As filed on January 31, 2000 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. 54 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 28 X
INVESCO STOCK FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
------------
Copies to:
Ronald M. Feiman, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
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Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
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.
<PAGE>
PROSPECTUS | February 15, 2000
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YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
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INVESCO STOCK FUNDS, INC.
INVESCO BLUE CHIP GROWTH FUND--CLASS C
INVESCO DYNAMICS FUND--CLASS C
INVESCO ENDEAVOR FUND--CLASS C
INVESCO GROWTH & INCOME FUND--CLASS C
INVESCO SMALL COMPANY GROWTH FUND--CLASS C
INVESCO VALUE EQUITY FUND--CLASS C
SIX MUTUAL FUNDS SEEKING LONG-TERM CAPITAL APPRECIATION. CLASS C SHARES ARE SOLD
PRIMARILY THROUGH THIRD PARTIES, SUCH AS BROKERS, BANKS, AND FINANCIAL PLANNERS.
TABLE OF CONTENTS
Investment Goals, Strategies And Risks...........3
Fund Performance.................................6
Fees And Expenses................................9
Investment Risks................................11
Risks Associated With Particular Investments....12
Temporary Defensive Positions...................16
Portfolio Turnover..............................17
Fund Management.................................17
Portfolio Managers..............................18
Potential Rewards...............................19
Share Price.....................................20
How To Buy Shares...............................20
How To Sell Shares..............................22
Taxes...........................................23
Dividends And Capital Gain Distributions........23
Financial Highlights............................25
No dealer, sales person, or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and you should not rely on such other information or
representations.
[INVESCO ICON]
INVESCO
The Securities and Exchange Commission has not approved or disapproved the
shares of these Funds. Likewise, the Commission has not determined if this
Prospectus is truthful or complete. Anyone who tells you otherwise is committing
a federal crime.
<PAGE>
THIS PROSPECTUS WILL TELL YOU MORE ABOUT:
[KEY ICON} INVESTMENT GOALS & STRATEGIES
[ARROWS ICON] POTENTIAL INVESTMENT RISKS
[GRAPH ICON] PAST PERFORMANCE
[INVESCO ICON] WORKING WITH INVESCO
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[KEY ICON] [ARROWS ICON] INVESTMENT GOALS, STRATEGIES AND RISKS
FACTORS COMMON TO ALL THE FUNDS
INVESCO Funds Group, Inc. ("INVESCO") is the investment adviser for the Funds.
Together with our affiliated companies, we at INVESCO direct all aspects of the
management of the Funds.
This Prospectus contains important information about the Funds' Class C shares,
which are sold primarily through third parties, such as brokers, banks, and
financial planners. Each Fund also offers one or more additional classes of
shares directly to the public through separate prospectuses. Those other classes
of shares have lower expenses, with resulting positive effects on their
performance. You can choose the class of shares that is best for you, based on
how much you plan to invest and other relevant factors discussed in How To Buy
Shares. To obtain additional information about other classes of shares, contact
INVESCO Distributors, Inc. ("IDI") at 1-800-328-2234 or your broker, bank, or
financial planner who is offering the Class C shares offered in this Prospectus.
FOR MORE DETAILS ABOUT EACH FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK,
PLEASE SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
The Funds attempt to make your investment grow. The Funds are actively managed.
The Funds invest primarily in equity securities that INVESCO believes will rise
in price faster than other securities, as well as in options and other
investments whose values are based upon the values of equity securities. They
can also invest in debt securities.
All of the Funds (except Value Equity Fund) are managed in the growth style. At
INVESCO, growth investing starts with research from the "bottom up," and focuses
on company fundamentals and growth prospects.
We require that securities purchased for the Funds meet the following standards:
o Exceptional growth: The markets and industries they represent are growing
significantly faster than the economy as a whole.
o Leadership: They are leaders -- or emerging leaders -- in these markets,
securing their position through technology, marketing, distribution or some
other innovative means.
o Financial validation: Their returns -- in the form of sales unit growth,
rising operating margins, internal funding and other factors -- demonstrate
exceptional growth and leadership.
<PAGE>
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.
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.
[KEY ICON] INVESCO BLUE CHIP GROWTH FUND--CLASS C
The Fund tries to buy securities that will increase in value over the long-term;
current income is a secondary goal.
The Fund invests primarily in common stocks of large companies with market
capitalizations of more than $15 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 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.
Although the Fund is subject to a number of risks that could affect its
performance, its principal risk is market risk - that is, that the prices of the
securities in its portfolio will rise and fall due to price movements in the
securities markets, and that the securities held in the Fund's portfolio may
decline in value more than the overall securities markets.
[KEY ICON] INVESCO DYNAMICS FUND--CLASS C
This Fund attempts to make your investment grow. It invests primarily in common
stocks of mid-sized U.S. companies -- those with market capitalizations between
$2 billion and $15 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
<PAGE>
company's securities and general market and monetary conditions. Consequently,
the Fund's investments are usually bought and sold relatively frequently.
While the Fund generally invests in mid-sized companies, the Fund sometimes
invests in the securities of smaller companies. The prices of these securities
tend to move up and down more rapidly than the securities prices of larger, more
established companies, and the price of Fund shares tends to fluctuate more than
it would if the Fund invested in the securities of larger companies.
[KEY ICON] INVESCO ENDEAVOR FUND--CLASS C
The Fund attempts to make your investment grow. It uses an aggressive strategy
and invests primarily in common stocks. The Fund invests in companies of all
sizes and also has the flexibility to invest in other types of securities,
including preferred stocks, convertible securities, warrants, bonds and other
debt securities.
The Fund's strategy relies on many short-term factors including current
information about a company, investor interest, price movements of a company's
securities and general market and monetary conditions. Consequently, the Fund's
investments are usually bought and sold relatively frequently.
The Fund's investments are not limited to companies of a particular size. It
invests in the securities of smaller companies, including companies just
entering the securities marketplace with initial public offerings. The prices of
these securities tend to move up and down more rapidly than the securities
prices of larger, more established companies. When the Fund concentrates its
investments in the securities of smaller companies, the price of Fund shares
tends to fluctuate more than it would if the Fund invested in the securities of
larger companies.
[KEY ICON] INVESCO GROWTH & INCOME FUND--CLASS C
The Fund attempts to obtain a high rate of total return. Income on investments
(dividends and interest), plus increases in the value of investments, make up
total return. The Fund invests most of its assets in common stocks, preferred
stocks and securities convertible into common stocks. The Fund's core
investments are in well-established, large growth companies with a strong record
of paying dividends. The Fund may also invest in securities which do not pay
dividends but that INVESCO believes have the potential to increase in value,
regardless of the potential for dividends.
The Fund's strategy relies on many short-term factors including current
information about a company, investor interest, price movements of a company's
securities and general market and monetary conditions. Consequently, the Fund's
investments are usually bought and sold relatively frequently.
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.
<PAGE>
[KEY ICON] INVESCO SMALL COMPANY GROWTH FUND-- CLASS C
The Fund seeks long-term capital growth. Most holdings are in
small-capitalization companies -- those with market capitalizations under $2
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, and/or structural changes in the economy.
Investments in small, developing companies carry greater risk than investments
in larger, more established companies. Developing companies generally face
intense competition, and have a higher rate of failure than larger companies. On
the other hand, large companies were once small companies themselves, and the
growth opportunities of some small companies may be quite high.
[KEY ICON] INVESCO VALUE EQUITY FUND--CLASS C
The Fund seeks high total return from capital appreciation and current income.
The portfolio emphasizes high-quality, larger-capitalization companies which are
temporarily out of favor with investors. Our value-based process evaluates
numerous factors on a current and historical basis, seeking undiscovered values
in the market. The philosophy of value investing is based upon the belief that
certain securities are undervalued by the market. As such, when the market
"discovers" these securities, their value should increase.
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 extended
periods of time. Value-oriented funds may underperform when another investing
style is in favor.
[GRAPH ICON] FUND PERFORMANCE
Since the Funds' Class C shares are not offered until February 15, 2000, the bar
charts below show the Funds' Investor Class shares' actual yearly performance
for the years ended December 31 (commonly known as their "total return") over
the past decade or since inception. Investor Class shares are not offered in
this Prospectus. INVESTOR CLASS AND CLASS C RETURNS WOULD BE SIMILAR BECAUSE
BOTH CLASSES OF SHARES INVEST IN THE SAME PORTFOLIO OF SECURITIES. THE RETURNS
OF THE CLASSES WOULD DIFFER, HOWEVER, TO THE EXTENT OF DIFFERING LEVELS OF
EXPENSES. IN THIS REGARD, THE BAR CHARTS DO NOT REFLECT CONTINGENT DEFERRED
SALES CHARGES OR ASSET BASED SALES CHARGES IN EXCESS OF 0.25% OF NET ASSETS; IF
THEY DID, THE TOTAL RETURNS SHOWN WOULD BE LOWER. The table below shows average
annual total returns for various periods ended December 31 for each Fund's
Investor Class shares 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 Investor Class
shares' total 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.
<PAGE>
<TABLE>
<CAPTION>
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BLUE CHIP GROWTH FUND - INVESTOR CLASS
ACTUAL ANNUAL TOTAL RETURN(1),(2)
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'90 '91 '92 '93 '94 '95 '96 '97 '98 '99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1.18%) 42.05% 2.88% 18.01% (8.80%) 29.54% 20.96% 27.22% 41.72% 38.49%
Best Calendar Qtr. 12/99 31.17%
Worst Calendar Qtr. 9/90 (16.37%)
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DYNAMICS FUND - INVESTOR CLASS
ACTUAL ANNUAL TOTAL RETURN(1),(2)
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'90 '91 '92 '93 '94 '95 '96 '97 '98 '99
(6.35%) 67.00% 13.15% 19.10% (1.95%) 37.55% 15.65% 24.09% 23.25% 71.80%
Best Calendar Qtr. 12/99 38.83%
Worst Calendar Qtr. 9/90 (19.61%)
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</TABLE>
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INVESCO Endeavor Fund--Investor Class
Actual Annual Total Return(1),(2),(3)
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'99
84.21%
Best Calendar Qtr. 12/9 39.80%
Worst Calendar Qtr. 9/99 4.52%
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Growth & Income Fund--Investor Class
Actual Annual Total Return(1),(2),(4)
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'99
43.48%
Best Calendar Qtr. 12/98 30.79%
Worst Calendar Qtr. 9/99 0.07%
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<PAGE>
<TABLE>
<CAPTION>
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SMALL COMPANY GROWTH FUND - INVESTOR CLASS
ACTUAL ANNUAL TOTAL RETURN(1),(2),(5)
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<S> <C> <C> <C> <C> <C> <C> <C>
'92 '93 '94 '95 '96 '97 '98 '99
25.27% 23.38% (3.74%) 30.02% 23.38% 11.62% 18.31% 81.64%
Best Calendar Qtr. 12/99 46.68%
Worst Calendar Qtr. 9/98 (16.94%)
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VALUE EQUITY FUND - INVESTOR CLASS
ACTUAL ANNUAL TOTAL RETURN(1),(2)
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'90 '91 '92 '93 '94 '95 '96 '97 '98 '99
(5.80%) 35.84% 4.98% 10.43% 4.04% 30.60% 18.48% 28.00% 15.05% 1.12%
Best Calendar Qtr. 3/91 18.10%
Worst Calendar Qtr. 9/90 (15.24%)
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</TABLE>
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AVERAGE ANNUAL TOTAL RETURN(1)
AS OF 12/31/99
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10 YEARS OR
1 YEAR 5 YEARS SINCE INCEPTION
Blue Chip Growth Fund - Investor Class 38.49% 31.37% 19.78%
Endeavor Fund - Investor Class 84.21% N/A 121.45%(3)
Growth & Income Fund - Investor Class 43.48% N/A 60.83%(4)
Value Equity Fund - Investor Class 1.12% 18.17% 13.53%
S&P 500 Composite Index(6) 21.03% 28.54% 18.19%
Small Company Growth Fund
Investor Class 81.64% 29.08% 23.91%(5)
Russell 2000 Index(6) 21.26% 16.69% 13.40%
Dynamics Fund - Investor Class 71.80% 33.11% 24.06%
S&P MidCap 400 Index(6) 14.72% 23.05% 17.32%
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(1) Total return figures include reinvested dividends and capital gain
distributions, and include the effect of each Fund's expenses.
<PAGE>
(2) The total returns are for Investor Class shares that are
not offered in this Prospectus. Total returns of Class C shares will differ only
to the extent that the classes do not have the same expenses.
(3) The Fund commenced investment operations on October 28, 1998.
(4) The Fund commenced investment operations on July 1, 1998.
(5) The Fund commenced investment operations on December 27, 1991.
(6) The S&P MidCap 400 Index is an unmanaged index indicative of domestic
mid-capitalization stocks. The S&P 500 Index is an unmanaged index considered
representative of the performance of the broad U.S. stock market. The Russell
2000 Index is an unmanaged index considered representative of the performance 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.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds:
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
CLASS C SHARES
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) 1.00%*
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends and Other Distributions None
Redemption Fee (as a percentage of amount redeemed) None
Exchange Fee None
* A 1% contingent deferred sales charge is charged on redemptions or exchanges
of shares held thirteen months or less, other than shares acquired through
reinvestment of dividends and other distributions.
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
BLUE CHIP GROWTH FUND--CLASS C
Management Fees 0.55%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses 0.26%
-----
Total Annual Fund Operating Expenses 1.81%
=====
DYNAMICS FUND--CLASS C
Management Fees 0.52%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses (2) 0.27%
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Total Annual Fund Operating Expenses(2) 1.79%
=====
ENDEAVOR FUND--CLASS C
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) 0.49%
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Total Annual Fund Operating Expenses(2) 2.24%
=====
GROWTH & INCOME FUND--CLASS C
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) 0.75%
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Total Annual Fund Operating Expenses(2) 2.50%
=====
<PAGE>
SMALL COMPANY GROWTH FUND--CLASS C
Management Fees 0.72%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) 0.65%
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Total Annual Fund Operating Expenses(2) 2.37%
=====
VALUE EQUITY FUND--CLASS C
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) 0.40%
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Total Annual Fund Operating Expenses(2) 2.15%
=====
(1) Because the Funds' Class C shares pay 12b-1 distribution and service fees
which are based upon each Fund's assets, if you own shares of a Fund for a
long period of time, you may pay more than the economic equivalent of the
maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
(2) Based on estimated expenses for the current fiscal year which may be more
or less than actual expenses. Actual expenses are not provided because the
Funds' Class C shares are not offered until February 15, 2000. Certain
expenses of the Funds will be absorbed by INVESCO in order to ensure that
expenses for Dynamics Fund--Class C, Endeavor Fund--Class C, Growth &
Income Fund--Class C, Small Company Growth Fund--Class C, and Value Equity
Fund--Class C will not exceed 1.95%, 2.25%, 2.25%, 2.25%, and 2.05%,
respectively, of each Fund's average net assets attributable to Class C
shares pursuant to an agreement between the Funds and INVESCO. These
commitments may be changed at any time following consultation with the
board of directors. After absorption, Growth & Income Fund--Class C shares
Other Expenses and Total Annual Fund Operating Expenses for the fiscal year
ending July 31, 2000 are estimated to be 0.50% and 2.25%, respectively, of
the Fund's average net assets attributable to Class C shares; Small Company
Growth Fund--Class C shares Other Expenses and Total Annual Fund Operating
Expenses for the fiscal year ending July 31, 2000 are estimated to be 0.53%
and 2.25%, respectively, of the Fund's average net assets attributable to
Class C shares; and Value Equity Fund--Class C shares Other Expenses and
Total Annual Fund Operating Expenses for the fiscal year ending July 31,
2000 are estimated to be 0.30% and 2.05%, respectively, of the Fund's
average net assets attributable to Class C shares.
EXAMPLES
These Examples are intended to help you compare the cost of investing in the
Funds to the cost of investing in other mutual funds.
The Examples assume that you invested $10,000 in Class C shares of a Fund for
the time periods indicated. The first Example assumes that you redeem all of
your shares at the end of those periods. The second Example assumes that you
keep your shares. Both Examples also assume that your investment had a
hypothetical 5% return each year and that a Fund's Class C shares' operating
expenses remained the same. Although the actual costs and performance of a
Fund's Class C shares may be higher or lower, based on these assumptions your
costs would have been:
IF SHARES ARE REDEEMED 1 year 3 years 5 years 10 years
Blue Chip Growth Fund--Class C $284 $569 $980 $2,127
Dynamics Fund--Class C $282 $563 $970 $2,105
Endeavor Fund--Class C $327 $700 $1,200 $2,575
Growth & Income Fund--Class C $353 $779 $1,331 $2,836
Small Company Growth Fund--Class C $340 $739 $1,265 $2,706
Value Equity Fund--Class C $318 $673 $1,154 $2,483
<PAGE>
IF SHARES ARE NOT REDEEMED 1 year 3 years 5 years 10 years
Blue Chip Growth Fund--Class C $184 $569 $980 $2,127
Dynamics Fund--Class C $182 $563 $970 $2,105
Endeavor Fund--Class C $227 $700 $1,200 $2,575
Growth & Income Fund--Class C $253 $779 $1,331 $2,836
Small Company Growth Fund--Class C $240 $739 $1,265 $2,706
Value Equity Fund--Class C $218 $673 $1,154 $2,483
[ARROWS ICON] INVESTMENT RISKS
You should determine the level of risk with which you are comfortable before you
invest. The principal risks of investing in any mutual fund, including these
Funds, are:
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.
NOT INSURED. Mutual funds are not insured by the FDIC or any other agency,
unlike bank deposits such as CDs or savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment
objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its performance, nor
assure you that the market value of your investment will increase. You may lose
the money you invest, and the Funds will not reimburse you for any of these
losses.
VOLATILITY. The price of your mutual fund shares will increase or decrease with
changes in the value of a Fund's underlying investments and changes in the
equity markets as a whole.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not
constitute a complete investment plan. The Funds are designed to be only a part
of your personal investment plan.
<PAGE>
[ARROWS ICON] RISKS ASSOCIATED WITH PARTICULAR INVESTMENTS
You should consider the special factors associated with the policies discussed
below in determining the appropriateness of investing in a Fund. See the
Statement of Additional Information for a discussion of additional risk factors.
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of a Fund's
investments. Certain stocks selected for any Fund's portfolio may decline in
value more than the overall stock market. In general, the securities of large
businesses with outstanding securities worth $15 billion or more have less
volatility than those of mid-size businesses with outstanding securities worth
more than $2 billion, or small businesses with outstanding securities worth less
than $2 billion.
LIQUIDITY RISK
A Fund's portfolio is liquid if the Fund is able to sell the securities it owns
at a fair price within a reasonable time. Liquidity is generally related to the
market trading volume for a particular security. Investments in smaller
companies or in foreign companies or companies in emerging markets are subject
to a variety of risks, including potential lack of liquidity.
DERIVATIVES RISK
A derivative is a financial instrument whose value is "derived," in some manner,
from the price of another security, index, asset or rate. Derivatives include
options and futures contracts, among a wide range of other instruments. The
principal risk of investments in derivatives is that the fluctuations in their
values may not correlate perfectly with the overall securities markets. Some
derivatives are more sensitive to interest rate changes and market price
fluctuations than others. Also, derivatives are subject to counterparty risk 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 movements.
<PAGE>
FOREIGN SECURITIES RISKS
Investments in foreign and emerging markets carry special risks, including
currency, political, regulatory and diplomatic risks. Each Fund may invest up to
25% of its respective assets in securities of non-U.S. issuers. Securities of
Canadian issuers and American Depository Receipts are not subject to this 25%
limitation.
CURRENCY RISK. A change in the exchange rate between U.S. dollars and a
foreign currency may reduce the value of a Fund's investment in a security
valued in the foreign currency, or based on that currency value.
POLITICAL RISK. Political actions, events or instability may result in
unfavorable changes in the value of a security.
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.
----------------------------------------
<PAGE>
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.
- --------------------------------------------------------------------------------
INVESTMENT RISKS APPLIES TO THESE FUNDS
- --------------------------------------------------------------------------------
AMERICAN DEPOSITORY RECEIPTS
(ADRs)
These are securities issued Market, Information, Blue Chip Growth
by U.S. banks that represent Political, Regulatory, Dynamics
shares of foreign corporations Diplomatic, Liquidity Endeavor
held by those banks. and Currency Risks Growth & Income
Although traded in U.S. Small Company Growth
securities markets and valued Value Equity
in U.S.dollars, ADRs carry
most of the risks of investing
directly in foreign securities.
- --------------------------------------------------------------------------------
DEBT SECURITIES
Securities issued by private Market, Credit, Blue Chip Growth
companies or governments Interest Rate Dynamics
representing an obligation and Duration Risks Endeavor
to pay interest and to Growth & Income
repay principal when the Small Company Growth
security matures. Value Equity
- --------------------------------------------------------------------------------
DELAYED DELIVERY OR WHEN-ISSUED
SECURITIES Market and Interest Blue Chip Growth
Ordinarily, the Fund purchases Rate Risks Dynamics
securities and pays for them Endeavor
in cash at the normal trade Growth & Income
settlement time. When the Small Company Growth
Fund purchases a delayed Value Equity
delivery or when-issued
security, it promises to
pay in the future for example,
when the security is actually
available for delivery to the
Fund. The Fund's obligation to
pay and the interest rate it
receives, in the case of debt
securities, usually are fixed
when the Fund promises to pay.
Between the date the Fund
promises to pay and the date
the securities are actually
received, the Fund receives
no interest on its investment,
and bears the risk that the
market value of the when-
issued security may decline.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT RISKS APPLIES TO THESE FUNDS
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY
CONTRACTS
A contract to exchange an Currency, Political, Blue Chip Growth
amount of currency on a Diplomatic, Counter- Dynamics
date in the future at an party and Regulatory Endeavor
agreed-upon exchange rate Risks Growth & Income
might be used by the Fund Small Company Growth
to hedge against changes in Value Equity
foreign currency exchange
rates when the Fund invests
in foreign securities.
Does not reduce price
fluctuations in foreign
securities, or prevent
losses if the prices of
those securities decline.
- --------------------------------------------------------------------------------
FUTURES
A futures contract is an Market, Liquidity Blue Chip Growth
agreement to buy or sell and Options and Dynamics
a specific amount of a Futures Risks Endeavor
financial instrument Growth & Income
(such as an index option) Small Company Growth
at a stated price on a Value Equity
stated date. The Fund may
use futures contracts to
provide liquidity and to
hedge portfolio value.
- --------------------------------------------------------------------------------
JUNK BONDS
Debt securities that are Market, Credit, Dynamics
rated BB or lower by S&P or Interest Rate and Endeavor
Ba or lower by Moody's. Duration Risks Growth & Income
Tend to pay higher interest Small Company Growth
rates than higher-rated
debt securities, but carry
a higher credit risk.
- --------------------------------------------------------------------------------
OPTIONS
The obligation or right Credit, Information, Blue Chip Growth
to deliver or receive a Liquidity and Options Dynamics
security or other and Futures Risks Endeavor
instrument, index or Growth & Income
commodity, or cash payment Small Company Growth
depending on the price of Value Equity
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>
- --------------------------------------------------------------------------------
INVESTMENT RISKS APPLIES TO THESE FUNDS
- --------------------------------------------------------------------------------
OTHER FINANCIAL INSTRUMENTS
These may include forward Counterparty, Credit, Blue Chip Growth
contracts, swaps, caps, floors Currency, Interest Dynamics
and collars. They may be used Rate, Liquidity, Endeavor
to try to manage the Fund's Market and Growth & Income
foreign currency exposure and Regulatory Risks Small Company Growth
other investment risks, which Value Equity
can cause its net asset value
to rise or fall. The Fund
may use these financial
instruments, commonly known
as "derivatives," to increase
or decrease its exposure to
changing securities prices,
interest rates, currency
exchange rates or other
factors.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT
A contract under which the Credit and Counter- Blue Chip Growth
seller of a security agrees party Risks Dynamics
to buy it back at an agreed- Endeavor
upon price and time in the Growth & Income
future. Small Company Growth
Value Equity
- --------------------------------------------------------------------------------
RULE 144A SECURITIES
Securities that are not Liquidity Risk Blue Chip Growth
registered, but which are Dynamics
bought and sold solely by Endeavor
institutional investors. Growth & Income
The Fund considers many Rule Small Company Growth
144A securities to be Value Equity
"liquid," although the
market for such securities
typically is less active
than the public securities
markets.
