne
-----------------------------------------
Glen A. Payne, Secretary