- --------------------------------------------------------------------------------
[ARROWS ICON] TEMPORARY DEFENSIVE POSITIONS
When securities markets or economic conditions are unfavorable or unsettled, we
might try to protect the assets of a Fund by investing in securities that are
highly liquid, such as high quality money market instruments like short-term
U.S. government obligations, commercial paper or repurchase agreements, even
though that is not the normal investment strategy of any Fund. We have the right
to invest up to 100% of a Fund's assets in these securities, although we are
unlikely to do so. Even though the securities purchased for defensive purposes
often are considered the equivalent of cash, they also have their own risks.
Investments that are highly liquid or comparatively safe tend to offer lower
returns. Therefore, a Fund's performance could be comparatively lower if it
concentrates in defensive holdings.
<PAGE>
[ARROWS ICON] PORTFOLIO TURNOVER
We actively manage and trade the Funds' portfolios. Therefore, the Funds may
have a higher portfolio turnover rate compared to many other mutual funds. The
Funds' portfolio turnover rates for the period ended July 31, 1999 were:
Blue Chip Growth Fund 134%(a)
Dynamics Fund 23%(b)
Endeavor Fund 47%(b)
Growth & Income Fund 46%(b)
Small Company Growth Fund 41%(c)
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
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT MANAGEMENT
COMPANY THAT MANAGES MORE THAN $291 BILLION IN ASSETS WORLDWIDE. AMVESCAP IS
BASED IN LONDON, WITH MONEY MANAGERS LOCATED IN EUROPE, NORTH AND SOUTH AMERICA,
AND THE FAR EAST.
INVESTMENT ADVISER
INVESCO, located at 7800 East Union Avenue, Denver, Colorado, is the investment
adviser of the Funds. INVESCO was founded in 1932 and manages over $31 billion
for more than 960,478 shareholders of 45 INVESCO mutual funds. INVESCO performs
a wide variety of other services for the Funds, including administrative and
transfer agency functions (the processing of purchases, sales and exchanges of
Fund shares).
INVESCO Capital Management, a division of INVESCO, Inc. ("ICM"), located at 1360
Peachtree Street, N.E., Suite 100, Atlanta, Georgia, is the sub-adviser to Value
Equity Fund.
A wholly owned subsidiary of INVESCO, IDI is the Funds' distributor and is
responsible for the sale of the Funds' shares.
INVESCO, ICM and IDI are subsidiaries of AMVESCAP PLC.
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 NET ASSETS UNDER MANAGEMENT
- --------------------------------------------------------------------------------
INVESCO Blue Chip Growth Fund 0.55% (Annualized)
INVESCO Dynamics Fund 0.52% (Annualized
<PAGE>
INVESCO Endeavor Fund 0.75% (Annualized)
INVESCO Growth & Income Fund 0.75% (Annualized)
INVESCO Small Company Growth Fund 0.72% (Annualized)
INVESCO Value Equity Fund 0.75% (Annualized)
- --------------------------------------------------------------------------------
Since the Funds' Class C shares are not offered until February 15, 2000, Class C
shares paid no fees to INVESCO for its advisory services in the period ended
July 31, 1999.
[INVESCO ICON] PORTFOLIO MANAGERS
The following individuals are primarily responsible for the day-to-day
management of their respective Fund's or Funds' 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
STACIE COWELL, a vice president of INVESCO, is the lead portfolio manager of
Small Company Growth Fund. Before joining INVESCO in 1997, Stacie was senior
equity analyst with Founders Asset Management and a capital markets and trading
analyst with Chase Manhatten Bank in New York. She is a Chartered Financial
Analyst. Stacie holds an M.S. in Finance from the University of Colorado and a
B.A. in Economics from Colgate University.
MICHAEL C. HARHAI, executive vice president of ICM, is the portfolio manager of
Value Equity Fund. Before joining ICM in 1993, Michael was a senior vice
president and portfolio manager with Sovran Capital Management Corp., C&S/Sovran
Capital Management and a vice president with Citizens & Southern Investment
Advisors, Inc. He is a Chartered Financial Analyst. Michael holds an M.B.A. from
the University of Central Florida and a B.A. from the University of South
Florida.
TERRENCE IRRGANG, a vice president of ICM, is the co-portfolio manager of Value
Equity Fund. Before joining ICM in 1992, Terrence was a consultant for Towers,
Perrin, Forster & Crosby. He holds an M.B.A. from Temple University and a B.A.
from Gettysburg College.
TRENT E. MAY, a vice president of INVESCO, is the lead portfolio manager of Blue
Chip Growth and Growth & Income Funds and a co-portfolio manager of Small
Company Growth Fund. Before joining INVESCO in 1996, Trent was a senior equity
analyst with Munder Capital Management and a research assistant with SunBank
Capital Management. He is a Chartered Financial Analyst. Trent holds an M.B.A.
from Rollins College and a B.S. in Engineering from Florida Institute of
Technology.
<PAGE>
DOUGLAS J. MCELDOWNEY, a vice president of INVESCO, is the co-portfolio manager
of Blue Chip Growth Fund. Before joining INVESCO in 1999, Doug was a senior vice
president and portfolio manager with Bank of America Investment Management, Inc.
and an investment officer and portfolio manager with SunTrust Banks, Inc. He is
a Chartered Financial Analyst and a Certified Public Accountant. He holds an
M.B.A. from the Crummer Graduate School at Rollins College and a B.B.A. in
Finance from University of Kentucky.
FRITZ MEYER, a vice president of INVESCO, is the co-portfolio manager of Growth
& Income Fund. Before joining INVESCO in 1996, Fritz was an executive vice
president and portfolio manager with Nelson, Benson & Zellmer, Inc. He holds an
M.B.A. from Amos Tuck School--Dartmouth College and a B.A. with a distinction in
Economics from Dartmouth College.
TIMOTHY J. MILLER, a director and senior vice president of INVESCO, is the lead
portfolio manager of Dynamics and Endeavor Funds and co-portfolio manager of
Small Company Growth Fund. Before joining INVESCO in 1992, Tim was a portfolio
manager with Mississippi Valley Advisors. He is a Chartered Financial Analyst.
Tim holds an M.B.A. from the University of Missouri-- St. Louis and a B.S.B.A.
from St. Louis University.
THOMAS WALD, a vice president of INVESCO, is the co-portfolio manager of
Dynamics Fund. Before joining INVESCO in 1997, Tom was an analyst with Munder
Capital Management, Duff & Phelps and Prudential Investment Corp. He is a
Chartered Financial Analyst. Tom holds an M.B.A. from the Wharton School at the
University of Pennsylvania and a B.A. from Tulane University.
Stacie Cowell, Trent May, Doug McEldowney, Fritz Meyer and Tom Wald are members
of the INVESCO Growth Team, which is led by Tim Miller.
[INVESCO ICON] POTENTIAL REWARDS
NO SINGLE FUND SHOULD REPRESENT YOUR COMPLETE INVESTMENT PROGRAM NOR SHOULD YOU
ATTEMPT TO USE THE FUNDS FOR SHORT-TERM TRADING PURPOSES.
The Funds offer shareholders the potential to increase the value of their
capital over time; Blue Chip Growth, Growth & Income and Value Equity Funds also
offer the opportunity for current income. Like most mutual funds, each Fund
seeks to provide higher returns than the market or its competitors, but cannot
guarantee that performance. Each Fund seeks to minimize risk by investing in
many different companies in a variety of industries.
SUITABILITY FOR INVESTORS
Only you can determine if an investment in a Fund is right for you based upon
your own economic situation, the risk level with which you are comfortable and
other factors. In general, the Funds are most suitable for investors who:
o are willing to grow their capital over the long term (at least five years).
o understand that shares of a Fund can, and likely will, have daily price
fluctuations.
o are investing tax-deferred retirement accounts, such as traditional and Roth
Individual Retirement Accounts ("IRAs"), as well as employer-sponsored
qualified retirement plans, including 401(k)s and 403(b)s, all of which
have longer investment horizons.
You probably do not want to invest in the Funds if you are:
o primarily seeking current dividend income.
o unwilling to accept potentially significant changes in the price of Fund
shares.
o speculating on short-term fluctuations in the stock markets.
<PAGE>
[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 the regular trading day 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 or
exchange shares for you on that day), even though activity on foreign exchanges
could result in changes in the value of investments held by the Funds on that
day.
[INVESCO ICON] HOW TO BUY SHARES
TO BUY SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE THE CLOSE
OF THE NYSE, NORMALLY 4:00 P.M. EASTERN TIME.
The Funds offer multiple classes of shares. Each class represents an identical
interest in a Fund and has the same rights, except that each class bears its own
distribution and shareholder servicing charges, and other expenses. The income
attributable to each class and the dividends payable on the shares of each class
will be reduced by the amount of the distribution fee or service fee, if
applicable, and the other expenses payable by that class.
In deciding which class of shares to purchase, you should consider, among other
things (i) the length of time you expect to hold your shares, (ii) the
provisions of the distributions plan applicable to that class, if any, (iii)
the eligibility requirements that apply to purchases of a particular class, and
(iv) any services you may receive in making your investment determination. Your
investment representative can help you decide. Contact your investment
representative for several convenient ways to invest in the Funds. Class C
shares are available only through your investment representative.
There is no charge to invest directly through INVESCO. However, with respect to
Class C shares, upon redemption or exchange of Class C shares held thirteen
months or less (other than Class C shares acquired through reinvestment of
dividends or other distributions, or Class C shares exchanged for Class C shares
of another INVESCO Fund), a contingent deferred sales charge of 1% of the
current net asset value of the Class C shares will be assessed. If you invest in
<PAGE>
a Fund through a securities broker, you may be charged a commission or
transaction fee for either purchases or sales of Fund shares. For all new
accounts, please send a completed application form, and specify the fund or
funds you wish to purchase.
INVESCO reserves the right to increase, reduce or waive each Fund's minimum
investment requirements in its sole discretion, if it determines this action is
in the best interests of that Fund's shareholders. INVESCO also reserves the
right in its sole discretion to reject any order to buy Fund shares, including
purchases by exchange.
MINIMUM INITIAL INVESTMENT. $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans, including IRAs.
MINIMUM SUBSEQUENT INVESTMENT. $50 (Minimums are lower for certain retirement
plans.)
EXCHANGE POLICY. You may exchange your Class C shares in any of the Funds for
Class C shares in another INVESCO mutual fund on the basis of their respective
NAVs at the time of the exchange.
FUND EXCHANGES CAN BE A CONVENIENT WAY FOR YOU TO DIVERSIFY YOUR INVESTMENTS, OR
TO REALLOCATE YOUR INVESTMENTS WHEN YOUR OBJECTIVES CHANGE.
Before making any exchange, be sure to review the prospectuses of the funds
involved and consider the differences between the funds. Also, be certain that
you qualify to purchase certain classes of shares in the new fund. An exchange
is the sale of shares from one fund immediately followed by the purchase of
shares in another. Therefore, any gain or loss realized on the exchange is
recognizable for federal income tax purposes (unless, of course, you or your
account qualifies as tax-deferred under the Internal Revenue Code). If the
shares of the fund you are selling have gone up in value since you bought them,
the sale portion of an exchange may result in taxable income to you.
We have the following policies governing exchanges:
o Both fund accounts involved in the exchange must be registered in exactly the
same name(s) and Social Security or federal tax I.D. number(s).
o You may make up to four exchanges out of each Fund per 12-month period, but
you may be subject to the contingent deferred sales charge, described below.
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 terminations that affect
all shareholders of the Fund will be given at least 60 days prior to the
effective date of the change, except in unusual instances, including a
suspension of redemption of the exchanged security under Section 22(e) of the
Investment Company Act of 1940.
In addition, the ability to exchange may be temporarily suspended at any time
that sales of the fund into which you wish to exchange are temporarily stopped.
Please remember that if you pay by check, Automated Clearing House ("ACH"), or
wire and your funds do not clear, you will be responsible for any related loss
to a Fund or INVESCO. If you are already an INVESCO funds shareholder, the Fund
may seek reimbursement for any loss from your existing account(s).
CONTINGENT DEFERRED SALES CHARGE (CDSC). If you redeem or exchange Class C
shares of any Fund after holding them thirteen months or less (other than shares
acquired through reinvestment of dividends or other distributions), a CDSC of 1%
<PAGE>
of the current net asset value of the shares being redeemed or exchanged will be
assessed. The fee applies to redemptions from a Fund and exchanges (other than
exchanges into Class C shares) into any of the other mutual funds which are also
advised by INVESCO and distributed by IDI. We will use the "first-in, first-out"
method to determine your holding period. Under this method, the date of
redemption or exchange will be compared with the earliest purchase date of
shares held in your account. If your holding period is less than thirteen
months, the CDSC will be assessed on the current net asset value of those
shares.
The CDSC for Class C shares generally will be waived:
o to pay account fees;
o for IRA distributions due to death, disability or periodic distributions based
on life expectancy;
o to return excess contributions (and earnings, if applicable) from retirement
plan accounts; or nfor redemptions following the death of a shareholder or
beneficial owner.
DISTRIBUTION EXPENSES. We have adopted a Master Distribution Plan and Agreement
(commonly known as a "12b-1 Plan") for the Funds' Class C shares. The 12b-1 fees
paid by each Fund's Class C shares are used to pay distribution fees to IDI for
the sale and distribution of the Fund's shares and fees for services provided to
shareholders, all or a substantial portion of which are paid to the dealer of
record. Because the Funds' Class C shares pay these fees out of their assets on
an ongoing basis, these fees increase the cost of your investment.
HOUSEHOLDING. To save money for the Funds, INVESCO will send only one copy of a
prospectus or financial report to each household address. This process, known as
"householding," is used for most required shareholder mailings. It does not
apply to account statements. You may, of course, request an additional copy of a
prospectus or financial report at any time by calling or writing INVESCO. You
may also request that householding be eliminated from all your required
mailings.
[INVESCO ICON] HOW TO SELL SHARES
Contact your investment representative for several convenient ways to sell your
Fund shares. Shares of the Funds may be sold at any time at the next NAV
calculated after your request to sell in proper form is received by INVESCO.
Depending on Fund performance, the NAV at the time you sell your shares may be
more or less than the price you paid to purchase your shares.
TO SELL SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE 4:00 P.M.
EASTERN TIME.
If you own shares in more than one INVESCO fund, please specify the fund whose
shares you wish to sell. Remember that any sale or exchange of shares in a
non-retirement account will likely result in a taxable gain or loss.
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
<PAGE>
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.
[GRAPH ICON] TAXES
Everyone's tax status is unique. We encourage you to consult your own tax
adviser on the tax impact to you of investing in the Funds.
TO AVOID BACKUP WITHHOLDING, BE SURE WE HAVE YOUR CORRECT SOCIAL SECURITY OR
TAXPAYER IDENTIFICATION NUMBER.
Each Fund customarily distributes to its shareholders substantially all of its
net investment income, net capital gains and net gains from foreign currency
transactions, if any. You receive a proportionate part of these distributions,
depending on the percentage of each Fund's shares that you own. These
distributions are required under federal tax laws governing mutual funds. It is
the policy of each Fund to distribute all investment company taxable income and
net capital gains. As a result of this policy and each Fund's qualification as a
regulated investment company, it is anticipated that none of the Funds will pay
any federal income or excise taxes. Instead, each Fund will be accorded conduit
or "pass through" treatment for federal income tax purposes.
However, unless you are (or your account is) exempt from income taxes, you must
include all dividends and capital gain distributions paid to you by a Fund in
your taxable income for federal, state and local income tax purposes. You also
may realize capital gains or losses when you sell shares of a Fund at more or
less than the price you originally paid. An exchange is treated as a sale, and
is a taxable event. Dividends and other distributions usually are taxable
whether you receive them in cash or automatically reinvest them in shares of the
distributing Fund(s) or other INVESCO funds.
If you have not provided INVESCO with complete, correct tax information, the
Funds are required by law to withhold 31% of your distributions and any money
that you receive from the sale of shares of the Funds as a backup withholding
tax.
We will provide you with detailed information every year about your dividends
and capital gain distributions. Depending on the activity in your individual
account, we may also be able to assist with cost basis figures for shares you
sell.
[GRAPH ICON] DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Funds earn ordinary or investment income from dividends and interest on
their investments. The Funds expect to distribute substantially all of this
investment income, less Fund expenses, to shareholders annually, with respect to
Blue Chip Growth, Dynamics, Endeavor and Small Company Growth Funds, and
quarterly, with respect to Growth & Income and Value Equity Funds, or at such
other times as the Funds may elect.
NET INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS ARE DISTRIBUTED TO
SHAREHOLDERS AT LEAST ANNUALLY. DISTRIBUTIONS ARE TAXABLE WHETHER REINVESTED IN
ADDITIONAL SHARES OR PAID TO YOU IN CASH (EXCEPT FOR TAX-EXEMPT ACCOUNTS)
A Fund also realizes capital gains or losses when it sells securities in its
portfolio for more or less than it had paid for them. If total gains on sales
exceed total losses (including losses carried forward from previous years), a
Fund has a net realized capital gain. Net realized capital gains, if any, are
distributed to shareholders at least annually, usually in December.
<PAGE>
Under present federal income tax laws, capital gains may be taxable at different
rates, depending on how long a Fund has held the underlying investment.
Short-term capital gains which are derived from the sale of assets held one year
or less are taxed as ordinary income. Long-term capital gains which are derived
from the sale of assets held for more than one year are taxed at up to the
maximum capital gains rate, currently 20% for individuals.
Dividends and capital gain distributions are paid to you if you hold shares on
the record date of the distribution regardless of how long you have held your
shares. A Fund's NAV will drop by the amount of the distribution on the day the
distribution is declared. If you buy shares of a Fund just before a distribution
is declared, you may wind up "buying a distribution." This means that if the
Fund declares 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-distribution date,
unless you choose to have them automatically reinvested in another INVESCO fund
or paid to you by check or electronic funds transfer. If you choose to be paid
by check, the minimum amount of the check must be at least $10; amounts less
than that will be automatically reinvested. Dividends and other distributions,
whether received in cash or reinvested in additional Fund shares, may be subject
to federal income tax.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of Investor Class shares of each Fund for the past five years (or,
if shorter, the period of the Fund's operations). Certain information reflects
financial results for a single Investor Class share. Since Class C shares are
new, financial information is not available for this class as of the date of
this Prospectus. The total returns in the table represent the annual percentages
that an investor would have earned (or lost) on an investment in an Investor
Class share of a Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with the Company's financial
statements, are included in INVESCO Stock Funds, Inc.'s 1999 Annual Report to
Shareholders, which is incorporated by reference into the Statement of
Additional Information. This Report is available without charge by contacting
IDI at the address or telephone number on the back cover of this Prospectus.
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED AUGUST 31
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BLUE CHIP GROWTH FUND-- 1999(a) 1998 1997 1996 1995 1994
INVESTOR CLASS
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 0.00 0.02 0.01 0.03 0.05 0.03
Net Investment Income(b)
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>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD
ENDED
JULY 31 YEAR ENDED APRIL 30
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DYNAMICS FUND--
INVESTOR CLASS 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 1.24 3.04 6.34 (0.23) 3.96 1.37
OPERATIONS
- --------------------------------------------------------------------------------------------------
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 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
- --------------------------------------------------------------------------------
INVESCO ENDEAVOR FUND--
INVESTOR CLASS 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 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, 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, 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
- -------------------------------------------------------------------------------
GROWTH & INCOME FUND--
INVESTOR CLASS 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)
(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
INVESCO, 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>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD
ENDED
JULY 31 YEAR ENDED MAY 31
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SMALL COMPANY GROWTH
FUND--INVESTOR CLASS 1999(a) 1999 1998 1997 1996 1995
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
INVESCO, which is before any expense offset arrangements.
(f) Annualized
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD
ENDED
JULY 31 YEAR ENDED AUGUST 31
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VALUE EQUITY FUND--
INVESTOR CLASS 1999(a) 1998 1997 1996 1995 1994
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 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 INVESCO for the
period ended July 31, 1999 and the year ended August 31, 1998. If such
expenses had not been 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
INVESCO, if applicable, which is before any expense offset
arrangements.
(f) Annualized
<PAGE>
FEBRUARY 15, 2000
INVESCO STOCK FUNDS, INC.
INVESCO BLUE CHIP GROWTH FUND--CLASS C
INVESCO DYNAMICS FUND--CLASS C
INVESCO ENDEAVOR FUND--CLASS C
INVESCO GROWTH & INCOME FUND--CLASS C
INVESCO SMALL COMPANY GROWTH FUND--CLASS C
INVESCO VALUE EQUITY FUND--CLASS C
You may obtain additional information about the Funds from several sources:
FINANCIAL REPORTS. Although this Prospectus describes the Funds' anticipated
investments and operations, the Funds also prepare annual and semiannual reports
that detail the Funds' actual investments at the report date. These reports
include discussion of each Fund's recent performance, as well as market and
general economic trends affecting each Fund's performance. The annual report
also includes the report of the Funds' independent accountants.
STATEMENT OF ADDITIONAL INFORMATION. The SAI dated February 15, 2000 is a
supplement to this Prospectus and has detailed information about the Funds and
their investment policies and practices. A current SAI for the Funds is on file
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference; in other words, the SAI is legally a part of this
Prospectus, and you are considered to be aware of the contents of the SAI.
INTERNET. The current Prospectus of the Funds 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 1-800-328-2234. 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., 20549-0102. This information can be
obtained by electronic request at the following E-mail address:
[email protected], or by calling 202-942-8090. The SEC file numbers for the
Funds are 811-1474 and 002-26125.
811-1474
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
INVESCO STOCK FUNDS, INC.
INVESCO Blue Chip Growth Fund - Investor Class and Class C
INVESCO Dynamics Fund - Investor Class and Class C
INVESCO Endeavor Fund - Investor Class and Class C
INVESCO Growth & Income Fund - Investor Class and Class C
INVESCO Small Company Growth Fund - Investor Class and Class C
INVESCO S&P 500 Index Fund - Investor Class and Institutional Class
INVESCO Value Equity Fund - Investor Class and Class C
Address: Mailing Address:
7800 E. Union Ave., Denver, CO 80237 P.O. Box 173706, Denver, CO 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
February 15, 2000
- ------------------------------------------------------------------------------
A Prospectus for the Investor Class shares of INVESCO Blue Chip Growth, INVESCO
Dynamics, INVESCO Endeavor, INVESCO Growth & Income, INVESCO Small Company
Growth, INVESCO S&P 500 Index and INVESCO Value Equity Funds dated August 31,
1999, a Prospectus for INVESCO S&P 500 Index Fund - Institutional Class dated
August 31, 1999, and a Prospectus for the Class C shares of INVESCO Blue Chip
Growth, INVESCO Dynamics, INVESCO Endeavor, INVESCO Growth & Income, INVESCO
Small Company Growth, and INVESCO Value Equity Funds dated February 15, 2000,
provide the basic information you should know before investing in a Fund. This
Statement of Additional Information ("SAI") is incorporated by reference into
the Funds' Prospectuses; in other words, this SAI is legally part of the Funds'
Prospectuses. Although this SAI is not a prospectus, it contains information in
addition to that set forth in the Prospectuses. It is intended to provide
additional information regarding the activities and operations of the Funds and
should be read in conjunction with the Prospectuses.
<PAGE>
You may obtain, without charge, the current Prospectuses, SAI and annual and
semiannual reports of the Funds by writing to INVESCO Distributors, Inc., P.O.
Box 173706, Denver, CO 80217-3706 , or by calling 1-800-525-8085. The
Prospectuses of the Investor Class and Class C shares of the Funds are also
available through the INVESCO Web site at www.invesco.com.
<PAGE>
TABLE OF CONTENTS
The Company... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Investments, Policies and Risks . . . . . . . . . . . . . . . . . . . . . . .36
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Other Service Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . . . .89
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Tax Consequences of Owning Shares of a Fund . . . . . . . . . . . . . . . . . 94
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
<PAGE>
THE COMPANY
The Company was incorporated under the laws of Maryland as INVESCO Dynamics
Fund, Inc. on April 2, 1993. On July 1, 1993, the Company assumed all of the
assets and liabilities of Financial Dynamics Fund, Inc. ("FDF"), which was
incorporated in Colorado on February 17, 1967. All financial and other
information about the Company for periods prior to July 1, 1993 relates to FDF.
On June 26, 1997, the Company changed its name to INVESCO Capital Appreciation
Funds, Inc. and designated two series of shares of common stock of the Company
as the INVESCO Dynamics Fund and the INVESCO Growth & Income Fund. On August 28,
1998, the Company changed its name to INVESCO Equity Funds, Inc. and designated
a third series of shares of common stock of the Company as the INVESCO Endeavor
Fund. On October 29, 1998 the Company changed its name to INVESCO Stock Funds,
Inc. On July 15, 1999, the Company assumed all of the assets and liabilities of
INVESCO Blue Chip Growth Fund, a series of INVESCO Growth Fund, Inc.; INVESCO
Small Company Growth Fund, a series of INVESCO Emerging Opportunity Funds, Inc.;
INVESCO S&P 500 Index Fund, a series of INVESCO Specialty Funds, Inc.; and
INVESCO Value Equity Fund, a series of INVESCO Value Trust.
The Company is an open-end, diversified, management investment company currently
consisting of seven portfolios of investments: INVESCO Blue Chip Growth Fund -
Investor Class and Class C, INVESCO Dynamics Fund - Investor Class and Class C,
INVESCO Endeavor Fund - Investor Class and Class C, INVESCO Growth & Income Fund
- - Investor Class and Class C, INVESCO Small Company Growth Fund - Investor Class
and Class C, INVESCO S&P 500 Index Fund - Investor Class and Institutional Class
and INVESCO Value Equity Fund - Investor Class and Class C (each a "Fund" and
collectively the "Funds"). Additional funds may be offered in the future.
"Open-end" means that each Fund issues an indefinite number of shares which it
continuously offers to redeem at net asset value per share ("NAV"). A
"management" investment company actively buys and sells securities for the
portfolio of each Fund at the direction of a professional manager. Open-end
management investment companies (or one or more series of such companies, such
as the Funds) are commonly referred to as mutual funds. The Funds do not charge
sales fees to purchase their shares. However, the Investor Class shares of each
Fund pay a 12b-1 distribution fee which is computed and paid monthly at an
annual rate of 0.25% of average net assets attributable to Investor Class
shares. The Class C shares of each Fund pay a 12b-1 distribution/ service fee
which is computed and paid monthly at an aggregate annual rate of 1.00% of
average net assets attributable to Class C shares.
Although S&P 500 Index Fund attempts to mirror the performance of the S&P 500
Composite Stock Price Index ("S&P 500"), the Fund is not affiliated in any way
with Standard & Poor's ("S&P"). S&P is not involved in the determination of the
prices and amount of the securities bought by the Fund, the sale of Fund shares
or the calculation of the equation by which Fund shares are to be converted into
cash.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500 or
any data included therein and S&P shall have no liability for any errors,
omissions or interruptions therein. S&P makes no warranty, express or implied,
as to results to be obtained by the Company, shareholders of the Fund or any
<PAGE>
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 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.
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.
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banks. Investments in instruments issued by a foreign branch of a U.S. bank will
be made only if the investment risk associated with such investment is the same
as that involving an investment in instruments issued by the U.S. parent, with
the U.S. parent unconditionally liable in the event that the foreign branch
fails to pay on the investment for any reason.
COMMERCIAL PAPER -- Commercial paper is the term for short-term promissory notes
issued by domestic corporations to meet current working capital needs.
Commercial paper may be unsecured by the corporation's assets but may be backed
by a letter of credit from a bank or other financial institution. The letter of
credit enhances the paper's creditworthiness. The issuer is directly responsible
for payment but the bank "guarantees" that if the note is not paid at maturity
by the issuer, the bank will pay the principal and interest to the buyer.
INVESCO Funds Group, Inc. ("INVESCO"), the Funds' investment adviser, will
consider the creditworthiness of the institution issuing the letter of credit,
as well as the creditworthiness of the issuer of the commercial paper, when
purchasing paper enhanced by a letter of credit. Commercial paper is sold either
as interest-bearing or on a discounted basis, with maturities not exceeding 270
days.
DEBT SECURITIES -- Debt securities include bonds, notes and other securities
that give the holder the right to receive fixed amounts of principal, interest,
or both on a date in the future or on demand. Debt securities also are often
referred to as fixed-income securities, even if the rate of interest varies over
the life of the security.
Debt securities are generally subject to credit risk and market risk. Credit
risk is the risk that the issuer of the security may be unable to meet interest
or principal payments or both as they come due. Market risk is the risk that the
market value of the security may decline for a variety of reasons, including
changes in interest rates. An increase in interest rates tends to reduce the
market values of debt securities in which a Fund has invested. A decline in
interest rates tends to increase the market values of debt securities in which a
Fund has invested.
Moody's Investor Services, Inc. ("Moody's") and S&P ratings provide a useful
guide to the credit risk of many debt securities. The lower the rating of a debt
security, the greater the credit risk the rating service assigns to the
security. To compensate investors for accepting that greater risk, lower-rated
debt securities tend to offer higher interest rates. Growth & Income 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 INVESCO 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.
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A significant economic downturn or increase in interest rates may cause issuers
of debt securities to experience increased financial problems which could
adversely affect their ability to pay principal and interest obligations, to
meet projected business goals, and to obtain additional financing. These
conditions more severely impact issuers of lower-rated debt securities. The
market for lower-rated straight debt securities may not be as liquid as the
market for higher-rated straight debt securities. Therefore, INVESCO attempts to
limit purchases of lower-rated securities to securities having an established
secondary market.
Debt securities rated Caa by Moody's may be in default or may present risks of
non-payment of principal or interest. 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 or Caa) are
of poorer quality and also have speculative characteristics. Bonds rated Caa may
be in default or there may be present elements of danger with respect to
principal or interest. Lower-rated bonds by S&P (categories BB, B or CCC)
include those that are regarded, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with their terms; BB indicates the lowest degree of speculation and
CCC a high degree of speculation. While such bonds likely will have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions. 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 fluctuate 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
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bank otherwise meets the Funds' credit rating requirements. CDs are issued
against deposits in a commercial bank for a specified period and rate and are
normally negotiable. Eurodollar CDs are certificates issued by a foreign branch
(usually London) of a U.S. domestic bank, and, as such, the credit is deemed to
be that of the domestic bank. Bankers' acceptances are short-term credit
instruments evidencing the promise of the bank (by virtue of the bank's
"acceptance") to pay at maturity a draft which has been drawn on it by a
customer (the "drawer"). Bankers' acceptances are used to finance the import,
export, transfer, or storage of goods and reflect the obligation of both the
bank and the drawer to pay the face amount. Both types of securities are subject
to the ability of the issuing bank to meet its obligations, and are subject to
risks common to all debt securities. In addition, banker's acceptances may be
subject to foreign currency risk and certain other risks of investment in
foreign securities.
EQUITY SECURITIES -- The Funds may invest in common, preferred and convertible
preferred stocks, and securities whose values are tied to the price of stocks,
such as rights, warrants and convertible debt securities. Common stocks and
preferred stocks represent equity ownership in a corporation. Owners of stock,
such as the Funds, share in a corporation's earnings through dividends which may
be declared by the corporation, although the receipt of dividends is not the
principal benefit that the Funds seek when they invest in stocks and similar
instruments.
Instead, the Funds seek to invest in stocks that will increase in market value
and may be sold for more than a Fund paid to buy them. Market value is based
upon constantly changing investor perceptions of what the company is worth
compared to other companies. Although dividends are a factor in the changing
market value of stocks, many companies do not pay dividends, or pay
comparatively small dividends. The principal risk of investing in equity
securities is that their market values fluctuate constantly, often due to
factors entirely outside the control of the Funds or the company issuing the
stock. At any given time, the market value of an equity security may be
significantly higher or lower than the amount paid by a Fund to acquire it.
Owners of preferred stocks are entitled to dividends payable from the
corporation's earnings, which in some cases may be "cumulative" if prior
dividends on the preferred stock have not been paid. Dividends payable on
preferred stock have priority over distributions to holders of common stock, and
preferred stocks generally have a priority on the distribution of assets in the
event of the corporation's liquidation. Preferred stocks may be "participating,"
which means that they may be entitled to dividends in excess of the stated
dividend in certain cases. The holders of a company's debt securities generally
are entitled to be paid by the company before it pays anything to its
stockholders.
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.
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Until conversion, the owner of convertible securities usually receives the
interest paid on a convertible bond or the dividend preference of a preferred
stock.
A convertible security has an "investment value" which is a theoretical value
determined by the yield it provides in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. It also has a "conversion value,"
which is the market value the convertible security would have if it were
exchanged for the underlying equity security. Convertible securities may be
purchased at varying price levels above or below their investment values or
conversion values.
Conversion value is a simple mathematical calculation that fluctuates directly
with the price of the underlying security. However, if the conversion value is
substantially below the investment value, the market value of the convertible
security is governed principally by its investment value. If the conversion
value is near or above the investment value, the market value of the convertible
security generally will rise above the 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 investments 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. Investments in non-U.S.
securities may also be subject to other risks different from those affecting
U.S. investments, including local political or economic developments,
expropriation or nationalization of assets, confiscatory taxation, and
imposition of withholding taxes on dividends or interest payments. If it becomes
necessary, it may be more difficult for a Fund to obtain or to enforce a
judgment against a foreign issuer than against a domestic issuer.
<PAGE>
Securities traded on foreign markets are usually bought and sold in local
currencies, not in U.S. dollars. Therefore, the market value of foreign
securities acquired by a Fund can be affected -- favorably or unfavorably -- by
changes in currency rates and exchange control regulations. Costs are incurred
in converting money from one currency to another. Foreign currency exchange
rates are determined by supply and demand on the foreign exchange markets.
Foreign exchange markets are affected by the international balance of payments
and other economic and financial conditions, government intervention,
speculation and other factors, all of which are outside the control of each
Fund. Generally, the Funds' foreign currency exchange transactions will be
conducted on a cash or "spot" basis at the spot rate for purchasing or selling
currency in the foreign currency exchange markets.
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."
<PAGE>
In addition to the instruments and strategies described below, the adviser
and/or sub-adviser may use other similar or related techniques to the extent
that they are consistent with a Fund's investment objective and permitted by its
investment limitations and applicable regulatory authorities. The Funds'
Prospectuses or Statement of Additional Information ("SAI") will be supplemented
to the extent that new products or techniques become employed involving
materially different risks than those described below or in the Prospectuses.
SPECIAL RISKS. Financial Instruments and their use involve special
considerations and risks, certain of which are described below.
(1) Financial Instruments may increase the volatility of 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 differences in volatility between
the contract and the securities, although this may not be successful in all
cases.
(3) If successful, the above-discussed hedging strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable price
movements of portfolio securities. However, such strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements. For example, if a Fund entered into a short hedge because the adviser
<PAGE>
and/or sub-adviser projected a decline in the price of a security in the Fund's
portfolio, and the price of that security increased instead, the gain from that
increase would likely be wholly or partially offset by a decline in the value of
the short position in the Financial Instrument. Moreover, if the price of the
Financial Instrument declined by more than the increase in the price of the
security, the Fund could suffer a loss.
(4) A Fund's ability to close out a position in a Financial Instrument prior to
expiration or maturity depends on the degree of liquidity of the market or, in
the absence of such a market, the ability and willingness of the other party to
the transaction (the "counterparty") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed out
at a time and price that is favorable to a Fund.
(5) As described below, the Funds are required to maintain assets as "cover,"
maintain segregated accounts or make margin payments when they take positions in
Financial Instruments involving obligations to third parties (i.e., Financial
Instruments other than purchased options). If a Fund is unable to close out its
positions in such Financial Instruments, it might be required to continue to
maintain such assets or segregated accounts or make such payments until the
position expired. These requirements might impair a Fund's ability to sell a
portfolio security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at a
disadvantageous time.
COVER. Positions in Financial Instruments, other than purchased options, expose
the Funds to an obligation to another party. A Fund will not enter into any such
transaction unless it owns (1) an offsetting ("covered") position in securities,
currencies or other options, futures contracts or forward contracts, or (2) cash
and liquid assets with a value, marked-to-market daily, sufficient to cover its
obligations to the extent not covered as provided in (1) above. The Funds will
comply with SEC guidelines regarding cover for these instruments and will, if
the guidelines so require, designate cash or liquid assets as segregated in the
prescribed amount as determined daily.
Assets used as cover or held as segregated cannot be sold while the position in
the corresponding Financial Instrument is open unless they are replaced with
other appropriate assets. As a result, the commitment of a large portion of a
Fund's assets to cover or to hold as segregated could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.
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.
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The purchase of call options can serve as a hedge against a price rise of the
underlier and the purchase of put options can serve as a hedge against a price
decline of the underlier. Writing call options can serve as a limited short
hedge because declines in the value of the hedged investment would be offset to
the extent of the premium received for writing the option. However, if the
security or currency appreciates to a price higher than the exercise price of
the call option, it can be expected that the option will be exercised and a Fund
will be obligated to sell the security or currency at less than its market
value.
Writing put options can serve as a limited long or anticipatory hedge because
increases in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. However, if the security or
currency depreciates to a price lower than the exercise price of the put option,
it can be expected that the put option will be exercised and a Fund will be
obligated to purchase the security or currency at more than its market value.
The value of an option position will reflect, among other things, the current
market value of the underlying investment, the time remaining until expiration,
the relationship of the exercise price to the market price of the underlying
investment, the price volatility of the underlying investment and general market
and interest rate conditions. Options that expire unexercised have no value.
A Fund may effectively terminate its right or obligation under an option by
entering into a closing transaction. For example, the Fund may terminate its
obligation under a call or put option that it had written by purchasing an
identical call or put option, which is known as a closing purchase transaction.
Conversely, the Fund may terminate a position in a put or call option it had
purchased by writing an identical put or call option, which is known as a
closing sale transaction. Closing transactions permit a Fund to realize profits
or limit losses on an option position prior to its exercise or expiration.
RISKS OF OPTIONS ON SECURITIES. Options embody the possibility of large amounts
of exposure, which will result in a Fund's net asset value being more sensitive
to changes in the value of the related investment. A Fund may purchase or write
both exchange-traded and OTC options. Exchange-traded options in the United
States are issued by a clearing organization affiliated with the exchange on
which the option is listed that, in effect, 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
<PAGE>
offsetting closing transaction on an option it has written, it will be required
to maintain the securities subject to the call or the liquid assets underlying
the put until a closing purchase transaction can be entered into or the option
expires. However, there can be no assurance that such a market will exist at any
particular time.
If a Fund were unable to effect a closing transaction for an option it had
purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call option
written by a Fund could cause material losses because the Fund would be unable
to sell the investment used as cover for the written option until the option
expires or is exercised.
OPTIONS ON INDEXES. Puts and calls on indexes are similar to puts and calls on
securities or futures contracts except that all settlements are in cash and
changes in value depend on changes in the index in question. When a Fund writes
a call on an index, it receives a premium and agrees that, prior to the
expiration date, upon exercise of the call, the purchaser will receive from the
Fund an amount of cash equal to the positive difference between the closing
price of the index and the exercise price of the call times a specified multiple
("multiplier"), which determines the total dollar value for each point of such
difference. When a Fund buys a call on an index, it pays a premium and has the
same rights as to such call as are indicated above. When a Fund buys a put on an
index, it pays a premium and has the right, prior to the expiration date, to
require the seller of the put to deliver to the Fund an amount of cash equal to
the positive difference between the exercise price of the put and the closing
price of the index times the multiplier. When a Fund writes a put on an index,
it receives a premium and the purchaser of the put has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the positive difference between the exercise price of the put and the closing
level of the index times the multiplier.
The risks of purchasing and selling options on indexes may be greater than
options on securities. Because index options are settled in cash, when a Fund
writes a call on an index it cannot fulfill its potential settlement obligations
by delivering the underlying securities. A Fund can offset some of the risk of
writing a call index option by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a Fund cannot,
as a practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Fund could assemble a portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level. As with other kinds of options, a Fund as the call
writer will not learn what it has been assigned until the next business day. The
time lag between exercise and notice of assignment poses no risk for the writer
of a covered call on a specific underlying security, such as common stock,
because in that case the writer's obligation is to deliver the underlying
security, not to pay its value as of a moment in the past. In contrast, the
writer of an index call will be required to pay cash in an amount based on the
difference between the closing index value on the exercise date and the exercise
price. By the time a Fund learns what it has been assigned, the index may have
<PAGE>
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.
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
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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.
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
<PAGE>
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.
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.
<PAGE>
The value of Financial Instruments on foreign currencies depends on the value of
the underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of such Financial Instruments, a
Fund could be disadvantaged by having to deal in the odd-lot market (generally
consisting of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirement that quotations available through dealers or other
market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Financial Instruments until they reopen.
Settlement of hedging transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency. Thus,
a Fund might be required to accept or make delivery of the underlying foreign
currency in accordance with any U.S. or foreign regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and might be
required to pay any fees, taxes and charges associated with such delivery
assessed in the issuing country.
FORWARD CURRENCY CONTRACTS AND FOREIGN CURRENCY DEPOSITS. The Funds may enter
into forward currency contracts to purchase or sell foreign currencies for a
fixed amount of U.S. dollars or another foreign currency. A forward currency
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days (term) from the date of the
forward currency contract agreed upon by the parties, at a price set at the time
the forward currency contract is entered. Forward currency contracts are
negotiated directly between currency traders (usually large commercial banks)
and their customers.
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
<PAGE>
result in losses if the currency used to hedge does not perform similarly to the
currency in which the hedged securities are denominated.
The Funds may also use forward currency contracts in one currency or a basket of
currencies to attempt to hedge against fluctuations in the value of securities
denominated in a different currency if the adviser anticipates that there will
be a positive correlation between the two currencies.
The cost to a Fund of engaging in forward currency contracts varies with factors
such as the currency involved, the length of the contract period and the market
conditions then prevailing. Because forward currency contracts are usually
entered into on a principal basis, no fees or commissions are involved. When a
Fund enters into a forward currency contract, it relies on the counterparty to
make or take delivery of the underlying currency at the maturity of the
contract. Failure by the counterparty to do so would result in the loss of some
or all of any expected benefit of the transaction.
As is the case with futures contracts, purchasers and sellers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures contracts, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts, with
the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counterparty. Thus, there can be
no assurance that a Fund will in fact be able to close out a forward currency
contract at a favorable price prior to maturity. In addition, in the event of
insolvency of the counterparty, the Fund might be unable to close out a forward
currency contract. In either event, the Fund would continue to be subject to
market risk with respect to the position, and would continue to be required to
maintain a position in securities denominated in the foreign currency or to
segregate cash or liquid assets.
The precise matching of forward currency contract amounts and the value of the
securities, dividends or interest payments involved generally will not be
possible because the value of such securities, dividends or interest payments,
measured in the foreign currency, will change after the forward currency
contract has been established. Thus, a Fund might need to purchase or sell
foreign currencies in the spot (cash) market to the extent such foreign
currencies are not covered by forward currency contracts. The projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain.
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
<PAGE>
position. For example, a Fund may purchase a put option and write a call option
on the same underlying instrument, in order to construct a combined position
whose risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, in order to reduce the
risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in
higher transaction costs.
TURNOVER. The Funds' options and futures activities may affect their turnover
rates and brokerage commission payments. The exercise of calls or puts written
by a Fund, and the sale or purchase of futures contracts, may cause it to sell
or purchase related investments, thus increasing its turnover rate. Once a Fund
has received an exercise notice on an option it has written, it cannot effect a
closing transaction in order to terminate its obligation under the option and
must deliver or receive the underlying securities at the exercise price. The
exercise of puts purchased by a Fund may also cause the sale of related
investments, increasing turnover. Although such exercise is within the Fund's
control, holding a protective put might cause it to sell the related investments
for reasons that would not exist in the absence of the put. A Fund will pay a
brokerage commission each time it buys or sells a put or call or purchases or
sells a futures contract. Such commissions may be higher than those that would
apply to direct purchases or sales.
SWAPS, CAPS, FLOORS AND COLLARS. The Funds are authorized to enter into swaps,
caps, floors and collars. Swaps involve the exchange by one party with another
party of their respective commitments to pay or receive cash flows, e.g., an
exchange of floating rate payments for fixed rate payments. The purchase of a
cap or a floor entitles the purchaser, to the extent that a specified index
exceeds in the case of a cap, or falls below in the case of a floor, a
predetermined value, to receive payments on a notional principal amount from the
party selling such instrument. A collar combines elements of buying a cap and
selling a floor.
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 security with
the SEC, and otherwise obtaining listing on a securities exchange or in the over
the counter market.
<PAGE>
INVESTMENT COMPANY SECURITIES -- To manage their daily cash positions, the Funds
may invest in securities issued by other investment companies that invest in
short-term debt securities and seek to maintain a net asset value of $1.00 per
share ("money market funds"). The Funds also may invest in Standard & Poor's
Depository Receipts ("SPDRs") and shares of other investment companies. SPDRs
are investment companies whose portfolios mirror the compositions of specific
S&P indices, such as the S&P 500 and the S&P 400. SPDRs are traded on the
American Stock Exchange. SPDR holders such as a Fund are paid a "Dividend
Equivalent Amount" that corresponds to the amount of cash dividends accruing to
the securities held by the SPDR Trust, net of certain fees and expenses. The
Investment Company Act of 1940, as amended (the "1940 Act") limits investments
in securities of other investment companies, such as the SPDR Trust. These
limitations include, among others, that, subject to certain exceptions, no more
than 10% of a Fund's total assets may be invested in securities of other
investment companies and no more than 5% of its total assets may be invested in
the securities of any one investment company. As a shareholder of another
investment company, a Fund would bear its pro rata portion of the other
investment company's expenses, including advisory fees, in addition to the
expenses the Fund bears directly in connection with its own operations.
REITS -- Real Estate Investment Trusts are investment trusts that invest
primarily in real estate and securities of businesses connected to the real
estate industry.
REPURCHASE AGREEMENTS -- A Fund may enter into repurchase agreements, or REPOs,
on debt securities that the Fund is allowed to hold in its portfolio. This is a
way to invest money for short periods. A REPO is an agreement under which the
Fund acquires a debt security and then resells it to the seller at an
agreed-upon price and date (normally, the next business day). The repurchase
price represents an interest rate effective for the short period the debt
security is held by the Fund, and is unrelated to the interest rate on the
underlying debt security. A repurchase agreement is often considered as a loan
collateralized by securities. The collateral securities acquired by the Fund
(including accrued interest earned thereon) must have a total value in excess of
the value of the repurchase agreement. The collateral securities are held by the
Fund's custodian bank until the repurchase agreement is completed.
The Funds may enter into repurchase agreements with commercial banks, registered
broker-dealers or registered government securities dealers that are creditworthy
under standards established by the Company's board of directors. The Company's
board of directors has established standards that INVESCO and the applicable
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
<PAGE>
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 (ALL FUNDS, EXCEPT S&P 500 INDEX FUND) -- Securities that
can be resold to institutional investors pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act"). In recent years, a large
institutional market has developed for many Rule 144A Securities. Institutional
investors generally cannot sell these securities to the general public but
instead will often depend on an efficient institutional market in which Rule
144A Securities can readily be resold to other institutional investors, or on an
issuer's ability to honor a demand for repayment. Therefore, the fact that there
are contractual or legal restrictions on resale to the general public or certain
institutions does not necessarily mean that a Rule 144A Security is illiquid.
Institutional markets for Rule 144A Securities may provide both reliable market
values for Rule 144A Securities and enable a Fund to sell a Rule 144A investment
when appropriate. For this reason, the Company's board of directors has
concluded that if a sufficient institutional trading market exists for a given
Rule 144A security, it may be considered "liquid," and not subject to a Fund's
limitations on investment in restricted securities. The Company's board of
directors has given INVESCO the day-to-day authority to determine the liquidity
of Rule 144A Securities, according to guidelines approved by the board. The
principal risk of investing in Rule 144A Securities is that there may be an
insufficient number of qualified institutional buyers interested in purchasing a
Rule 144A Security held by a Fund, and the Fund might be unable to dispose of
such security promptly or at reasonable prices.
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.
SOVEREIGN DEBT -- In certain emerging countries, the central government and its
agencies are the largest debtors to local and foreign banks and others.
Sovereign debt involves the risk that the government, as a result of political
considerations or cash flow difficulties, may fail to make scheduled payments of
interest or principal and may require holders to participate in rescheduling of
payments or even to make additional loans. If an emerging country government
defaults on its sovereign debt, there is likely to be no legal proceeding under
which the debt may be ordered repaid, in whole or in part. The ability or
willingness of a foreign sovereign debtor to make payments of principal and
interest in a timely manner may be influenced by, among other factors, its cash
flow, the magnitude of its foreign reserves, the availability of foreign
exchanges on the payment date, the debt service burden to the economy as a
whole, the debtor's then current relationship with the International Monetary
Fund and its then current political constraints. Some of the emerging countries
issuing such instruments have experienced high rates of inflation in recent
years and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance government
programs, and may have other adverse social, political and economic
<PAGE>
consequences, including effects on the willingness of such countries to service
their sovereign debt. An emerging country government's willingness and ability
to make timely payments on its sovereign debt also are likely to be heavily
affected by the country's balance of trade and its access to trade and other
international credits. If a country's exports are concentrated in a few
commodities, such country would be more significantly exposed to a decline in
the international process of one or more of such commodities. A rise in
protectionism on the part of its trading partners, or unwillingness by such
partners to make payment for goods in hard currency, could also adversely affect
the country's ability to export its products and repay its debts. Sovereign
debtors may also be dependent on expected receipts from such agencies and others
abroad to reduce principal and interest arrearages on their debt. However,
failure by the sovereign debtor or other entity to implement economic reforms
negotiated with multilateral agencies or others, to achieve specified levels of
economic performance, or to make other debt payments when due, may cause third
parties to terminate their commitments to provide funds to the sovereign debtor,
which may further impair such debtor's willingness or ability to service its
debts.
The Fund may invest in debt securities issued under the "Brady Plan" in
connection with restructurings in emerging country debt markets or earlier
loans. These securities, often referred to as "Brady Bonds," are, in some cases,
denominated in U.S. dollars and collateralized as to principal by U.S. Treasury
zero coupon bonds having the same maturity. At least one year's interest
payments, on a rolling basis, are collateralized by cash or other investments.
Brady Bonds are actively traded on an over-the-counter basis in the secondary
market for emerging country debt securities. Brady Bonds are lower-rated bonds
and highly volatile.
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 INVESCO and the applicable sub-advisers are satisfied that the credit risk
with respect to any such instrumentality is comparatively minimal.
WHEN-ISSUED/DELAYED DELIVERY -- The Funds normally buy and sell securities on an
ordinary settlement basis. That means that the buy or sell order is sent, and a
Fund actually takes delivery or gives up physical possession of the security on
the "settlement date," which is three business days later. However, the Funds
also may purchase and sell securities on a when-issued or delayed delivery
basis.
When-issued or delayed delivery transactions occur when securities are purchased
or sold by a Fund and payment and delivery take place at an agreed-upon time in
the future. The Funds may engage in this practice in an effort to secure an
advantageous price and yield. However, the yield on a comparable security
available when delivery actually takes place may vary from the yield on the
security at the time the when-issued or delayed delivery transaction was entered
into. When a Fund engages in when-issued and delayed delivery transactions, it
relies on the seller or buyer to consummate the sale at the future date. If the
seller or buyer fails to act as promised, that failure may result in the Fund
missing the opportunity of obtaining a price or yield considered to be
advantageous. No payment or delivery is made by a Fund until it receives
delivery or payment from the other party to the transaction. However,
fluctuation in the value of the security from the time of commitment until
delivery could adversely affect a Fund.
INVESTMENT RESTRICTIONS
The Funds operate under certain investment restrictions. For purposes of the
following restrictions, all percentage limitations apply immediately after a
purchase or initial investment. Any subsequent change in a particular percentage
resulting from fluctuations in value does not require elimination of any
security from a Fund.
The following restrictions are fundamental and may not be changed without prior
approval of a majority of the outstanding voting securities of a Fund, as
defined in the 1940 Act. Each Fund may not:
1. purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities 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
<PAGE>
U.S. government or any of its agencies or instrumentalities, or securities
of other investment companies) if, as a result, (i) more than 5% of a
Fund's total assets would be invested in the securities of that issuer, or
(ii) a Fund would hold more than 10% of the outstanding voting securities
of that issuer;
3. underwrite securities of other issuers, except insofar as it may be
deemed to be an underwriter under the 1933 Act 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 under the 1940 Act;
6. lend any security or make any loan if, as a result, more than 33 1/3%
of its total assets would be lent to other parties, but this limitation
does not apply to the purchase of debt securities or to repurchase
agreements;
7. purchase or sell physical commodities; however, this policy shall not
prevent the Fund from purchasing and selling foreign currency, futures
contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments; or
8. purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).
9. Each Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by INVESCO or an
affiliate or a successor thereof, with substantially the same fundamental
investment objective, policies and limitations as the Fund.
In addition, each Fund has the following non-fundamental policies, which may be
changed without shareholder approval:
A. The Fund may not sell securities short (unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities
sold short) or purchase securities on margin, except that (i) this policy
does not prevent the Fund from entering into short positions in foreign
currency, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments, (ii) the Fund may obtain
such short-term credits as are necessary for the clearance of transactions,
and (iii) the Fund may make margin payments in connection with futures
contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments.
B. The Fund may borrow money only from a bank or from an open-end
management investment company managed by INVESCO or an affiliate or a
successor thereof for temporary or emergency purposes (not for leveraging
<PAGE>
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.
Following is a chart outlining some of the limitations pursuant to
non-fundamental investment policies set by the board of directors. These
non-fundamental policies may be changed by the board of directors without
shareholder approval:
- --------------------------------------------------------------------------------
INVESTMENT BLUE CHIP GROWTH DYNAMICS ENDEAVOR GROWTH & INCOME
- --------------------------------------------------------------------------------
EQUITY SECURITIES Unlimited Unlimited Unlimited Unlimited
- --------------------------------------------------------------------------------
LOWER RATED Not Allowed Up to 25%
CORPORATE DEBT
SECURITIES
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT BLUE CHIP GROWTH DYNAMICS ENDEAVOR GROWTH & INCOME
- --------------------------------------------------------------------------------
FOREIGN SECURITIES Up to 25% Up to 25% Up to 25% Up to 25%
(Percentages
exclude ADRs and
securities of
Canadian issuers.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT SMALL COMPANY GROWTH S&P 500 INDEX VALUE EQUITY
- --------------------------------------------------------------------------------
EQUITY SECURITIES Normally, at least Normally, those Normally, at
65% in companies listed in the least 65%
with market S&P 500 Index
capitalizations of
$1 billion or less
- --------------------------------------------------------------------------------
LOWER RATED Up to 5%
CORPORATE DEBT
SECURITIES
- --------------------------------------------------------------------------------
FOREIGN SECURITIES Up to 25% Only securities Up to 25%
(Percentages that are listed
exclude ADRs and in the S&P 500
securities of Index
Canadian issuers.)
- --------------------------------------------------------------------------------
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.
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios,
Inc.)
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
As of December 31, 1999, INVESCO managed 45 mutual funds having combined assets
of $31 billion, on behalf of more than 960,478 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
<PAGE>
of the largest independent investment management businesses in the world, with
approximately $291 billion in assets under management on September 30, 1999.
AMVESCAP PLC's North American subsidiaries include:
INVESCO Retirement and Benefit Services, Inc. ("IRBS"), Atlanta, Georgia,
develops and provides domestic and international defined contribution
retirement plan services to plan sponsors, institutional retirement plan
sponsors, institutional plan providers and foreign governments.
INVESCO Retirement Plan Services ("IRPS"), Atlanta, Georgia, a
division of IRBS, provides recordkeeping and investment selection
services to defined contribution plan sponsors of plans with between
$2 million and $200 million in assets. Additionally, IRPS provides
investment consulting services to institutions seeking to provide
retirement plan products and services.
Institutional Trust Company, doing business as INVESCO Trust Company
("ITC"), Denver, Colorado, a division of IRBS, provides retirement
account custodian and/or trust services for individual retirement
accounts ("IRAs") and other retirement plan accounts. This includes
services such as recordkeeping, tax reporting and compliance. ITC acts
as trustee or custodian to these plans. ITC accepts contributions and
provides complete transfer agency functions: correspondence,
sub-accounting, telephone communications and processing of
distributions.
INVESCO, Inc., Atlanta, Georgia, manages individualized investment
portfolios of equity, fixed-income and real estate securities for
institutional clients, including mutual funds and the collective investment
entities. INVESCO, Inc. includes the following Divisions:
INVESCO Capital Management Division, 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 Division, Boston, Massachusetts,
primarily manages pension and endowment accounts.
PRIMCO Capital Management Division, Louisville, Kentucky, specializes
in managing stable return investments, principally on behalf of
Section 401(k) retirement plans.
INVESCO Realty Advisors Division, 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) Division, New York, is an investment adviser for
separately managed accounts, such as corporate and municipal pension
plans, Taft-Hartley Plans, insurance companies, charitable
institutions and private individuals. INVESCO NY further serves as
investment adviser to several closed-end investment companies, and as
sub-adviser with respect to certain commingled employee benefit
trusts.
<PAGE>
A I M Advisors, Inc., Houston, Texas, provides investment advisory and
administrative services for retail and institutional mutual funds.
A I M Capital Management, Inc., Houston, Texas, provides investment
advisory services to individuals, corporations, pension plans and other
private investment advisory accounts and also serves as a sub-adviser to
certain retail and institutional mutual funds, one Canadian mutual fund and
one portfolio of an open-end registered investment company that is offered
to separate accounts of variable insurance companies.
A I M Distributors, Inc. and Fund Management Company, Houston, Texas, are
registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.
The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire Square,
London, EC2M4YR, England.
THE INVESTMENT ADVISORY AGREEMENT
INVESCO serves as investment adviser to the Funds under an investment advisory
agreement dated February 28, 1997 (the "Agreement") with the Company.
The Agreement requires that INVESCO manage the investment portfolio of each Fund
in a way that conforms with the Fund's investment policies. INVESCO may directly
manage a Fund itself, or may hire a sub-adviser, which may be an affiliate of
INVESCO, to do so. Specifically, INVESCO is responsible for:
o managing the investment and reinvestment of all the assets of the Funds,
and executing all purchases and sales of portfolio securities;
o maintaining a continuous investment program for the Funds, consistent
with (i) each Fund's investment policies as set forth in the Company's
Articles of Incorporation, Bylaws and Registration Statement, as from
time to time amended, under the 1940 Act, and in any prospectus and/or
statement of additional information of the Funds, as from time to time
amended and in use under the 1933 Act, and (ii) the Company's status as a
regulated investment company under the Internal Revenue Code of 1986, as
amended;
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 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.
<PAGE>
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 prospectuses, statements
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; and
o preparing and maintaining certain of the books and records required to be
prepared and maintained by the Funds under the 1940 Act.
Expenses not assumed by INVESCO are borne by the Funds. As full compensation for
its advisory services to the Company, INVESCO receives a monthly fee from each
Fund. The fee is calculated at the annual rate of:
BLUE CHIP GROWTH AND DYNAMICS FUNDS
o 0.60% on the first $350 million of each Fund's average net assets;
o 0.55% on the next $350 million of each Fund's average net assets;
o 0.50% 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
<PAGE>
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;
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;
<PAGE>
o 0.45% of the Fund's average net assets from $2 billion;
o 0.40% of the Fund's average net assets from $4 billion;
o 0.375% of the Fund's average net assets from $6 billion; and
o 0.35% of the Fund's average net assets from $8 billion.
During the periods outlined in the table below, the Funds paid INVESCO advisory
fees in the dollar amounts shown below. Since the Funds' Class C shares are not
offered until February 15, 2000, no advisory fees were paid with respect to
Class C shares for the periods shown below. If applicable, the advisory fees
were offset by credits in the amounts shown below, so that the Funds' fees were
not in excess of the expense limitations shown below, which have been
voluntarily agreed to by the Company and INVESCO.
Advisory Total Expense Total Expense
Fee Dollars Reimbursements Limitations
----------- -------------- -----------
Blue Chip Growth Fund - Investor Class
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 - Investor Class
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%
Endeavor Fund - Investor Class
July 31, 1999(b) $ 173,488 $0 1.50%
April 30, 1999 $ 206,836 $0 1.50%
Growth & Income Fund - Investor Class
July 31, 1999(b) $ 107,949 $33,201 1.50%
April 30, 1999 $ 209,172 $53,659 1.50%
Small Company Growth Fund - Investor Class
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%
<PAGE>
S&P 500 Index Fund - Institutional Class
July 31, 1999(e) $ 9,042 $ 29,912 0.35%(f)
July 31, 1998 $ 3,729 $ 31,239 0.30%
S&P 500 Index Fund - Investor Class
July 31, 1999(e) $ 99,317 $ 155,166 0.60%(g)
July 31, 1998 $ 10,030 $ 44,823 0.55%
Value Equity Fund - Investor Class
July 31, 1999(a) $2,756,316 $ 397,754 1.30%(h)
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
(f) Effective May 13, 1999, the Total Expense Limitation was changed to 0.35%
(g) Effective May 13, 1999, the Total Expense Limitation was changed to 0.60%
(h) Effective May 13, 1999, the Total Expense Limitation was changed to 1.30%
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 July 15,
1999 with INVESCO.
With respect to the Value Equity Fund, INVESCO Capital Management, a division of
INVESCO, Inc. ("ICM"), serves as sub-adviser to the Fund pursuant to a
sub-advisory agreement dated February 28, 1997 with INVESCO.
The Sub-Agreements provide that World and ICM, as applicable, subject to the
supervision of INVESCO, shall manage the investment portfolio 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
<PAGE>
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 sub-advisory fees
are paid by INVESCO, NOT the Funds. The fees are calculated at the following
annual rates:
S&P 500 INDEX FUND
o 0.07% on the first $10 million of the Fund's average net assets;
o 0.05% on the next $40 million of the Fund's average net assets; and
o 0.03% of the Fund's average net assets from $50 million.
VALUE EQUITY FUND
o 0.30% on the first $500 million of the Fund's average net assets;
o 0.26% on the next $500 million of the Fund's average net assets;
o 0.20% of the Fund's average net assets from $1 billion;
o 0.18% of the Fund's average net assets from $2 billion;
o 0.16% of the Fund's average net assets from $4 billion;
o 0.15% of the Fund's average net assets from $6 billion; and
o 0.14% of the Fund's average net assets from $8 billion.
ADMINISTRATIVE SERVICES AGREEMENT
INVESCO, either directly or through affiliated companies, provides certain
administrative, sub-accounting, and recordkeeping services to the Funds pursuant
to an Administrative Services Agreement dated February 28, 1997 with the
Company.
<PAGE>
The Administrative Services Agreement requires INVESCO to provide the following
services to the Funds:
o such sub-accounting and recordkeeping services and functions as are
reasonably necessary for the operation of the Funds; and
o such sub-accounting, recordkeeping, and administrative services and
functions, which may be provided by affiliates of INVESCO, as are
reasonably necessary for the operation of Fund shareholder accounts
maintained by certain retirement plans and employee benefit plans for the
benefit of participants in such plans.
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 dated February
28, 1997 with the Company.
The Transfer Agency Agreement provides that each Fund pays 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' Investor
Class shares paid the following fees to INVESCO (in some instances, prior to the
absorption of certain Fund expenses by INVESCO). Since the Funds' Class C shares
are not offered until February 15, 2000, no fees were paid with respect to Class
C shares for the periods shown below.
Blue Chip Growth Fund - Investor Class
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
<PAGE>
Dynamics Fund - Investor Class
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 - Investor Class
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 - Investor Class
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 - Investor Class
JULY 31, MAY 31
TYPE OF FEE 1999(e) 1998 1998 1997
- ----------- ------- ---- ---- ----
Advisory $ 512,934 $1,973,393 $2,334,680 $2,029,312
Administrative Services 33,164 54,324 56,738 50,600
Transfer Agency 327,104 1,116,282 1,090,224 1,043,895
S&P 500 Index Fund - Institutional Class
JULY 31,
TYPE OF FEE 1999 1998
- ----------- ---- ----
Advisory $ 9,042 $ 3,729
Administrative Services 1,793 2,624
Transfer Agency 2,447 266
S&P 500 Index Fund - Investor Class
JULY 31,
TYPE OF FEE 1999 1998
- ----------- ---- ----
Advisory $ 99,317 $ 10,030
Administrative Services 19,051 4,250
Transfer Agency 76,345 7,631
<PAGE>
Value Equity Fund - Investor Class
JULY 31, AUGUST 31
TYPE OF FEE 1999(a) 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
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 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 derivative usage
by the Funds and the procedures utilized by INVESCO to ensure that the use of
such instruments follows the policies on such instruments adopted by the
Company's board of directors. It reports on these matters to the Company's board
of directors.
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
<PAGE>
for making investment decisions on behalf of the Funds. These investment
decisions are reviewed by the investment committee of INVESCO.
All of the officers and directors of the Company hold comparable positions with
the following funds, which, with the Company, are collectively referred to as
the "INVESCO Funds":
INVESCO Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.)
INVESCO Combination Stock & Bond Funds, Inc. (formerly, INVESCO
Flexible Funds, Inc.)
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios,
Inc.)
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
The table below provides information about each of the Company's directors and
officers. Their affiliations represent their principal occupations.
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
Charles W. Brady *+ Director and Chairman Chairman of the Board
1315 Peachtree St., N.E. of the Board of INVESCO Global
Atlanta, Georgia Health Sciences Fund;
Age: 64 Chief Executive
Officer and Director
of AMVESCAP PLC,
London, England and
various subsidiaries
of AMVESCAP PLC.
Fred A. Deering +# Director and Vice Trustee of INVESCO
Security Life Center Chairman of the Board Global Health Sciences
1290 Broadway Fund; formerly,
Denver, Colorado Chairman of the
Age: 72 Executive Committee
and Chairman of the
Board of Security Life
of Denver Insurance
Company; Director of
ING American Holdings
Company and First ING
Life Insurance
Company of New York.
<PAGE>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
Mark H. Williamson *+ President, Chief President, Chief
7800 E. Union Avenue Executive Officer Executive Officer and
Denver, Colorado and Director Director of INVESCO
Age: 48 Funds Group, Inc.;
President, Chief
Executive Officer and
Director of INVESCO
Distributors, Inc.;
President, Chief
Operating Officer and
Trustee of INVESCO
Global Health Sciences
Fund; formerly,
Chairman and Chief
Executive Officer of
Nations Banc Advisors,
Inc.; formerly,
Chairman of
NationsBanc
Investments, Inc.
Victor L. Andrews, Ph.D. **! Director Professor Emeritus,
34 Seawatch Drive Chairman Emeritus and
Savannah, Georgia Chairman of the CFO
Age: 69 Roundtable of the
Department of Finance
of Georgia State
University; President,
Andrews Financial
Associates, Inc.
(consulting firm);
formerly, member of the
faculties of the
Harvard Business School
and the Sloan School of
Management of MIT;
Director of The
Sheffield Funds, Inc.
<PAGE>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
Bob R. Baker +**@ Director Consultant(since 2000)
AMC Cancer Research Center and President and
1600 Pierce Street Chief Executive
Denver, Colorado Officer (1988 to 2000)
Age: 63 of AMC Cancer Research
Center, Denver,
Colorado; 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; prior
7608 Glen Albens Circle to June 30, 1987,
Dallas, Texas Senior Vice President
Age: 69 and Senior Trust
Officer of InterFirst
Bank, Dallas, Texas.
James T. Bunch**@ Director Principal and Founder
3600 Republic Plaza of Green Manning &
320 Seventeenth Street Bunch Ltd., Denver,
Denver, Colorado Colorado, since
Age: 57 August 1988;
Director and Secretary
of Green Manning
Bunch Securities, Inc.,
Denver, Colorado since
September 1993;
Vice President and
Director of
Western Golf
Association and Evans
Scholars Foundation;
formerly, General
Counsel and Director of
Boettcher & Co.,
Denver, Colorado;
formerly, Chairman and
Managing Partner of
Davis Graham & Stubbs,
Denver, Colorado.
<PAGE>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE 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: 55 Administration,
University of Texas at
Arlington; formerly,
Chairman, Commodity
Futures Trading
Commission;
Administrator for
Information and
Regulatory Affairs at
the Office of
Management and Budget;
Executive Director of
the Presidential Task
Force on Regulatory
Relief; and Director of
the Federal Trade
Commission's Bureau of
Economics; also,
Director of Chicago
Mercantile Exchange,
Enron Corporation, IBP,
Inc., State Farm
Insurance Company,
Independent Women's
Forum, International
Republic Institute, and
the Republican Women's
Federal Forum. Also,
Member of Board of
Visitors, College of
Business
Administration,
University of Iowa, and
Member of Board of
Visitors, Center for
Study of Public Choice,
George Mason
University.
<PAGE>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
Gerald J. Lewis#! Director Chairman of Lawsuit
701 "B" Street Resolution Services,
Suite 2100 San Diego, California
San Diego, California since 1987;
Age: 65 Director of General
Chemical Group, Inc.,
Hampdon, New
Hampshire, since 1996;
formerly, Associate
Justice of the
California Court of
Appeals; formerly,
Director of
Wheelabrator
Technologies, Inc.,
Fisher Scientific,
Inc., Henley
Manufacturing, Inc.,
and California Coastal
Properties, Inc.;
formerly, Of Counsel
Latham & Watkins, San
Diego, California
(1987 to 1997).
John W. McIntyre + #@ Director Retired. Formerly, Vice
7 Piedmont Center Suite 100 Chairman of the Board
Atlanta, Georgia of Directors of the
Age: 69 Citizens and Southern
Corporation and
Chairman of the Board
and Chief Executive
Officer of the Citizens
and Southern Georgia
Corp. and the Citizens
and Southern National
Bank; Trustee of
INVESCO Global Health
Sciences Fund, Gables
Residential Trust,
Employee's Retirement
System of GA, Emory
University and J.M.
Tull Charitable
Foundation; Director of
Kaiser Foundation
Health Plans of
Georgia, Inc.
<PAGE>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
Larry Soll, Ph.D.!** Director Retired. Formerly,
345 Poorman Road Chairman of the Board
Boulder, Colorado (1987 to 1994), Chief
Age: 57 Executive Officer (1982
to 1989 and 1993 to
1994) and President
(1982 to 1989) of
Synergen Inc.; Director
of Synergen since
incorporation in 1982;
Director of Isis
Pharmaceuticals, Inc.;
Trustee of INVESCO
Global Health Sciences
Fund.
Glen A. Payne Secretary Senior Vice President,
7800 E. Union Avenue General Counsel and
Denver, Colorado Secretary of INVESCO
Age: 52 Funds Group, Inc.;
Senior Vice President,
Secretary and General
Counsel of INVESCO
Distributors, Inc.;
Secretary of INVESCO
Global Health Sciences
Fund; formerly, General
Counsel of INVESCO
Trust Company (1989
to1998); formerly,
employee of a U.S.
regulatory agency,
Washington, D.C. (1973
to 1989).
<PAGE>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- --------------------- ----------------------
Ronald L. Grooms Chief Accounting Senior Vice President,
7800 E. Union Avenue Officer, Chief Treasurer and Director
Denver, Colorado Financial Officer and of INVESCO Funds Group,
Age: 53 Treasurer Inc.; Senior Vice
President, Treasurer
and Director of INVESCO
Distributors, Inc.;
Treasurer and Principal
Financial and
Accounting Officer of
INVESCO Global Health
Sciences Fund;
formerly, Senior Vice
President and Treasurer
of INVESCO Trust
Company (1988 to 1998).
William J. Galvin, Jr. Assistant Secretary Senior Vice President
7800 E. Union Avenue and Assistant Secretary
Denver, Colorado of INVESCO Funds Group,
Age: 43 Inc.; Senior Vice
President and Assistant
Secretary of INVESCO
Distributors, Inc.;
formerly, Trust Officer
of INVESCO Trust
Company (1995 to 1998).
Pamela J. Piro Assistant Treasurer Vice President and
7800 E. Union Avenue Assistant Treasurer of
Denver, Colorado INVESCO Funds Group,
Age: 39 Inc.; Assistant
Treasurer of INVESCO
Distributors, Inc.;
formerly, Assistant
Vice President (1996 to
1997), Director -
Portfolio Accounting
(1994 to 1996),
Portfolio Accounting
Manager (1993 to 1994)
and Assistant
Accounting Manager
(1990 to 1993).
<PAGE>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
Alan I. Watson Assistant Secretary Vice President of
7800 E. Union Avenue INVESCO Funds Group,
Denver, Colorado Inc.; formerly, Trust
Age: 58 Officer of INVESCO
Trust Company.
Judy P. Wiese Assistant Secretary Vice President and
7800 E. Union Avenue Assistant Secretary of
Denver, Colorado INVESCO Funds Group,
Age: 51 Inc.; Assistant
Secretary of INVESCO
Distributors, Inc.;
formerly, Trust
Officer of INVESCO
Trust Company.
# Member of the audit committee of the Company.
+ Member of the executive committee of the Company. On occasion, the executive
committee acts upon the current and ordinary business of the Company between
meetings of the board of directors. Except for certain powers which, under
applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All decisions are
subsequently submitted for ratification by the board of directors.
* These directors are "interested persons" of the Company as defined in the
1940 Act.
** Member of the management liaison committee of the Company.
@ Member of the brokerage committee of the Company.
! Member of the derivatives committee of the Company.
The following table shows the compensation paid by the Company to its
Independent Directors for services rendered in their capacities as directors of
the Company; the benefits accrued as Company expenses with respect to the
Defined Benefit Deferred Compensation Plan discussed below; and the estimated
annual benefits to be received by these directors upon retirement as a result of
their service to the Company, all for the period ended July 31, 1999.
In addition, the table sets forth the total compensation paid by all of the
INVESCO Funds and INVESCO Global Health Sciences Fund (collectively, the
"INVESCO Complex") to these directors or trustees for services rendered in their
capacities as directors or trustees during the year ended December 31, 1999. As
of December 31, 1999, there were 46 funds in the INVESCO Complex.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
BENEFITS ESTIMATED TOTAL
AGGREGATE ACCRUED ANNUAL COMPENSATION
COMPENSATION AS PART OF BENEFITS FROM INVESCO
NAME OF PERSON FROM COMPANY UPON COMPLEX PAID
AND POSITION COMPANY(1) EXPENSES(2) RETIREMENT(3) TO DIRECTORS(7)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fred A. Deering, $6,164 $8,033 $5,425 $107,050
Vice Chairman of
the Board
- -----------------------------------------------------------------------------------------
Victor L. Andrews 5,589 7,684 5,981 84,700
- -----------------------------------------------------------------------------------------
Bob R. Baker 5,672 6,862 8,016 82,850
- -----------------------------------------------------------------------------------------
Lawrence H. Budner 5,561 7,684 5,981 82,850
- -----------------------------------------------------------------------------------------
James T. Bunch(4) 0 0 0 0
- -----------------------------------------------------------------------------------------
Daniel D. Chabris(5) 2,366 7,852 4,921 34,000
- -----------------------------------------------------------------------------------------
Wendy L. Gramm 5,449 0 0 81,350
- -----------------------------------------------------------------------------------------
Kenneth T. King(5) 6,014 8,199 4,921 85,850
- -----------------------------------------------------------------------------------------
Gerald J. Lewis(4) 0 0 0 0
- -----------------------------------------------------------------------------------------
John W. McIntyre 6,135 0 0 108,700
- -----------------------------------------------------------------------------------------
Larry Soll 5,449 0 0 100,900
- -----------------------------------------------------------------------------------------
Total 48,399 46,314 35,245 768,250
- -----------------------------------------------------------------------------------------
% of Net Assets 0.0010%(6) 0.0010%(6) 0.0024%(7)
- -----------------------------------------------------------------------------------------
</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 and Messrs.
Bunch and Lewis, each of these directors has served as a director of one or more
of the funds in the INVESCO Funds for the minimum five-year period required to
be eligible to participate in the Defined Benefit Deferred Compensation Plan.
Although Mr. McIntyre became eligible to participate in the Defined Benefit
Deferred Compensation Plan as of November 1, 1998, he was not included in the
calculation of retirement benefits until November 1, 1999.
(4) Messrs. Bunch and Lewis became directors of the Company on January 1, 2000.
(5) Mr. Chabris retired as a director of the Company on September 30, 1998. Mr.
King retired as a director of the Company on December 31, 1999.
(6) Total as a percentage of the Company's net assets as of July 31, 1999.
(7) Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1999.
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,
if the Qualified Director retires upon reaching age 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, commencing with the first year of retirement of any
Qualified Director whose retirement has been extended by the boards for three
years, and commencing with attainment of age 72 by a Qualified Director who
voluntarily retires prior to reaching age 72, 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 him/her or 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
<PAGE>
payments under the Plan to Mr. Chabris as of October 1, 1998 and to Mr. King as
of January 1, 2000. 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 the INVESCO Funds.
The Independent Directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of certain of the INVESCO
Funds. Certain of the deferred amounts have been invested in the shares of all
INVESCO Funds, except Funds offered by INVESCO Variable Investment Funds, Inc.,
in which the directors are legally precluded from investing. Each Independent
Director may, therefore, be deemed to have an indirect interest in shares of
each such INVESCO Fund, in addition to any INVESCO Fund shares the Independent
Director may own either directly or beneficially.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of December 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
- --------------------------------------------------------------------------------
BASIS OF OWNERSHIP
NAME AND ADDRESS (RECORD/BENEFICIAL) PERCENTAGE OWNED
================================================================================
None
- --------------------------------------------------------------------------------
<PAGE>
Dynamics Fund
- --------------------------------------------------------------------------------
BASIS OF OWNERSHIP
NAME AND ADDRESS (RECORD/BENEFICIAL) PERCENTAGE OWNED
================================================================================
Charles Schwab & Co., Inc.
Special Custody Account Record 14.44%
for the Exclusive Benefit
of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
Connecticut General Life Ins.
c/o Liz Pezda M-110 Record 5.69%
P.O. Box 2975 H 19 B
Hartford, CT 06104-2975
- --------------------------------------------------------------------------------
Endeavor Fund
- --------------------------------------------------------------------------------
BASIS OF OWNERSHIP
NAME AND ADDRESS (RECORD/BENEFICIAL) PERCENTAGE OWNED
================================================================================
Charles Schwab & Co., Inc. Record 26.20%
Special Custody Account
for the Exclusive Benefit
of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
National Financial Services Corp.
The Exclusive Benefit Record 7.40%
of Customers
One World Financial Center
200 Liberty St., 5th Floor
Attn: Kate - Recon
New York, NY 10281-5500
- --------------------------------------------------------------------------------
<PAGE>
Growth & Income Fund
- --------------------------------------------------------------------------------
BASIS OF OWNERSHIP
NAME AND ADDRESS (RECORD/BENEFICIAL) PERCENTAGE OWNED
================================================================================
Charles Schwab & Co., Inc. Record 30.92%
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. Record 6.85%
The Exclusive Benefit of Cust.
One World Financial Center
200 Liberty Street, 5th Floor
Attn: Kate Recon
New York, NY 10281-1003
- --------------------------------------------------------------------------------
Small Company Growth Fund
- --------------------------------------------------------------------------------
BASIS OF OWNERSHIP
NAME AND ADDRESS (RECORD/BENEFICIAL) PERCENTAGE OWNED
================================================================================
Connecticut General Life Record 14.46%
Insurance
c/o Liz Pezda M-110
P.O. Box 2975 H 19 B
Hartford, CT 06104-2975
- --------------------------------------------------------------------------------
Charles Schwab & Co., Inc.
Special Custody Account Record 9.18%
for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
FIIOC Agent
Employee Benefit Plans Record 5.68%
100 Magellan Way KWIC
Covington, KY 41015-1987
<PAGE>
S&P 500 Index Fund
- --------------------------------------------------------------------------------
BASIS OF OWNERSHIP
NAME AND ADDRESS (RECORD/BENEFICIAL) PERCENTAGE OWNED
================================================================================
INVESCO Trust Company Record 38.57%
Right Choice Managed Care Inc.
Exec Def Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 20.31%
Compass Group USA
Non-Qualified Plan IRPS
Attn: Kelly Allen
P.O. Box 1350
Winston-Salem, NC 27102-1350
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 19.49%
Right Choice Managed Care Inc.
Supp Exec Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
- --------------------------------------------------------------------------------
Ronald L. Grooms Beneficial 10.05%
7800 East Union Avenue
Denver, CO 80237-2715
- --------------------------------------------------------------------------------
Value Equity Fund
- --------------------------------------------------------------------------------
BASIS OF OWNERSHIP
NAME AND ADDRESS (RECORD/BENEFICIAL) PERCENTAGE OWNED
================================================================================
Charles Schwab & Co., Inc. Record 6.47%
Special Custody Account
for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
BASIS OF OWNERSHIP
NAME AND ADDRESS (RECORD/BENEFICIAL) PERCENTAGE OWNED
================================================================================
INVESCO Trust Company Record 6.02%
The Ritz Carlton Hotel
Company LLC
Special Reserve Plan DC
400 Colony Square Suite 2200
1201 Peachtree Street NE
Atlanta, GA 30361-3500
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 5.89%
Morris Communications Corp.
Employee's Profit Sharing
Retirement Plan
725 Broad Street
Augusta, GA 30901-1336
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 5.72%
Carle Clinic Association
Profit Sharing Plan
602 West University Avenue
Urbana, IL 61801-2530
- --------------------------------------------------------------------------------
As of December 31, 2000, officers and directors of the Company, as a group,
beneficially owned less than 1% of each of Blue Chip Growth, Dynamics,
Endeavor, Growth & Income, Small Company Growth, and Value Equity Funds'
outstanding shares and less than 11% of the S&P 500 Index Fund's outstanding
shares.
DISTRIBUTOR
INVESCO Distributors, Inc. ("IDI"), a wholly owned subsidiary of INVESCO, is the
distributor of the Funds. IDI receives no compensation and bears all expenses,
including the cost of printing and distributing prospectuses, incident to
marketing of the Funds' shares, except for such distribution expenses as are
paid out of Fund assets under the Company's Plans of Distribution, which have
been adopted by each Fund pursuant to Rule 12b-1 under the 1940 Act.
INVESTOR CLASS. The Company has adopted a Plan and Agreement of Distribution
(the "Investor Class Plan") with respect to Investor Class shares, which
provides that the Investor Class shares of each Fund will make monthly payments
to IDI computed at an annual rate no greater than 0.25% of average net assets
attributable to Investor Class shares. These payments permit IDI, at its
discretion, to engage in certain activities and provide services in connection
with the distribution of a Fund's Investor Class shares to investors. Payments
by a Fund under the Investor Class Plan, for any month, may be made to
compensate IDI for permissible activities engaged in and services provided.
<PAGE>
CLASS C. The Company has adopted a Master Distribution Plan and Agreement
pursuant to Rule 12b-1 under the 1940 Act relating to the Class C shares of the
Funds (the "Class C Plan"). Under the Class C Plan, Class C shares of the Funds
pay compensation to IDI at an annual rate of 1.00% per annum of the average
daily net assets attributable to Class C shares for the purpose of financing any
activity which is primarily intended to result in the sale of Class C shares.
The Class C Plan is designed to compensate IDI for certain promotional and other
sales-related costs, and to implement a dealer incentive program which provides
for periodic payments to selected dealers who furnish continuing personal
shareholder services to their customers who purchase and own Class C shares of a
Fund. Payments can also be directed by IDI to selected institutions that have
entered into service agreements with respect to Class C shares of each Fund and
that provide continuing personal services to their customers who own such Class
C shares of a Fund. Activities appropriate for financing under the Class C Plan
include, but are not limited to, the following: printing of prospectuses and
statements of additional information and reports for other than existing
shareholders; preparation and distribution of advertising material and
sales literature; expenses of organizing and conducting sales seminars;
supplemental payments to dealers and other institutions such as asset-based
sales charges or as payments of service fees under shareholder service
arrangements; and costs of administering the Class C Plan.
Of the aggregate amount payable under the Class C Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own Class C shares of a Fund, in
amounts of up to 0.25% of the average daily net assets of the Class C shares of
the Fund attributable to the customers of such dealers or financial institutions
are characterized as a service fee. Payments to dealers and other financial
institutions in excess of such amount and payments to IDI would be characterized
as an asset-based sales charge pursuant to the Class C Plan. Payments pursuant
to the Class C Plan are subject to any applicable limitations imposed by rules
of the National Association of Securities Dealers, Inc. ("NASD"). The Class C
Plan conforms to rules of the NASD by limiting payments made to dealers and
other financial institutions who provide continuing personal shareholder
services to their customers who purchase and own Class C shares of the Funds to
no more than 0.25% per annum of the average daily net assets of the Class C
shares of the Funds attributable to the customers of such dealers or financial
institutions, and by imposing a cap on the total sales charges, including
asset-based sales charges, that may be paid by the Funds.
IDI may pay sales commissions to dealers and institutions who sell Class C
shares of the Funds at the time of such sales. Payments with respect to Class C
shares will equal 1.00% of the purchase price of the Class C shares sold by the
dealer or institution, and will consist of a sales commission of 0.75% of the
purchase price of Class C shares sold plus an advance of the first year service
fee of 0.25% with respect to such shares. IDI will retain all payments received
by it relating to Class C shares for the first thirteen months after they are
purchased. The portion of the payments to IDI under the Class C Plan
attributable to Class C shares which constitutes an asset-based sales charge
(0.75%) is intended in part to permit IDI to recoup a portion of on-going sales
commissions to dealers plus financing costs, if any. After the first thirteen
months, IDI will make such payments quarterly to dealers and institutions based
on the average net asset value of Class C shares which are attributable to
shareholders for whom the dealers and institutions are designated as dealers of
record.
<PAGE>
A significant expenditure under the Investor Class Plan and Class C Plan
(collectively, the "Plans") is compensation paid to securities companies and
other financial institutions and organizations, which may include
INVESCO-affiliated companies, in order to obtain various distribution-related
and/or administrative services for the Funds. Each Fund is authorized by a Plan
to use its assets to finance the payments made to obtain those services.
Payments will be made by IDI to broker-dealers who sell shares of a Fund and may
be made to banks, savings and loan associations and other depository
institutions. Although the Glass-Steagall Act limits the ability of certain
banks to act as underwriters of mutual fund shares, INVESCO does not believe
that these limitations would affect the ability of such banks to enter into
arrangements with IDI, but can give no assurance in this regard. However, to the
extent it is determined otherwise in the future, arrangements with banks might
have to be modified or terminated, and, in that case, the size of the Funds
possibly could decrease to the extent that the banks would no longer invest
customer assets in the Funds. Neither the Company nor its investment adviser
will give any preference to banks or other depository institutions which enter
into such arrangements when selecting investments to be made by a Fund.
Financial institutions and any other person entitled to receive compensation for
selling Fund shares may receive different compensation for selling shares of one
particular class instead of another.
During the period ended July 31, 1999, the Funds made payments to IDI under the
Investor Class Plan in the amounts of $2,507,538, $1,291,398, $49,244, $34,245,
$138,369, $88,491, and $915,156 for Blue Chip Growth Fund - Investor Class,
Dynamics Fund - Investor Class, Endeavor Fund - Investor Class, Growth & Income
Fund - Investor Class, Small Company Growth Fund - Investor Class, S&P 500 Index
Fund - Investor Class and Value Equity Fund - Investor Class, respectively. In
addition, as of July 31, 1999, $277,286, $524,406, $23,848, $12,940, $100,988,
$13,861 and $83,038 of additional distribution accruals had been incurred for
Blue Chip Growth Fund - Investor Class, Dynamics Fund - Investor Class, Endeavor
Fund - Investor Class, Growth & Income Fund - Investor Class, Small Company
Growth Fund - Investor Class, S&P 500 Index Fund - Investor Class and Value
Equity Fund - Investor Class, respectively, and will be paid during the fiscal
year ended July 31, 2000. Since the Funds' Class C shares are not offered until
February 15, 2000, the Funds' Class C shares made no payments to IDI under the
Class C Plan during the period ended July 31, 1999. For the fiscal year ended
July 31, 1999, allocation of 12b-1 amounts paid by the Funds' Investor Class for
the following categories of expenses were:
Blue Chip Growth Fund - Investor Class
Advertising--$1,251,932;
Sales literature, printing, and postage--$259,217;
Direct Mail--$166,036;
Public Relations/Promotion--$112,722;
Compensation to securities dealers and other organizations--$396,205; and
Marketing personnel--$321,426.
<PAGE>
Dynamics Fund - Investor Class
Advertising--$333,433;
Sales literature, printing, and postage--$82,180;
Direct Mail--$39,011;
Public Relations/Promotion--$62,799;
Compensation to securities dealers and other organizations--$636,304; and
Marketing personnel--$137,671.
Endeavor Fund - Investor Class
Advertising--$31,872;
Sales literature, printing, and postage--$3,067;
Direct Mail--$2,645;
Public Relations/Promotion--$2,056;
Compensation to securities dealers and other organizations--$6,726; and
Marketing personnel--$2,878.
Growth & Income Fund - Investor Class
Advertising--$25,828;
Sales literature, printing, and postage--$2,003;
Direct Mail--$1,343;
Public Relations/Promotion--$1,013;
Compensation to securities dealers and other organizations--$2,727; and
Marketing personnel--$1,331.
Small Company Growth Fund - Investor Class
Advertising--$6,605;
Sales literature, printing, and postage--$9,551;
Direct Mail--$8,895;
Public Relations/Promotion--$11,675;
Compensation to securities dealers and other organizations--$76,799; and
Marketing personnel--$24,844.
S&P 500 Index Fund - Investor Class
Advertising--$24,616;
Sales literature, printing, and postage--$22,775;
Direct Mail--$2,760;
Public Relations/Promotion--$4,380;
Compensation to securities dealers and other organizations--$20,335; and
Marketing personnel--$13,625.
<PAGE>
Value Equity Fund - Investor Class
Advertising--$134,414;
Sales literature, printing, and postage--$68,376;
Direct Mail--$19,218;
Public Relations/Promotion--$26,709;
Compensation to securities dealers and other organizations--$573,142; and
Marketing personnel--$93,297.
The services which are provided by securities dealers and other organizations
may vary by dealer but include, among other things, processing new shareholder
account applications, preparing and transmitting to the Company's Transfer Agent
computer-processable tapes of all Fund transactions by customers, serving as the
primary source of information to customers in answering questions concerning the
Funds, and assisting in other customer transactions with the Funds.
The Plans provide that they shall continue in effect with respect to each Fund
as long as such continuance is approved at least annually by the vote of the
board of directors of the Company cast in person at a meeting called for the
purpose of voting on such continuance, including the vote of a majority of the
Independent Directors. A Plan can also be terminated at any time by a Fund,
without penalty, if a majority of the Independent Directors, or shareholders of
the relevant class of shares of the Fund, vote to terminate a Plan. The Company
may, in its absolute discretion, suspend, discontinue or limit the offering of
its shares at any time. In determining whether any such action should be taken,
the board of directors intends to consider all relevant factors including,
without limitation, the size of a Fund, the investment climate for a Fund,
general market conditions, and the volume of sales and redemptions of a Fund's
shares. The Plans may continue in effect and payments may be made under a Plan
following any temporary suspension or limitation of the offering of Fund shares;
however, the Company is not contractually obligated to continue a Plan for any
particular period of time. Suspension of the offering of a Fund's shares would
not, of course, affect a shareholder's ability to redeem his or her shares.
So long as the Plans are in effect, the selection and nomination of persons to
serve as Independent Directors of the Company shall be committed to the
Independent Directors then in office at the time of such selection or
nomination. The Plans may not be amended to increase the amount of a Fund's
payments under a Plan without approval of the shareholders of the affected class
of the Fund's shares, and all material amendments to a Plan must be approved by
the board of directors of the Company, including a majority of the Independent
Directors. Under the agreement implementing the Plans, IDI or a Fund, the latter
by vote of a majority of the Independent Directors, or a majority of the holders
of the relevant class of a Fund's outstanding voting securities, may terminate
such agreement without penalty upon 30 days' written notice to the other party.
No further payments will be made by a Fund under a Plan in the event of its
termination.
To the extent that a Plan constitutes a plan of distribution adopted pursuant to
Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so as to
authorize the use of Fund assets in the amounts and for the purposes set forth
therein, notwithstanding the occurrence of an assignment, as defined by the 1940
Act, and rules thereunder. To the extent it constitutes an agreement pursuant to
a plan, a Fund's obligation to make payments to IDI shall terminate
<PAGE>
automatically, in the event of such "assignment." In this event, a Fund may
continue to make payments pursuant to a Plan only upon the approval of new
arrangements regarding the use of the amounts authorized to be paid by a Fund
under a Plan. Such new arrangements must be approved by the directors, including
a majority of the Independent Directors, by a vote cast in person at a meeting
called for such purpose. These new arrangements might or might not be with IDI.
On a quarterly basis, the directors review information about the distribution
services that have been provided to each Fund and the 12b-1 fees paid for such
services. On an annual basis, the directors consider whether a Plan should be
continued and, if so, whether any amendment to the Plan, including changes in
the amount of 12b-1 fees paid by each class of a 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 Plans are the officers and directors of the
Company who are also officers either of IDI or other companies affiliated with
IDI. The benefits which the Company believes will be reasonably likely to flow
to a Fund and its shareholders under the Plans include the following:
o Enhanced marketing efforts, if successful, should result in an increase
in net assets through the sale of additional shares and afford greater
resources with which to pursue the investment objectives of the Funds;
o The sale of additional shares reduces the likelihood that redemption of
shares will require the liquidation of securities of the Funds in amounts
and at times that are disadvantageous for investment purposes; and
o Increased Fund assets may result in reducing each investor's share of
certain expenses through economies of scale (e.g., exceeding established
breakpoints in an advisory fee schedule and allocating fixed expenses
over a larger asset base), thereby partially offsetting the costs of a
Plan.
The positive effect which increased Fund assets will have on INVESCO's revenues
could allow INVESCO and its affiliated companies:
o To have greater resources to make the financial commitments necessary to
improve the quality and level of the Funds' shareholder services (in both
systems and personnel);
o To increase the number and type of mutual funds available to investors
from INVESCO and its affiliated companies (and support them in their
infancy), and thereby expand the investment choices available to all
shareholders; and
o To acquire and retain talented employees who desire to be associated with
a growing organization.
<PAGE>
OTHER SERVICE PROVIDERS
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500, Denver,
Colorado, are the independent accountants of the Company. The independent
accountants are responsible for auditing the financial statements of the Funds.
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts, is the
custodian of the cash and investment securities of the Company. The custodian is
also responsible for, among other things, receipt and delivery of each Fund's
investment securities in accordance with procedures and conditions specified in
the custody agreement with the Company. The custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Funds to be held outside the United States in branches of U.S. banks and, to
the extent permitted by applicable regulations, in certain foreign banks and
securities depositories.
TRANSFER AGENT
INVESCO, 7800 E. Union Avenue, Denver, Colorado, is the Company's transfer
agent, registrar, and dividend disbursing agent. Services provided by INVESCO
include the issuance, cancellation and transfer of shares of the Funds, and the
maintenance of records regarding the ownership of such shares.
LEGAL COUNSEL
The firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., 2nd
Floor, Washington, D.C., is legal counsel for the Company. The firm of Moye,
Giles, O'Keefe, Vermeire & Gorrell LLP, 1225 17th Street, Suite 2900, Denver,
Colorado, acts as special counsel to the Company.
BROKERAGE ALLOCATION AND OTHER PRACTICES
As the investment adviser to the Funds, INVESCO places orders for the purchase
and sale of securities with broker-dealers based upon an evaluation of the
financial responsibility of the broker-dealers and the ability of the
broker-dealers to effect transactions at the best available prices.
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.
<PAGE>
In seeking to ensure that the commissions charged a Fund are consistent with
prevailing and reasonable commissions, INVESCO monitors brokerage industry
practices and commissions charged by broker-dealers on transactions effected for
other institutional investors like the Funds.
Consistent with the standard of seeking to obtain favorable execution on
portfolio transactions, INVESCO may select brokers that provide research
services to INVESCO and the Company, as well as other INVESCO mutual funds and
other accounts managed by INVESCO. Research services include statistical and
analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to INVESCO in making
informed investment decisions. Research services prepared and furnished by
brokers through which a Fund effects securities transactions may be used by
INVESCO in servicing all of its accounts and not all such services may be used
by INVESCO in connection with a particular Fund. Conversely, a Fund receives
benefits of research acquired through the brokerage transactions of other
clients of INVESCO.
In order to obtain reliable trade execution and research services, INVESCO may
utilize brokers that charge higher commissions than other brokers would charge
for the same transaction. This practice is known as "paying up." However, even
when paying up, INVESCO is obligated to obtain favorable execution of a Fund's
transactions.
Portfolio transactions also may be effected through broker-dealers that
recommend the Funds to their clients, or that act as agent in the purchase of a
Fund's shares for their clients. When a number of broker-dealers can provide
comparable best price and execution on a particular transaction, INVESCO may
consider the sale of a Fund's shares by a broker-dealer in selecting among
qualified broker-dealers.
Certain of the INVESCO Funds utilize fund brokerage commissions to pay custody
fees for each respective fund. This program requires that the participating
funds receive favorable execution.
The aggregate dollar amount of underwriting discounts and 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
<PAGE>
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
For the fiscal year ended July 31, 1999, brokers providing research services
received $4,728,050 in commissions on portfolio transactions effected for the
Funds. The aggregate dollar amount of such portfolio transactions was
$3,773,902,315. Commissions totaling $206,673 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.
<PAGE>
At July 31, 1999, each Fund held debt securities of its regular brokers or
dealers, or their parents, as follows:
- --------------------------------------------------------------------------------
VALUE OF SECURITIES
FUND BROKER OR DEALER AT JULY 31, 1999
================================================================================
Blue Chip Growth General Electric $50,662,110
- --------------------------------------------------------------------------------
Dynamics American Express Credit $45,000,000
- --------------------------------------------------------------------------------
GE Companies 30,000,000
- -------------------------------------------------------------------------------
State Street Bank & Trust 5,853,000
- --------------------------------------------------------------------------------
Paine Webber Group 5,400,000
- --------------------------------------------------------------------------------
Endeavor State Street Bank & Trust $ 3,745,000
- --------------------------------------------------------------------------------
General Electric 1,486,215
- --------------------------------------------------------------------------------
Growth & Income General Electric $ 2,078,630
- --------------------------------------------------------------------------------
State Street Bank & Trust 1,145,000
- --------------------------------------------------------------------------------
American Express 615,273
- --------------------------------------------------------------------------------
Small Company Growth State Street Bank & Trust $80,476,000
- --------------------------------------------------------------------------------
S&P 500 Index State Street Bank & Trust $ 5,182,000
- --------------------------------------------------------------------------------
General Electric 2,130,841
- --------------------------------------------------------------------------------
Ford Motor 344,654
- --------------------------------------------------------------------------------
American Express 343,209
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter 296,421
- --------------------------------------------------------------------------------
Merrill Lynch 144,224
- --------------------------------------------------------------------------------
Morgan (JP) & Co. 117,261
- --------------------------------------------------------------------------------
CIGNA Corp 109,970
- --------------------------------------------------------------------------------
American General 105,230
- --------------------------------------------------------------------------------
Sears Roebuck 91,409
- --------------------------------------------------------------------------------
Bank Boston Corp 79,324
- --------------------------------------------------------------------------------
State Street 71,300
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
VALUE OF SECURITIES
FUND BROKER OR DEALER AT JULY 31, 1999
================================================================================
PaineWebber Group 32,000
- -------------------------------------------------------------------------------
Value Equity General Electric $ 7,902,500
- --------------------------------------------------------------------------------
American General 6,963,750
- --------------------------------------------------------------------------------
Ford Motor 6,253,175
- --------------------------------------------------------------------------------
State Street Bank & Trust 5,686,000
- --------------------------------------------------------------------------------
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-dealer that executes transactions for the Funds.
CAPITAL STOCK
The Company is authorized to issue up to three billion five hundred million
shares of common stock with a par value of $0.01 per share. As of December 31,
1999, the following shares of each Fund were outstanding:
Blue Chip Growth Fund - Investor Class 201,968,903
Blue Chip Growth Fund - Class C 0
Dynamics Fund - Investor Class 178,238,339
Dynamics Fund - Class C 0
Endeavor Fund - Investor Class 12,852,556
Endeavor Fund - Class C 0
Growth & Income Fund - Investor Class 8,565,801
Growth & Income Fund - Class C 0
Small Company Growth Fund - Investor Class 47,054,162
Small Company Growth Fund - Class C 0
S&P 500 Index Fund - Institutional Class 320,642
S&P 500 Index Fund - Investor Class 5,437,814
Value Equity Fund - Investor Class 12,027,646
Value Equity Fund - Class C 0
A share of each class of a Fund represents an identical interest in that Fund's
investment portfolio and has the same rights, privileges and preferences.
However, each class may differ with respect to sales charges, if any,
distribution and/or service fees, if any, other expenses allocable exclusively
to each class, voting rights on matters exclusively affecting that class, and
its exchange privilege, if any. The different sales charges and other expenses
<PAGE>
applicable to the different classes of shares of the Funds will affect the
performance of those classes. Each share of a Fund is entitled to participate
equally in dividends for that class, other distributions and the proceeds of any
liquidation of a class of that Fund. However, due to the differing expenses of
the classes, dividends and liquidation proceeds on Institutional Class, Investor
Class and Class C shares will differ. All shares of a Fund will be voted
together, except that only the shareholders of a particular class of a Fund may
vote on matters exclusively affecting that class, such as the terms of a Rule
12b-1 Plan as it relates to the class. All shares issued and outstanding are,
and all shares offered hereby when issued will be, fully paid and non-
assessable. 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,
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 taxes on the
<PAGE>
amount that is not distributed. If a Fund does not qualify as a regulated
investment company, it will be subject to income 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 gains 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 declared, the net asset value
is reduced by the amount of the distribution. If shares of a Fund are purchased
shortly before a distribution, the full price for the shares will be paid and
some portion of the price may then be returned to the shareholder as a taxable
dividend or capital gain. However, the net asset value per share will be reduced
by the amount of the distribution, which would reduce any gain (or increase any
loss) for tax purposes on any subsequent redemption of shares.
If it invests in foreign securities, a Fund may be subject to the withholding of
foreign taxes on dividends or interest it receives on foreign securities.
Foreign taxes withheld will be treated as an expense of the Fund unless the Fund
meets the qualifications and makes the election to enable it to pass these taxes
through to shareholders for use by them as a foreign tax credit or deduction.
Tax conventions between certain countries and the United States may reduce or
eliminate such taxes.
A Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average value of at least 50% of its assets produce, or are held for the
<PAGE>
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 telephone number or
address on the back cover of the Funds' Prospectuses.
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:
10 Year or
Name of Fund 1 Year 5 Year Since Inception
- ------------ ------ ------ ---------------
Blue Chip Growth Fund - Investor Class 42.06%(a) 23.66% 16.87%
Dynamics Fund - Investor Class 6.83%(b) 25.43% 20.11%
Endeavor Fund - Investor Class 1.78%(b) N/A 66.10%(c)
96
<PAGE>
Growth & Income Fund - Investor Class 5.71%(b) N/A 55.82%(d)
Small Company Growth Fund - Investor Class 12.67%(e) 18.45% 18.39%(f)
S&P 500 Index Fund - Institutional Class 20.40% N/A 26.36%(g)
S&P 500 Index Fund - Investor Class 20.09% N/A 26.92%(g)
Value Equity Fund - Investor Class 25.41%(a) 18.78% 13.56%
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) Since inception October 28, 1998
(d) Since inception July 1, 1998
(e) From June 1, 1999 to July 31, 1999
(f) Since inception December 27, 1991
(g) Since inception December 23, 1997
Average annual total return performance is not provided for each Fund's Class C
shares since they are not offered until February 15, 2000. Average annual total
return performance for each of the periods indicated was computed by finding the
average annual compounded rates of return that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1 + T)n = ERV
where: P = a hypothetical initial payment of $10,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were determined
by solving the above formula for "T" for each time period indicated.
In conjunction with performance reports, comparative data between a Fund's
performance for a given period and other types of investment vehicles, including
certificates of deposit, may be provided to prospective investors and
shareholders.
In conjunction with performance reports and/or analyses of shareholder services
for a Fund, comparative data between that Fund's performance for a given period
and recognized indices of investment results for the same period, and/or
assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company, S&P,
Lipper Inc., Lehman Brothers, National Association of Securities Dealers
Automated Quotations, Frank Russell Company, Value Line Investment Survey, the
American Stock Exchange, Morgan Stanley Capital International, Wilshire
Associates, the Financial Times Stock Exchange, the New York Stock Exchange, the
Nikkei Stock Average and Deutcher Aktienindex, all of which are unmanaged market
indicators. In addition, rankings, ratings, and comparisons of investment
<PAGE>
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 Funds in performance reports will be drawn from the following mutual fund
groupings, in addition to the broad-based Lipper general fund groupings:
Blue Chip Growth Fund Large-Cap Growth Funds
Dynamics Fund Mid-Cap Growth Funds
Endeavor Fund Mid-Cap Growth Funds
Growth & Income Fund Large-Cap Core Funds
Small Company Growth Fund Small-Cap Growth Funds
S&P 500 Index Fund S&P 500 Funds
Value Equity Fund Multi-Cap Growth 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
<PAGE>
U.S. NEWS AND WORLD REPORT
UNITED MUTUAL FUND SELECTOR
USA TODAY
THE WALL STREET JOURNAL
WIESENBERGER INVESTMENT COMPANIES SERVICES
WORKING WOMAN
WORTH
FINANCIAL STATEMENTS
The financial statements for the Funds for the fiscal year ended July 31, 1999,
are incorporated herein by reference from INVESCO Stock Funds, Inc.'s Annual
Report to Shareholders dated July 31, 1999.
<PAGE>
APPENDIX A
BOND RATINGS
The following is a description of Moody's and S&P's bond ratings:
Moody's Corporate Bond Ratings
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes, and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B - Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or maintenance of other terms of
the contract over any longer period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to --- principal or
interest.
<PAGE>
S&P Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to default and
are dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) Articles of Incorporation filed April 2, 1993.(2)
(1) Articles of Amendment to Articles of Incorporation filed
June 26, 1997.(3)
(2) Articles Supplementary to Articles of Incorporation filed
May 18, 1998.(5)
(3) Articles of Amendment of Articles of Incorporation filed
August 28, 1998.(6)
(4) Articles of Amendment to Articles of Incorporation filed
October 29, 1998.(8)
(5) Articles of Amendment to Articles of Incorporation filed May
24, 1999.(7)
(6) Articles of Amendment to Articles of Incorporation filed
July 15, 1999.(8)
(7) Articles of Transfer of INVESCO Growth Funds, Inc. and
INVESCO Stock Funds, Inc., filed July 15, 1999.(9)
(8) Articles of Amendment of Articles of Incorporation filed
July 14, 1999.
(9) Articles of Transfer of INVESCO Emerging Opportunity Funds,
Inc. and INVESCO Stock Funds, Inc., filed July 15, 1999.(9)
(10) Articles of Amendment and Restatement of Articles of
Incorporation filed December 2, 1999.
(b) Bylaws, as amended July 21, 1993.(2)
(c) Not applicable.
(d) (1) Investment Advisory Agreement between Registrant and INVESCO
Funds Group, Inc. dated February 28, 1997.(3)
(a) Amendment dated June 30, 1998 to Advisory Agreement.(4)
(b) Amendment dated September 18, 1998 to Advisory
Agreement.(8)
(c) Amendment dated May 13, 1999 to Advisory Agreement.(9)
(d) Amendment dated July 15, 1999 to Advisory Agreement.
(2) Form of Sub-Advisory Agreement between INVESCO Funds Group,
Inc. and World Asset Management with respect to INVESCO
S&P 500 Index Fund.
(3) Form of Sub-Advisory Agreement between INVESCO Funds Group,
Inc. and INVESCO Capital Management, Inc. with respect to
INVESCO Value Equity Fund.
<PAGE>
(e) (1) Distribution Agreement between Registrant and INVESCO
Distributors, Inc. dated September 30, 1997.(4)
(a) Amendment dated September 18, 1998 to Distribution
Agreement.
(b) Amendment dated July 15, 1999 to Distribution
Agreement.
(f) (1) Amended Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees.
(g) Custody Agreement between Registrant and State Street Bank and
Trust Company dated July 1, 1993.(1)
(1) Amendment to Custody Agreement dated October 25, 1995.(3)
(2) Data Access Services Addendum.(4)
(3) Additional Fund Letter dated April 15, 1998.(4)
(4) Additional Fund Letter dated August 27, 1998.(8)
(5) Additional Fund Letter dated July 14, 1999.
(6) Amended Fee Schedule effective January 1, 2000.
(h) (1) Transfer Agency Agreement between Registrant and INVESCO
Funds Group, Inc. dated February 28, 1997.(3)
(a) Amendment dated October 29, 1998 to Transfer Agency
Agreement.(9)
(2) Administrative Services Agreement between the Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(a) Amendment dated May 18, 1997 to Administrative
Services Agreement.
(b) Amendment dated June 29, 1998 to Administrative
Services Agreement.(9)
(c) Amendment dated October 16, 1998 to Administrative
Services Agreement.(9)
(d) Amendment dated May 13, 1999 to Administrative Services
Agreement.(9)
(i) (1) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will,
when sold, be legally issued, fully paid and non-assessable
dated January 16, 1968.(4)
(2) Opinion and consent of counsel with respect to INVESCO Blue
Chip Growth Fund, INVESCO Small Company Growth Fund, INVESCO
S&P 500 Index Fund and INVESCO Value Equity Fund as to the
legality of the securities being registered dated July 14,
1999.(7)
(j) Consent of Independent Accountants.
(k) Not applicable.
(l) Not applicable.
(m) (1) Amended Plan and Agreement of Distribution dated
September 30, 1997 adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940 with respect to the
Funds' Investor Class shares.
(a) Amendment dated August 28, 1998 to Amended Plan
and Agreement of Distribution Pursuant to Rule 12b-1.
(b) Amendment dated October 29, 1998 to Amended Plan
and Agreement of Distribution Pursuant to Rule 12b-1.
<PAGE>
(2) Form of Master Distribution Plan and Agreement adopted
pursuant to Rule 12b-1 under the Investment Company Act of
1940 dated January ___, 2000 with respect to the Funds'
Class C shares.
(n) Not Applicable.
(o) (1) Plan pursuant to Rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO S&P 500 Index Fund adopted
February 3, 1999.
(2) Plan pursuant to Rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO Blue Chip Growth Fund
adopted November 9, 1999.
(3) Plan pursuant to Rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO Dynamics Fund adopted
November 9, 1999.
(4) Plan pursuant to Rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO Endeavor Fund adopted
November 9, 1999.
(5) Plan pursuant to Rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO Growth & Income Fund adopted
November 9, 1999.
(6) Plan pursuant to Rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO Small Company Growth Fund
adopted November 9, 1999.
(7) Plan pursuant to Rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO Value Equity Fund adopted
November 9, 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.
(6) Previously filed with Post-Effective Amendment No. 49 to the Registration
Statement on August 28, 1998, and incorporated by reference herein.
<PAGE>
(7) Previously filed with Post-Effective Amendment No. 50 to the Registration
Statement on July 14, 1999, and incorporated by reference herein.
(8) Previously filed with Post-Effective Amendment No. 51 to the Registration
Statement on July 15, 1999 and incorporated by reference herein.
(9) Previously filed with Post-Effective Amendment No. 52 to the Registration
Statement on August 31, 1999 and incorporated by reference herein.
(10) Previously filed with Post-Effective Amendment No. 53 to the Registration
Statement on November 4, 1999 and incorporated by reference herein.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH INVESCO
STOCK FUNDS, INC. (THE " COMPANY")
No person is presently controlled by or under common control with the Company.
ITEM 25. INDEMNIFICATION
Indemnification provisions for officers, directors and employees of the Company
are set forth in Article X of the Amended Bylaws and Article Seventh (3) of the
Articles of Restatement of the Articles of Incorporation, and are hereby
incorporated by reference. See Item 24(b)(1) and (2) above. Under these
Articles, directors and officers will be indemnified to the fullest extent
permitted to directors by the Maryland General Corporation Law, subject only to
such limitations as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Under the Investment Company Act of 1940,
directors and officers of the Company cannot be protected against liability to a
Fund or its shareholders to which they would be subject because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties of
their office. The Company also maintains liability insurance policies covering
its directors and officers.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Fund Management" in the Funds' Prospectuses and "Management of the Funds"
in the Statement of Additional Information for information regarding the
business of the investment adviser, INVESCO.
Following are the names and principal occupations of each director and officer
of the investment adviser, INVESCO. Certain of these persons hold positions with
IDI, a subsidiary of INVESCO.
- --------------------------------------------------------------------------------
POSITION WITH PRINCIPAL OCCUPATION AND
NAME ADVISER COMPANY AFFILIATION
- --------------------------------------------------------------------------------
Mark H. Williamson Chairman, Director President & Chief Executive
and Officer Officer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Raymond R. Cunningham Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Ronald L. Grooms Officer & Senior Vice President &
Director Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Richard W. Healey Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
William R. Keithler Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Timothy J. Miller Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Glen A. Payne Officer Senior Vice President,
Secretary & General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Marie E. Aro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Stacie Cowell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Stuart Holland 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
- --------------------------------------------------------------------------------
Steve King Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Thomas A. Kolbe Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Ronald C. Lively Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Peter M. Lovell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
James F. Lummanick Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
George A. Matyas Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Corey M. McClintock Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Douglas J. McEldowney Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Frederick R. (Fritz) Meyer Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Stephen A. Moran Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Jon B. Pauley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Anthony R. Rogers Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
James B. Sandidge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Tane T. Tyler Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Thomas R. Wald Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854
- --------------------------------------------------------------------------------
Reagan A. Shopp Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
William S. Mechling 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 Manage
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 Stock Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
INVESCO Variable Investment Funds, Inc.
(b)
POSITIONS AND POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH OFFICES WITH
BUSINESS ADDRESS UNDERWRITER THE COMPANY
- ---------------- ------------ -------------
William J. Galvin, Jr. Senior Vice Assistant Secretary
7800 E. Union Avenue President &
Denver, CO 80237 Asst. Secretary
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President, Chief Fin'l
Denver, CO 80237 Treasurer, & Officer, and
Director Chief Acctg. Off.
Richard W. Healey Senior Vice
7800 E. Union Avenue President &
Denver, CO 80237 Director
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
<PAGE>
Timothy J. Miller Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
Pamela J. Piro Assistant Treasurer Assistant Treasurer
7800 E. Union Avenue
Denver, CO 80237
Judy P. Wiese Assistant Secretary Assistant Secretary
7800 E. Union Avenue
Denver, CO 80237
Mark H. Williamson Chairman of the Board, President,
7800 E. Union Avenue President, & Chief CEO & Director
Denver, CO 80237 Executive Officer
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Mark H. Williamson
7800 E. Union Avenue
Denver, CO 80237
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Company 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 January, 2000.
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/ Wendy L. Gramm*
- ------------------------------- -----------------------------
Charles W. Brady, Director 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(8) 115
a(10) 118
d(1)(d) 126
d(2) 128
d(3) 136
e(1)(a) 144
e(1)(b) 145
f(1) 146
g(5) 153
g(6) 154
h(2)(a) 160
j 161
m(1) 162
m(1)(a) 168
m(1)(b) 169
m(2) 170
o(2) 182
o(3) 186
o(4) 190
o(5) 194
o(6) 198
o(7) 202
EXHIBIT a(8)
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INVESCO STOCK FUNDS, INC.
INVESCO Stock Funds, Inc., a corporation organized and existing under the
General Corporation Law of the State of Maryland (the "Company"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Article III, Section 1 of the Articles of Incorporation of the
Company is hereby amended to read as follows:
ARTICLE III
CAPITALIZATION
Section 1. The aggregate number of shares of stock of all series
which the Company shall have the authority to issue is two billion
(2,000,000,000) shares of Common Stock, having a par value of one cent
($0.01) per share of all authorized shares, having an aggregate par value
of twenty million dollars ($20,000,000). Such stock may be issued as full
shares or as fractional shares.
In the exercise of powers granted to the board of directors pursuant
to Section 3 of this Article III, the board of directors designates eight
classes of shares of common stock of the Company to be designated as the
INVESCO Blue Chip Growth Fund, the INVESCO Dynamics Fund, the INVESCO
Endeavor Fund, the INVESCO Growth & Income Fund, the INVESCO Small Company
Growth Fund, the INVESCO S&P 500 Index Fund - Class I, the INVESCO S&P 500
Index Fund - Class II, and the INVESCO Value Equity Fund. Four hundred
million (400,000,000) shares are classified as and are allocated to the
INVESCO Blue Chip Growth Fund. Two hundred million (200,000,000) shares
are classified as and are allocated to the INVESCO Dynamics Fund. One
hundred million (100,000,000) shares are classified as and are allocated
to the INVESCO Growth & Income Fund. One hundred million (100,000,000)
shares are classified as and are allocated to the INVESCO Endeavor Fund.
Two hundred million (200,000,000) shares are classified as and are
allocated to the INVESCO Small Company Growth Fund. One hundred million
(100,000,000) shares are classified as and are allocated to the INVESCO
S&P 500 Index Fund - Class I. One hundred million (100,000,000) shares are
classified as and are allocated to the INVESCO S&P 500 Index Fund - Class
II. One hundred million (100,000,000) shares are classified as and are
allocated to the INVESCO Value Equity Fund.
<PAGE>
Unless otherwise prohibited by law, so long as the corporation is
registered as an open-end investment company under the Investment Company
Act of 1940, as amended, the total number of shares which the corporation
is authorized to issue may be increased or decreased by the board of
directors in accordance with the applicable provisions of the Maryland
General Corporation Law.
SECOND: Shares of each class have been duly authorized and classified by
the board of directors pursuant to authority and power contained in the Articles
of Incorporation of the Company.
THIRD: The foregoing amendment, in accordance with the requirements of
Section 2-605 of the General Corporation Law of the State of Maryland, was
unanimously approved by the board of directors of the Company on February 3,
1999.
The undersigned, President of the Company, who is executing on behalf of
the Company the foregoing Articles of Amendment, of which this paragraph is made
a part, hereby acknowledges, in the name and on behalf of the Company, the
foregoing Articles of Amendment to be the corporate act of the Company and
further verifies under oath that, to the best of his knowledge, information and
belief, the matters and facts set forth herein are true in all material
respects, under the penalties of perjury.
IN WITNESS WHEREOF, INVESCO Stock Funds, Inc. has caused these Articles of
Amendment to be signed in its name and on its behalf by its President and
witnessed by its President on the 13th day of July, 1999.
These Articles of Amendment shall be effective as of the 15th day of July,
1999 by the Maryland State Department of Assessments and Taxation.
INVESCO STOCK FUNDS, INC.
By: /s/ Mark H. Williamson
------------------------------
Mark H. Williamson, President
WITNESSED:
By: /s/ Alan I. Watson
-------------------------
Alan I. Watson
Assistant Secretary
<PAGE>
CERTIFICATION
I, Ruth A. Christensen, a notary public in and for the City and County of
Denver, and State of Colorado, do hereby certify that Mark H. Williamson,
personally known to me to be the person whose name is subscribed to the
foregoing Articles of Amendment, appeared before me this date in person and
acknowledged that he signed, sealed and delivered said instrument as his full
and voluntary act and deed for the uses and purposes therein set forth.
Given my hand and official seal this 13th day of July, 1999.
/s/ Ruth A. Christensen
------------------------------------
Notary Public
My Commission Expires: March 16, 2002
EXHIBIT a(10)
ARTICLES OF AMENDMENT AND RESTATEMENT
OF THE
ARTICLES OF INCORPORATION
OF
INVESCO STOCK FUNDS, INC.
INVESCO Stock Funds, Inc., a corporation organized and existing under the
General Corporation Law of the State of Maryland, certifies to the Maryland
State Department of Assessments and Taxation that:
FIRST: INVESCO Stock Funds, Inc. desires to amend and restate its
Articles of Incorporation as currently in effect. The provisions set forth
in these Articles of Amendment and Restatement have been approved by a
majority of the entire board of directors of INVESCO Stock Funds, Inc. and
are all the provisions of the Articles of Incorporation currently in effect.
These Articles of Amendment and Restatement amend the Articles of
Incorporation. The Articles of Incorporation of INVESCO Stock Funds, Inc.
are hereby amended and restated in the following manner:
ARTICLE I
NAME AND TERM
The name of the corporation is INVESCO Stock Funds, Inc. (the
"Company"). The Company shall have perpetual existence.
ARTICLE II
POWERS AND PURPOSES
The nature of the business and the objects and purposes to be transacted,
promoted and carried on by the Company are as follows:
1. To engage in the business of an incorporated investment company of
open-end management type and to engage in all legally permissible
activities and operations usual, customary, or necessary in connection
therewith.
2. In general, to engage in any other business permitted to corporations
by the laws of the State of Maryland and to have and exercise all
powers conferred upon or permitted to corporations by the Maryland
General Corporation Law and any other laws of the State of Maryland;
provided, however, that the Company shall be restricted from engaging
in any activities or taking any actions which would preclude its
compliance with applicable provisions of the Investment Company Act of
1940, as amended, applicable to open-end management type investment
companies or applicable rules promulgated thereunder.
ARTICLE III
CAPITALIZATION
Section 1. The aggregate number of shares of stock of all series that the
Company shall have the authority to issue is three billion five hundred million
(3,500,000,000) shares of Common Stock, having a par value of one cent ($0.01)
per share of all authorized shares, having an aggregate par value of thirty-five
million dollars ($35,000,000.00). Such stock may be issued as full shares or as
fractional shares.
<PAGE>
In the exercise of the powers granted to the board of directors pursuant
to Section 3 of this Article III, the board of directors designates seven series
of shares of common stock of the Company, with two or more classes of shares of
common stock for each series, designated as follows:
<TABLE>
<CAPTION>
Fund Name & Class Allocated Shares
<S> <C>
INVESCO Blue Chip Growth Fund-Investor Class Four hundred million shares (400,000,000)
INVESCO Blue Chip Growth Fund-Class C Four hundred million shares (400,000,000)
INVESCO Dynamics Fund-Investor Class Three hundred million shares (300,000,000)
INVESCO Dynamics Fund-Class C Three hundred million shares (300,000,000)
INVESCO Endeavor Fund-Investor Class One hundred million shares (100,000,000)
INVESCO Endeavor Fund-Class C One hundred million shares (100,000,000)
INVESCO Growth & Income Fund-Investor Class One hundred million shares (100,000,000)
INVESCO Growth & Income Fund-Class C One hundred million shares (100,000,000)
INVESCO Small Company Growth Fund-Investor Class Two hundred million shares (200,000,000)
INVESCO Small Company Growth Fund-Class C Two hundred million shares (200,000,000)
INVESCO S&P 500 Index Fund-Institutional Class One hundred million shares (100,000,000)
INVESCO S&P 500 Index Fund-Investor Class One hundred million shares (100,000,000)
INVESCO Value Equity Fund-Investor Class One hundred million shares (100,000,000)
INVESCO Value Equity Fund-Class C One hundred million shares (100,000,000)
Unless otherwise prohibited by law, so long as the Company is registered
as an open-end investment company under the Investment Company Act of 1940, as
amended, the total number of shares that the Company is authorized to issue may
be increased or decreased by the board of directors in accordance with the
applicable provisions of the Maryland General Corporation Law.
Section 2. No holder of stock of the Company shall be entitled as a matter
of right to purchase or subscribe for any shares of the capital stock of the
Company which it may issue or sell, whether out of the number of shares
authorized by these articles of incorporation, or out of any shares of the
capital stock of the Company acquired by it after the issue thereof.
Section 3. The Company is authorized to issue its stock in one or more
series or one or more classes of shares, and, subject to the requirements of the
Investment Company Act of 1940, as amended, particularly Section 18(f) thereof
and Rule 18f-2 thereunder, the different series and classes, if any, shall be
established and designated, and the variations in the relative preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as between the
different series or classes shall be fixed and determined and may be classified
and reclassified by the board of directors; provided that the board of directors
shall not classify or reclassify any of such shares into any class or series of
stock which is prior to any class or series of stock then outstanding with
respect to rights upon the liquidation, dissolution or winding up of the affairs
of, or upon any distribution of the general assets of, the Company, except that
there may be variations so fixed and determined between different series or
classes as to investment objective, purchase price, right of redemption, special
rights as to dividends and on liquidation with respect to assets and income
belonging to a particular series or class, voting powers and conversion rights.
All references to shares in these articles of incorporation shall be deemed to
be shares of any or all series and classes of shares of the Company's capital
stock as the context may require.
(a) The number of authorized shares allocated to each series or class
and the number of shares of each series or of each class that may
be issued shall be in such number as may be determined by the
board of directors. The directors may classify or reclassify any
unissued shares or any shares previously issued and reacquired of
any series or class into one or more series or one or more
classes that may be established and designated by the board of
directors from time to time. The directors may hold as treasury
shares (of the same or some other series or class), reissue for
such consideration and on such terms as they may determine, or
cancel any shares of any series or any class reacquired by the
Company at their discretion from time to time.
<PAGE>
(b) All consideration received by the Company for the issue or sale
of shares of a particular series or class, together with all
assets in which such consideration is invested or reinvested, all
income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be, shall
irrevocably belong to that series or class for all purposes,
subject only to the rights of creditors of that series or class,
and shall be so recorded upon the books of account of the
Company. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular
series or class, the directors shall allocate them among any one
or more of the series or classes established and designated from
time to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable. Each such allocation
by the Company shall be conclusive and binding upon the
stockholders of all series or classes for all purposes. The
directors shall have full discretion, to the extent not
inconsistent with the Investment Company Act of 1940, as amended,
and the Maryland General Corporation Law to determine which items
shall be treated as income and which items shall be treated as
capital; and each such determination and allocation shall be
conclusive and binding upon the stockholders.
(c) The assets belonging to each particular class or series shall be
charged with the liabilities of the Company in respect to that
class or series and all expenses, costs, charges and reserves
attributable to that class or series, and any general
liabilities, expenses, costs, charges or reserves of the Company
which are not readily identifiable as belonging to any particular
class or series shall be allocated and charged by the directors
to and among any one or more of the classes or series established
and designated from time to time in such manner and on such basis
as the directors in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs,
charges and reserves by the directors shall be conclusive and
binding upon the stockholders of all series and classes for all
purposes.
(d) Dividends and distributions on shares of a particular series or
class may be paid with such frequency as the directors may
determine, which may be daily or otherwise, pursuant to a
standing resolution or resolutions adopted only once or with such
frequency as the board of directors may determine, to the holders
of shares of that series or class, from such of the income and
capital gains, accrued or realized, from the assets belonging to
that series or class, as the directors may determine, after
providing for actual and accrued liabilities belonging to that
series or class. All dividends and distributions on shares of a
particular series or class shall be distributed pro rata to the
holders of that series or class in proportion to the number of
shares of that series or class held by such holders at the date
and time of record established for the payment of such dividends
or distributions except that in connection with any dividend or
distribution program or procedure, the board of directors may
determine that no dividend or distribution shall be payable on
shares as to which the stockholder's purchase order and/or
payment have not been received by the time or times established
by the board of directors under such program or procedure.
The Company intends to have each series that may be established to
represent interests of a separate investment portfolio qualify as a
"regulated investment company" under the Internal Revenue Code of
1986, or any successor comparable statute thereto, and regulations
promulgated thereunder. Inasmuch as the computation of net income
and gains for federal income tax purposes may vary from the
computation thereof on the books of the Company, the board of
directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends
designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the board of directors, to
enable the respective series to qualify as regulated investment
companies and to avoid liability of such series for federal income
tax in respect of that year. However, nothing in the foregoing shall
<PAGE>
limit the authority of the board of directors to make distributions
greater than or less than the amount necessary to qualify the series
as regulated investment companies and to avoid liability of such
series for such tax.
(e) Dividends and distributions may be made in cash, property or
additional shares of the same or another class or series, or a
combination thereof, as determined by the board of directors or
pursuant to any program that the board of directors may have in
effect at the time for the election by each stockholder of the
mode of the making of such dividend or distribution to that
stockholder. Any such dividend or distribution paid in shares
will be paid at the net asset value thereof as defined in section
(4) below.
(f) In the event of the liquidation or dissolution of the Company or
of a particular class or series, the stockholders of each class
or series that has been established and designated and is being
liquidated shall be entitled to receive, as a class or series,
when and as declared by the board of directors, the excess of the
assets belonging to that class or series over the liabilities
belonging to that class or series. The holders of shares of any
particular class or series shall not be entitled thereby to any
distribution upon liquidation of any other class or series. The
assets so distributable to the stockholders of any particular
class or series shall be distributed among such stockholders in
proportion to the number of shares of that class or series held
by them and recorded on the books of the Company. The
liquidation of any particular class or series in which there are
shares then outstanding may be authorized by vote of a majority
of the board of directors then in office, subject to the approval
of a majority of the outstanding securities of that class or
series, as defined in the Investment Company Act of 1940, as
amended, and without the vote of the holders of any other class
or series. The liquidation or dissolution of a particular class
or series may be accomplished, in whole or in part, by the
transfer of assets of such class or series to another class or
series or by the exchange of shares of such class or series for
the shares of another class or series.
(g) On each matter submitted to a vote of the stockholders, each
holder of a share shall be entitled to one vote for each share
standing in his name on the books of the Company, irrespective of
the class or series thereof, and all shares of all classes or
series shall vote as a single class or series ("single class
voting"); provided, however that (i) as to any matter with
respect to which a separate vote of any class or series is
required by the Investment Company Act of 1940, as amended, or by
the Maryland General Corporation Law, such requirement as to a
separate vote by that class or series shall apply in lieu of
single class voting as described above; (ii) in the event that
the separate vote requirements referred to in (i) above apply
with respect to one or more but not all classes or series, then,
subject to (iii) below, the shares of all other classes or series
shall vote as a single class or series; and (iii) as to any
matter which does not affect the interest of a particular class
or series, only the holders of shares of the one or more
affected classes shall be entitled to vote. Holders of shares
of the stock of the Company shall not be entitled to exercise
cumulative voting in the election of directors or on any other
matter.
(h) The establishment and designation of any series or class of
shares, in addition to the initial class of shares which has been
established in section (1) above, shall be effective upon the
adoption by a majority of the then directors of a resolution
setting forth such establishment and designation and the relative
rights and preferences of such series or class, or as otherwise
provided in such instrument and the filing with the proper
authority of the State of Maryland of Articles Supplementary
setting forth such establishment and designation and relative
rights and preferences.
Section 4. The Company shall, upon due presentation of a share or shares
of stock for redemption, redeem such share or shares of stock at a redemption
price prescribed by the board of directors in accordance with applicable laws
<PAGE>
and regulations; provided that in no event shall such price be less than the
applicable net asset value per share of such class or series as determined in
accordance with the provisions of this section (4), less such redemption or
other charge as is determined by the board of directors. Subject to applicable
law, the Company may redeem shares, not offered by a stockholder for redemption,
held by any stockholder whose shares of a class or series had a value less than
such minimum amount as may be fixed by the board of directors from time to time
or prescribed by applicable law, other than as a result of a decline in value of
such shares because of market action; provided that before the Company redeems
such shares it must notify the shareholder by first-class mail that the value of
his shares is less than the required minimum value and allow him 60 days to make
an additional investment in an amount which will increase the value of his
account to the required minimum value. Unless otherwise required by applicable
law, the price to be paid for shares redeemed pursuant to the preceding sentence
shall be the aggregate net asset value of the shares at the close of business on
the date of redemption, and the shareholder shall have no right to object to the
redemption of his shares. The Company shall pay redemption prices in cash,
except that the Company may at its sole option pay redemption prices in kind in
such manner as is consistent with and not in contravention of Section 18(f) of
the Investment Company Act of 1940, as amended, and any Rules or Regulations
thereunder. Redemption prices shall be paid exclusively out of the assets of the
class or series whose shares are being redeemed.
Notwithstanding the foregoing, the Company may postpone payment of
redemption proceeds and may suspend the right of the holders of shares of any
class or series to require the Company to redeem shares of that class or series
during any period or at any time when and to the extent permissible under the
Investment Company Act of 1940, as amended, or any rule or order thereunder.
The net asset value of a share of any class or series of common stock of
the Company shall be determined in accordance with applicable laws and
regulations or under the supervision of such persons and at such time or times
as shall from time to time be prescribed by the board of directors.
Section 5. The Company may issue, sell, redeem, repurchase and otherwise
deal in and with shares of its stock in fractional denominations and such
fractional denominations shall, for all purposes, be shares having
proportionately to the respective fractions represented thereby all the rights
of whole shares, including without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Company; provided that the issue of shares in fractional
denominations shall be limited to such transactions and be made upon such terms
as may be fixed by or under authority of the bylaws.
Section 6. The Company shall not be obligated to issue certificates
representing shares of any class or series unless it shall receive a written
request therefor from the record holder thereof in accordance with procedures
established in the bylaws or by the board of directors.
ARTICLE IV
PREEMPTIVE RIGHTS
No stockholder of the Company of any class or series, whether now or
hereafter authorized, shall have any preemptive or preferential or other right
of purchase of or subscription to any share of any class or series of stock, or
shares convertible into, exchangeable for or evidencing the right to purchase
stock of any class or series whatsoever, whether or not the stock in question be
of the same class or series as may be held by such stockholder, and whether now
or hereafter authorized and whether issued for cash, property, services or
otherwise, other than such, if any, as the board of directors in its discretion
may from time to time fix.
<PAGE>
ARTICLE V
PRINCIPAL OFFICE AND REGISTERED AGENT
The post office address of the principal office of the Company in the
State of Maryland is 32 South Street, Baltimore, Maryland 21202. The resident
agent of the Company is The Corporation Trust Incorporated, whose post office
address is 32 South Street, Baltimore, Maryland 21202. Said resident agent is a
corporation of the State of Maryland. The Company owns no interest in land
located in the State of Maryland.
ARTICLE VI
DIRECTORS
Section 1. The board of directors currently consists of ten members who
need not be residents of the State of Maryland or stockholders of the Company.
Section 2. The names of the current directors who shall act until their
successors are duly elected and qualified are as follows:
Charles W. Brady
Fred A. Deering
Mark H. Williamson
Dr. Victor L. Andrews
Bob R. Baker
Lawrence H. Budner
Dr. Wendy L. Gramm
Kenneth T. King
John W. McIntyre
Dr. Larry Soll
Section 3. The number of directors may be increased or decreased in
accordance with the bylaws, provided that the number shall not be reduced to
less than three.
Section 4. A majority of the directors shall constitute a quorum for the
transaction of business, unless the bylaws shall provide that a different number
shall constitute a quorum; provided, however, that in no case shall a quorum be
less than one-third (1/3) of the total number of directors or less than two (2)
directors.
Section 5. No person shall serve as a director, unless elected by the
stockholders at an annual meeting or a special meeting called for such purpose;
except that vacancies occurring between such meetings may be filled by the
directors in accordance with the bylaws, and subject to such limitations as may
be set forth by applicable laws and regulations.
Section 6. The board of directors of the Company is hereby empowered to
authorize the issuance from time to time of shares of stock, whether of a class
or series now or hereafter authorized, for such consideration as it deems
advisable, subject to such limitations as may be set forth herein, in the
bylaws, in the Maryland General Corporation Law, and in the Investment Company
Act of 1940, as amended.
Section 7. The board of directors of the Company may make, alter or repeal
from time to time any of the bylaws of the Company except any particular bylaw
that is specified as not subject to alternation or repeal by the board of
directors.
<PAGE>
ARTICLE VII
LIABILITY AND INDEMNIFICATION
Section 1. Directors and officers of the Company, including persons who
formerly have served in such capacities, shall have limitations on, and/or
immunity from, liability of such directors and officers to the fullest extent
permitted by the Maryland General Corporation Law, subject only to such
restrictions as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Such limitations and/or immunity will apply
to acts or omissions occurring at the time an individual serves as a director or
officer of the Company, whether such person is a director or officer of the
Company at the time of any proceeding in which liability is asserted against the
director or officer. No amendment to these Articles of Incorporation or repeal
of any of its provisions shall limit or eliminate the benefits provided to
directors and officers under this provision with respect to any act or omission
which occurred prior to such amendment or repeal.
Section 2. The Company shall indemnify and advance expenses to its
directors and officers, including persons who formerly have served in such
capacities, to the fullest extent permitted to directors by the Maryland General
Corporation Law and the bylaws of the Company, as such Law and bylaws now or in
the future may be in effect, subject only to such limitations as may be required
by the Investment Company Act of 1940, as amended, and the rules thereunder.
ARTICLE VIII
SPECIAL VOTING AND MEETING PROVISIONS
Section 1. Notwithstanding any provision of Maryland law requiring a
greater proportion than a majority of the votes of all classes or of any class
of stock entitled to be cast to take or authorize any action, the Company may
take or authorize any such action upon the concurrence of a majority of the
aggregate number of the votes entitled to be cast thereon.
Section 2. The presence in person or by proxy of the holders of one-third
of the shares of stock of the Company entitled to vote without regard to class
shall constitute a quorum at any meeting of stockholders, except with respect to
any matter which by law requires the approval of one or more classes of stock,
in which case the presence in person or by proxy of the holders of one-third of
the shares of stock of each class entitled to vote on the matter shall
constitute a quorum.
Section 3. So long as the Company is registered pursuant to the Investment
Company Act of 1940, as amended, the Company will not be required to hold annual
shareholder meetings in years in which the election of directors is not required
to be acted upon under the Investment Company Act of 1940, as amended.
ARTICLE IX
AMENDMENT
The Company reserves the right from time to time to make any amendment of
its articles of incorporation now or hereafter authorized by law, including any
amendment which alters the contract rights, as expressly set forth in such
articles, of any outstanding stock by classification, reclassification or
otherwise, but no such amendment which changes the terms or rights of any of its
outstanding shares shall be valid unless such amendment shall have been
authorized by not less than a majority of the aggregate number of votes entitled
to be cast thereon, by a vote at a meeting or in writing with or without a
meeting.
<PAGE>
SECOND: The foregoing amendment was duly adopted in accordance with the
requirements of ss.ss. 2-408, -607, and -608 of the General Corporation Law of
the State of Maryland. The undersigned Secretary of the Company who is executing
on behalf of the Company the foregoing Articles of Restatement, of which this
paragraph is made a part, hereby acknowledges, in the name and on behalf of the
Company, the foregoing Articles of Restatement to be the corporate act of the
Company and further verifies under oath that, to the best of his knowledge,
information and belief, the matters and facts set forth herein are true in all
material respects, under penalties of perjury.
IN WITNESS WHEREOF, INVESCO Stock Funds, Inc. has caused these Articles of
Amendment and Restatement to be signed in its name and on its behalf by its
President and witnessed by its Secretary on this 29th day of November, 1999.
INVESCO STOCK FUNDS, INC.
By: /s/ Mark H. Williamson
------------------------------
Mark H. Williamson, President
[SEAL]
WITNESSED
By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
I, Ruth A. Christensen, a Notary Public in the City and County of Denver,
State of Colorado, do hereby certify that Mark H. Williamson, personally known
to me to be the person whose name is subscribed to the foregoing Articles of
Incorporation, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his full and voluntary act and
deed for the uses and purposes therein set forth.
Witness my hand and official seal this 29th day of November, 1999.
/s/ Ruth A. Christensen
------------------------------------
Notary Public
My commission expires March 16, 2002.
</TABLE>
EXHIBIT d(1)(d)
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO Stock Funds, Inc., a Maryland corporation (the "Company")
and INVESCO Funds Group, Inc., a Delaware corporation ("IFG"), as of the 15th
day of July, 1999 (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the Company allocable to INVESCO Blue
Chip Growth Fund, INVESCO Small Company Growth Fund, INVESCO S&P 500 Index Fund
and INVESCO Value Equity Fund, and IFG is willing and able to perform such
services on the terms an conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
Blue Chip Growth Fund, INVESCO Small Company Growth Fund, INVESCO S&P 500 Index
Fund and INVESCO Value Equity Fund, to the same extent as if those Funds were to
be added to the definition of "Funds" as utilized in the Agreement, and the
Funds shall pay IFG fees for services provided to them by IFG under the
Agreement as follows:
INVESCO Blue Chip Growth Fund:
0.60% on the first $350 million of the Fund's average net assets;
0.55% on the next $350 million of the Fund's average net assets;
0.50% of the Fund's average net assets from $700 million;
0.45% of the Fund's average net assets from $2 billion;
0.40% of the Fund's average net assets from $4 billion;
0.375% of the Fund's average net assets from $6 billion; and
0.35% of the Fund's average net assets from $8 billion.
INVESCO Small Company Growth Fund
0.75% on the first $350 million of the Fund's average net assets;
0.65% on the next $350 million of the Fund's average net assets;
0.55% of the Fund's average net assets from $700 million;
0.45% of the Fund's average net assets from $2 billion;
0.40% of the Fund's average net assets from $4 billion;
0.375% of the Fund's average net assets from $6 billion; and
0.35% of the Fund's average net assets From $8 billion.
INVESCO S&P 500 Index Fund
0.25% of the Fund's average net assets
INVESCO Value Equity Fund
0.75% on the first $500 million of the Fund's average net assets;
0.65% on the next $500 million of the Fund's average net assets;
<PAGE>
0.50% of the Fund's average net assets from $1 billion;
0.45% of the Fund's average net assets from $2 billion;
0.40% of the Fund's average net assets from $4 billion;
0.375% of the Fund's average net assets from $6 billion; and
0.35% of the Fund's average net assets from $8 billion.
IN WITNESS WHEREOF, the parties have executed this Agreement on this 15th
day of July, 1999.
INVESCO STOCK FUNDS, INC.
By: /s/ Mark H. Williamson
-----------------------
Mark H. Williamson,
President
ATTEST:
/s/ Glen A. Payne
- -----------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
-----------------------
Ronald L. Grooms,
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- -------------------------------
Glen A. Payne, Secretary
EXHIBIT d(2)
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT made this 15th day of July, 1999, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and World Asset Management, a
general partnership organized under the laws of the State of Delaware ("the Sub
Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO STOCK FUNDS, INC. (the "Company") is engaged in business
as a diversified, open end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") and has one class of shares (the "Shares"), which is
divided into series, each representing an interest in a separate portfolio of
investments, with one such series being designated the INVESCO S&P 500 Index
Fund (the "Fund"); and
WHEREAS, INVESCO and the Sub Adviser are engaged in rendering investment
advisory services and are registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with
the Company (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment advisory services to the Company, and,
upon receipt of written approval of the Company, is authorized to retain other
parties to provide such services; and
WHEREAS, the Sub Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB ADVISER
INVESCO hereby employs the Sub Adviser to act as investment adviser to the
Company and to furnish the investment advisory services described below, subject
to the broad supervision of INVESCO and Board of Directors of the Company, for
the period and on the terms and conditions set forth in this Agreement. The Sub
Adviser hereby accepts such assignment and agrees during such period, at its own
expense, to render such services and to assume the obligations herein set forth
for the compensation provided for herein. The Sub Adviser shall for all purposes
<PAGE>
herein be deemed to be an independent contractor and, unless otherwise expressly
provided or authorized herein, shall have no authority to act for or represent
the Company in any way or otherwise be deemed an agent of the Company.
The Sub Adviser hereby agrees to manage the investment operations of the
Funds, subject to the supervision of the Company's directors (the "Directors")
and INVESCO. Specifically, the Sub Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Funds, to execute all purchases and sales of
portfolio securities and to vote all proxies of portfolio securities;
(b) to maintain a continuous investment program for the Funds, consistent
with (i) the Funds' investment policies as set forth in the Company's Articles
of Incorporation, Bylaws, and Registration Statement, as from time to time
amended, under the Investment Company Act of 1940, as amended (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 Securities Act of 1933, as
amended, and (ii) the Company's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Funds, unless otherwise directed by the Directors of the Company or INVESCO, and
to execute transactions accordingly;
(d) to provide to 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 the Sub Adviser;
(e) to determine what portion of the Funds should be invested in the
various types of securities authorized for purchase by the Funds; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Funds action and any other rights pertaining to the Funds'
portfolio securities shall be exercised.
With respect to execution of transactions for the Funds, the Sub Adviser
is authorized to employ such brokers or dealers as may, in the Sub Adviser's
best judgment, implement the policy of the Funds to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub Adviser is authorized to
<PAGE>
consider the full range and quality of a broker's services which benefit the
Funds, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Research
services prepared and furnished by brokers through which the Sub Adviser effects
securities transactions on behalf of the Funds may be used by the Sub Adviser in
servicing all of its accounts, and not all such services may be used by the Sub
Adviser in connection with the Funds. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Funds of speed, efficiency, and
confidentiality of execution, the execution capabilities required by the
circumstances of the particular transactions, and the apparent knowledge or
familiarity with sources from or to whom such securities may be purchased or
sold. Where the commission rate reflects services, reliability and other
relevant factors in addition to the cost of execution, the Sub Adviser shall
have the burden of demonstrating that such expenditures were bona fide and for
the benefit of the Funds.
The Sub-Adviser may recommend transactions in which it has directly or
indirectly a material interest, in unregulated collective investment schemes
including any operated or advised by the Sub-Adviser or in margined
transactions. Advice on investments may extend to investments not traded or
exchanges recognized or designated by the Securities and Investments Board.
Both parties acknowledge that the advice given under this Agreement may
involve liabilities in one currency matched by assets in another currency and
that accordingly movements in rates of exchange may have a separate effect,
unfavorable as well as favorable on the gain or loss experienced on an
investment.
In carrying out its duties hereunder, the Sub-Adviser shall comply with
all instructions of INVESCO in connection therewith such instructions may be
given by letter, telex, telephone or facsimile by any Director or Officer of
INVESCO or by any other person authorized by INVESCO.
<PAGE>
Any instructions which appear to conflict with the terms of this Agreement
may be confirmed by the Sub-Adviser with INVESCO prior to execution.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent expressly
assumed by the Sub Adviser herein and except to the extent required by law to be
paid by the Sub Adviser, INVESCO and/or the Company shall pay all costs and
expenses in connection with the operations of the Funds.
ARTICLE III
COMPENSATION OF THE SUB ADVISER
For the services rendered, facilities furnished, and expenses assumed by
the Sub Adviser, INVESCO shall pay to the Sub Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the most
recently determined net asset value of the Funds, as determined by a valuation
made in accordance with the Fund's procedures for calculating its net asset
value as described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Sub Adviser with respect to the Fund shall
be computed at the annual rate of 0.07% of the Fund's daily net assets up to $10
million; 0.05% of the Fund's daily net assets in excess of $10 million but not
more than $50 million; and 0.03% of the Fund's daily net assets in excess of $50
million. During any period when the determination of the Funds' net asset value
is suspended by the Directors of the Funds, the net asset value of a share of
the Funds as of the last business day prior to such suspension shall, for the
purpose of this Article III, be deemed to be the net asset value at the close of
each succeeding business day until it is again determined. However, no such fee
shall be paid to the Sub Adviser with respect to any assets of the Funds which
may be invested in any other investment company for which the Sub Adviser serves
as investment adviser or sub adviser. The fee provided for hereunder shall be
prorated in any month in which this Agreement is not in effect for the entire
month. The Sub Adviser shall be entitled to receive fees hereunder only for such
periods as the INVESCO Investment Advisory Agreement remains in effect.
<PAGE>
ARTICLE IV
ACTIVITIES OF THE SUB ADVISER
The services of the Sub Adviser to the Funds are not to be deemed to be
exclusive, the Sub Adviser and any person controlled by or under common control
with the Sub Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Funds are or may become
interested in the Sub Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub Adviser, INVESCO and their affiliates are or may
become interested in the Funds as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Funds, neither the Sub Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Funds or receive any commissions. The Sub Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a
majority of the outstanding voting securities of the Fund. Thereafter, this
Agreement shall remain in force for an initial term of two years from the date
of execution, and from year to year thereafter until its termination in
accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Company, or
by the vote of a majority of the outstanding voting securities of the Funds, and
(ii) a majority of those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
<PAGE>
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Funds by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Funds, or by the
Sub Adviser. A termination by INVESCO or the Sub Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub
Adviser to receive payments on any unpaid balance of the compensation described
in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the Sub
Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or the
funds advised in connection with the subject matter of this Agreement unless
such loss arises from the willful misfeasance, bad faith or negligence in the
performance of the Sub-Adviser's duties and subject and without prejudice to the
foregoing. INVESCO hereby undertakes to indemnify and to keep indemnified the
Sub Adviser from and against any and all liabilities, obligations, losses,
damages, suits and expenses which may be incurred by or asserted against the Sub
Adviser for which it is responsible pursuant to Article I hereof provided always
that the Sub-Adviser shall send to INVESCO as soon as possible all claims,
letters, summonses, writs or documents which it receives from third parties and
provide whatever information and assistance INVESCO may require and no liability
of any sort shall be admitted and no undertaking shall be given nor shall any
offer, promise or payment be made or legal expenses incurred by the Sub Adviser
without written consent of INVESCO who shall be entitled if it so desires to
take over and conduct in the name of the Sub Adviser the defense of any action
or to prosecute any claim for indemnity or damages or otherwise against any
third party.
<PAGE>
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but
may only be modified by an instrument in writing signed by the Sub Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the Funds (other than an amendment which can be
effective without shareholder approval under applicable law).
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub Adviser to INVESCO
hereunder shall be given in writing or by mail, telex, telefacsimile or by
telephone, such telephone advice to be confirmed by mail, telex, telefacsimile
or in writing to such place as INVESCO shall from time to time require; further
the Sub Adviser shall be free to telephone INVESCO as it sees fit in the
performance of its duties.
<PAGE>
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the size, extent or intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
By: ------------------------
Mark H. Williamson,
President
ATTEST:
- -------------------------
Glen A. Payne, Secretary
WORLD ASSET MANAGEMENT
By: ------------------------
ATTEST:
- ------------------------
EXHIBIT d(3)
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT made this 15th day of July, 1999, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Capital
Management, Inc. ("ICM"), a Delaware corporation.
WITNESSETH:
WHEREAS, INVESCO Stock Funds, Inc. (the "Company")) is engaged in business as
a diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") and has one class of shares (the "Shares"), which is
divided into six or more series (the "Series"), each representing an interest in
a separate portfolio of investments; and
WHEREAS, the Shares of the Company have, in fact, been divided into separate
Series, one such Series being the INVESCO Value Equity Fund (the "Fund") such
Series having separate a portfolio of investments; and
WHEREAS, INVESCO and ICM are engaged principally in rendering investment
advisory services and are registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with the
Company (the "INVESCO Investment Advisory Agreement"), pursuant to which INVESCO
is required to provide investment advisory services to the Company, and, upon
receipt of written approval of the Company, is authorized to retain other
parties to provide such services; and
WHEREAS, ICM is willing to provide investment advisory services to the
Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and ICM hereby agree as follows:
ARTICLE I
DUTIES OF ICM
INVESCO hereby employs ICM to act as investment adviser to the Company and to
furnish, or arrange for affiliates of ICM to furnish, the investment advisory
services described below, subject to the broad supervision of INVESCO and the
Board of Directors of the Company, for the period and on the terms and
conditions set forth in this Agreement. ICM hereby accepts such employment and
agrees during such period, at its own expense, to render, or arrange for the
rendering of, such services and to assume the obligations herein set forth for
<PAGE>
the compensation provided for herein. ICM and its affiliates shall for all
purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company.
ICM hereby agrees to manage the investment operations of the Fund, subject to
the supervision of the Company's directors (the "Directors") and INVESCO.
Specifically, ICM agrees to perform the following services:
(a) to manage the investment and reinvestment of all assets, now or
hereafter acquired, by the Fund, to execute all purchases and sales of
portfolio securities and to vote all proxies of portfolio securities;
(b) to maintain a continuous investment program for the Fund, consistent
with (i) the 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 Investment Company Act of 1940, as amended (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 Securities Act
of 1933, as amended, and (ii) the Company's status as a regulated investment
company under the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the Fund,
unless otherwise directed by the Directors of the Company or INVESCO, and to
execute transactions accordingly;
(d) to provide to the Fund 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 ICM;
(e) to determine what portion of the Fund should be invested in the various
types of securities authorized for purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights, rights
to consent to Fund's action and any other rights pertaining to the Funds'
portfolio securities shall be exercised.
With respect to execution of transactions for the Fund, ICM shall place
orders for the purchase or sale of portfolio securities with brokers or dealers
selected by ICM. In connection with the selection of such brokers or dealers and
the placing of such orders, ICM is directed at all times to obtain for the
Funds, the most favorable execution and price; after fulfilling this primary
requirement of obtaining the most favorable execution and price, ICM is hereby
<PAGE>
expressly authorized to consider as a secondary factor in selecting brokers or
dealers with which such orders may be placed whether such firms furnish
statistical, research and other information or services to ICM. Receipt by ICM
of any such statistical or other information and services should not be deemed
to give rise to any requirement for abatement of the advisory fee payable
pursuant to paragraph 3 hereof. ICM may follow a policy of considering sales of
shares of the Company as a factor in the selection of broker-dealers to execute
portfolio transactions, subject to the requirements of best execution discussed
above.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
ICM assumes and shall pay for maintaining the staff and personnel necessary
to perform its obligations under this Agreement, and shall also, at its own
expense, provide the office space, equipment and facilities necessary to perform
its obligations under this Agreement.
Except to the extent expressly assumed by ICM herein and except to the extent
required by law to be paid by ICM, INVESCO and/or the Company shall pay all
costs and expenses in connection with its respective operations. Without
limiting the generality of the foregoing, such costs and expenses payable by
INVESCO or the Company, as applicable, include the following:
(a) all brokers' commissions, issue and transfer taxes, and other costs
chargeable to the Company or the Fund in connection with securities
transactions to which INVESCO, the Company or the Fund is a party or in
connection with securities owned by INVESCO, the Company or the Fund;
(b) the fees, charges and expenses of any independent public accountants,
custodian, depository, dividend disbursing agent, dividend reinvestment
agent, transfer agent, registrar, independent pricing services, and legal
counsel for INVESCO, the Company or for the Fund;
(c) the interest on indebtedness, if any, incurred by INVESCO, the Company
or the Fund;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by INVESCO, the Company or the Fund
to federal, state, county, city, or other governmental agents;
(e) the fees and expenses involved in maintaining the registration and
qualification of the Company and of its shares under laws administered by the
Securities and Exchange Commission or under other applicable regulatory
requirements, including the preparation and printing of prospectuses and
statements of additional information;
<PAGE>
(f) the compensation and expenses of the Directors of the Company;
(g) the costs of printing and distributing reports, notices of
shareholders' meetings, proxy statements, dividend notices, prospectuses,
statements of additional information and other communications to the
Company's shareholders, as well as all expenses of shareholders' meetings and
Company meetings;
(h) all costs, fees or other expenses arising in connection with the
organization and filing of the Company's Articles of Incorporation, including
its initial registration and qualification under the 1940 Act and under the
Securities Act of 1933, as amended, the initial determination of its tax
status and any rulings obtained for this purpose, the initial registration
and qualification of its securities under the laws of any state and the
approval of the Company's operations by any other federal or state authority;
(i) the expenses of repurchasing and redeeming shares of the Company's;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates representing
shares of beneficial interests of the Company;
(l) extraordinary expenses, including fees and disbursements of counsel, in
connection with litigation by or against INVESCO, the Company or the Fund;
(m) premiums for the fidelity bond maintained by the Company pursuant to
Section 17(g) of the 1940 Act and rules promulgated thereunder; and
(n) association and institute dues.
ARTICLE III
COMPENSATION OF ICM
For the services rendered, the facilities furnished and expenses assumed by
ICM, INVESCO shall pay to ICM an annual fee, computed on a daily basis and paid
on a monthly basis, using for each daily calculation the most recently
determined net asset value of the Fund, as determined by valuation determined in
accordance with the Fund's procedures for calculating its net asset value as
described in the Prospectus and/or Statement of Additional Information. On an
annual basis, the advisory fee to ICM shall be as follows: 0.30% on the first
$500 million of the Fund's average net assets, 0.26% on the next $500 million of
the Fund's average net assets, 0.20% of the Fund's average net assets from $1
billion, 0.18% of the Fund's average net assets from $2 billion, 0.16% of the
<PAGE>
Fund's average net assets from $4 billion, 0.15% of the Fund's average net
assets from $6 billion and 0.14% of the Fund's average net assets from $8
billion. During any period when the determination of the Fund's net asset value
is suspended by the Directors of the Company, the net asset value of a share of
the Fund as of the last business day prior to such suspension shall, for the
purpose of this Article III, be deemed to be the net asset value at the close of
each succeeding business day until it is again determined.
ARTICLE IV
LIMITATION OF LIABILITY OF ICM
ICM shall not be liable for any error of judgment, mistake of law or for any
loss arising out of any investment or for any act or omission in the performance
of sub-advisory services rendered with respect to the Company or, in particular,
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article IV, ICM shall include any
affiliates of ICM performing services contemplated hereby and directors,
officers, partners and employees of ICM and such affiliates.
ARTICLE V
ACTIVITIES OF ICM
The services of ICM to the Company are not to be deemed to be exclusive, ICM and
any person controlled by or under common control with ICM (for purposes of this
Article V referred to as "affiliates") being free to render services to others.
It is understood that directors, officers, employees and shareholders of the
Company are or may become interested in ICM and its affiliates, as directors,
officers, employees and shareholders or otherwise and that directors, officers,
partners, employees and shareholders of ICM and its affiliates are or may become
interested in the Company as directors, officers and employees, and that ICM,
INVESCO, and the directors, officers, employees and shareholders of INVESCO and
its affiliates may become interested in the Company as a shareholder or
otherwise.
<PAGE>
ARTICLE VI
AVOIDANCE OF INCONSISTENT POSITIONS AND
COMPLIANCE WITH THE LAWS
In connection with purchases or sales of securities for the investment portfolio
of the Company or of the Fund, neither ICM nor any of its directors, officers,
partners or employees will act as a principal or agent for any party other than
the Company or the Fund, as applicable, or receive any commissions. ICM will
comply with all applicable laws in acting hereunder including, without
limitation, the 1940 Act; the Investment Advisers Act of 1940, as amended; and
all rules and regulations duly promulgated under the foregoing.
ARTICLE VII
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a
majority of the outstanding voting securities of the Fund, and shall remain in
force for an initial term of two years from the date of execution, and from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually by (i) the directors of the Company, or by the vote
of a majority of the outstanding voting securities of the Fund, and (ii) a
majority of those directors who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Directors of the Company or by vote of the majority of
the outstanding voting securities of the Fund, or by ICM, on sixty days' written
notice to the applicable party(ies). This Agreement shall automatically
terminate in the event of its assignment or in the event of the termination of
the INVESCO Investment Advisory Agreement.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by ICM and
INVESCO, and no material amendment of this Agreement shall be effective until
approved by the vote of a majority of the outstanding voting securities of the
Fund as to which such amendment is applicable; provided, however, that this
paragraph shall not prevent any immaterial amendment(s) to this Agreement, which
amendment(s) are made with the approval of (1) the Directors and (2) a majority
of the Directors of the Company who are not interested persons of INVESCO, ICM
or the Company.
<PAGE>
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting securities,"
"assignments," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the Rules and Regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State of
Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
PERSONAL LIABILITY
The Sub Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the Sub
Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or the
fund advised in connection with the subject matter of this Agreement unless such
loss arises from the willful misfeasance, bad faith or negligence in the
performance of the Sub-Adviser's duties and subject and without prejudice to the
foregoing. INVESCO hereby undertakes to indemnify and to keep indemnified the
Sub Adviser from and against any and all liabilities, obligations, losses,
damages, suits and expenses which may be incurred by or asserted against the Sub
Adviser for which it is responsible pursuant to Article I hereof provided always
that the Sub-Adviser shall send to INVESCO as soon as possible all claims,
letters, summonses, writs or documents which it receives from third parties and
provide whatever information and assistance INVESCO may require and no liability
of any sort shall be admitted and no undertaking shall be given nor shall any
offer, promise or payment be made or legal expenses incurred by the Sub Adviser
without written consent of INVESCO who shall be entitled if it so desires to
take over and conduct in the name of the Sub Adviser the defense of any action
or to prosecute any claim for indemnity or damages or otherwise against any
third party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
By: /s/ Mark H. Williamson
----------------------
Mark H. Williamson
President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
INVESCO CAPITAL MANAGEMENT, INC.
By: -------------------------
President
ATTEST:
- -------------------------
Secretary
EXHIBIT e(1)(a)
AMENDMENT TO DISTRIBUTION AGREEMENT
Agreement made by and between INVESCO Dynamics Fund, Inc. (the "Fund")
and INVESCO Distributors, Inc. (the "Underwriter").
WHEREAS, the Fund and Underwriter are parties to a Distribution Agreement
dated September 30, 1997, (the "Distribution Agreement") governing the terms and
conditions under which the Underwriter engages in the business
of selling the shares of the Fund; and
WHEREAS, the Fund and Underwriter desire to amend the Distribution
Agreement;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the Fund and Underwriter hereby amend the Distribution Agreement by the
addition of the following terms and provisions:
1. The name of the Fund is changed to INVESCO Capital Appreciation
Funds, Inc. effective June 26, 1997 and to INVESCO Equity Funds,
Inc. effective August 28, 1998.
2. The Distribution Agreement shall be amended to reflect that INVESCO
Dynamics Fund, INVESCO Growth & Income Fund and INVESCO Endeavor
Fund are series of the Fund.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this 18th day of September 1998.
INVESCO DYNAMICS FUND, INC.
By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: /s/ MarkH. Williamson
-----------------------------
Mark H. Williamson, President
EXHIBIT e(1)(b)
AMENDMENT TO DISTRIBUTION AGREEMENT
Agreement made by and between INVESCO Equity Funds, Inc. (the "Fund")
and INVESCO Distributors, Inc. (the "Underwriter").
WHEREAS, the Fund and Underwriter are parties to a Distribution Agreement
dated September 30, 1997, (the "Distribution Agreement") governing the terms and
conditions under which the Underwriter engages in the business
of selling the shares of the Fund; and
WHEREAS, the Fund and Underwriter desire to amend the Distribution
Agreement;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the Fund and Underwriter hereby amend the Distribution Agreement by the
addition of the following terms and provisions:
1. The name of the Fund is changed to INVESCO Stock Funds, Inc.
effective October 29, 1998.
2. The Distribution Agreement shall be amended to reflect that
effective July 15, 1999, the INVESCO Blue Chip Growth Fund, INVESCO
Small Company Growth Fund, INVESCO S&P 500 Index Fund and INVESCO
Value
Equity Fund are series of the Fund.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this 15th day of July, 1999.
INVESCO EQUITY FUNDS, INC.
By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: /s/ MarkH. Williamson
-----------------------------
Mark H. Williamson, President
EXHIBIT f(1)
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS
As Amended November 10, 1999
The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors of the Funds who
are not interested directors thereof as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended ("Independent Directors").
1. Eligibility
Each Independent Director who has served as such ("Eligible Service") on
the boards of any of the Funds and their predecessor and successor entities, if
any, for an aggregate of at least five years at the time of his/her Service
Termination Date (as defined in paragraph 2) will be entitled to receive
benefits under the Plan. An Independent Director's period of Eligible Service
commences on the date of election to the board of directors of any one or more
of the Funds ("Board"). Hereafter, references in this Plan to Independent
Directors shall be deemed to include only those Directors who have met the
Eligible Service requirement for Plan participation.
2. Service Termination and Service Termination Date
a. Service Termination. Service Termination means termination of service
(other than by disability or death) of an Independent Director which results
from the Director's having reached his/her Service Termination Date.
b. Service Termination Date. An Independent Director's Service Termination
Date is that date upon which he or she no longer serves as a Director. Normally,
an Independent Director's Service Termination Date will be the last day of the
calendar quarter in which such Director's seventy-second birthday occurs. A
majority of the Board of a Fund may annually extend a Director's normal Service
Termination Date for a maximum period of three years, through the date not later
than the last day of the calendar quarter in which such Director's seventy-fifth
birthday occurs.
As used in this Plan unless otherwise stipulated, Service Termination Date
shall mean the date upon which the Director no longer serves as a Director.
<PAGE>
3. Defined Payments and Benefit
a. Payments. If an Independent Director's Service Termination Date occurs
on a date not earlier than the last day of the calendar quarter in which such
Director's seventy-second birthday occurs and not later than the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurs, the
Independent Director will receive four successive quarterly payments (the "First
Year Retirement Payments"), with each payment to be equal to 25 percent of the
sum of the annual basic retainer and annualized quarterly Board meeting fees
payable by each Fund to the Independent Director on his/her Service Termination
Date (excluding any fees relating to attending or chairing committee meetings or
other fees payable to an Independent Director). The first quarterly First Year
Retirement Payment shall be made on the first day of the calendar quarter
subsequent to the Independent Director's Service Termination Date.
b. Benefit. Commencing with the first day of the calendar quarter
following the calendar quarter in which an Independent Director has received the
last of four First Year Retirement Payments, and commencing as of the Service
Termination Date of an Independent Director whose Service Termination Date is
subsequent to the date of the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurred, the Independent Director will
receive, for the remainder of his/her life, a benefit (the "Benefit"), payable
quarterly, with each quarterly payment to be equal to 12.50 percent of the sum
of the annual basic retainer and annualized quarterly Board meeting fees payable
by each Fund to the Independent Director on his/her Service Termination Date
(excluding any fees relating to attending or chairing committee meetings or
other fees payable to an Independent Director).
If an Independent Director's Service Termination Date occurs prior to the
date of the last day of the calendar quarter in which such Director's
seventy-second birthday occurs as a result of the Director's voluntary
resignation, the Independent Director will receive the Benefit commencing on the
first day of the calendar quarter following the calendar quarter in which such
Director's seventy-second birthday occurs.
Example: As of July 1, 1998, the annual Benefit would be $34,000 (annual
basic retainer of $56,000 plus annualized quarterly Board meeting fees of
$12,000 times 12.50 percent of the total each quarter: $56,000 + $12,000 =
$68,000 x .125 = $8,500 x 4 = $34,000). As of July 1, 1998, the vice chairman of
the Funds receives an aggregate annual retainer of $62,000. The vice chairman's
annual Benefit would be $37,000. The annual Benefit may increase or decrease in
the future in accordance with changes in the Independent Directors' annual basic
retainer and/or Board meeting fees.
c. Death Provisions. If an Independent Director's service as a Director is
terminated because of his/her death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.
<PAGE>
If an Independent Director's service as a Director is terminated because
of his/her death prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
designated beneficiary of the Independent Director shall receive the Benefit for
a period of ten years, with quarterly payments to be made to the designated
beneficiary commencing in the first quarter following the Director's death.
d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his/her disability subsequent to the last day
of the calendar quarter in which such Director's seventy-second birthday
occurred and prior to the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for the remainder of his/her life, with quarterly
payments to be made to the disabled Independent Director. If the disabled
Independent Director should die before the First Year Retirement Payments are
completed and before forty quarterly Benefit payments are made, such payments
will continue to be made to the Independent Director's designated beneficiary
until the aggregate of the First Year Retirement Payments and forty quarterly
Benefit payments have been made to the disabled Independent Director and the
Director's designated beneficiary.
If an Independent Director's service as a Director is terminated because
of his/her disability prior to the last day of the calendar quarter in which
such Director's seventy-second birthday occurs or subsequent to the last day of
the calendar quarter in which such Director's seventy-fourth birthday occurred,
the Independent Director shall receive the Benefit for the remainder of his/her
life, with quarterly payments to be made to the disabled Independent Director
commencing in the first quarter following the Director's termination for
disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.
e. Death of Independent Director and Beneficiary. If, subsequent to the
death of the Independent Director, his/her designated beneficiary should die
before the First Year Retirement Payments (if applicable) and/or a total of
forty quarterly Benefit payments are made, the remaining value of the
Independent Director's First Year Retirement Payments, if any, and/or Benefit
(which Benefit shall in no event exceed the value of forty quarterly payments
minus the number of payments made) shall be determined as of the date of the
death of the Independent Director's designated beneficiary and shall be paid to
the estate of the designated beneficiary in one lump sum or in periodic
payments, with the determinations with respect to the value of the First Year
Retirement Payments, if any, and/or Benefit and the method and frequency of
payment to be made by the Committee (as defined in paragraph 8.a.) in its sole
discretion.
<PAGE>
4. Designated Beneficiary
The beneficiary referred to in paragraph 3 may be designated or changed by
the Independent Director without the consent of any prior beneficiary on a form
provided by the Committee (as defined in paragraph 8.a.) and delivered to the
Committee (or its designee as described on the form) before the Independent
Director's death. If no such beneficiary shall have been designated, or if no
designated beneficiary shall survive the Independent Director, the value or
remaining value of the Independent Director's First Year Retirement Payments, if
any, and/or Benefit (which Benefit shall in no event exceed the value of forty
quarterly payments minus the number of payments made) shall be determined as of
the date of the death of the Independent Director by the Committee and shall be
paid as promptly as possible in one lump sum to the Independent Director's
estate.
5. Disability
An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally
or physically, as a result of an accident or illness, so as to be prevented from
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his/her responsibilities as such.
6. Time of Payment
The First Year Retirement Payments and/or the Benefit for each year will
be paid in quarterly installments that are as nearly equal as possible.
7. Payment of First Year Retirement Payments and/or Benefit; Allocation of
Costs
Each Fund is responsible for the payment of the amount of the First Year
Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.
<PAGE>
8. Administration
a. The Committee. Any question involving entitlement to payments under or
the administration of the Plan will be referred to a four-person committee (the
"Committee") composed of three Independent Directors designated by all of the
Independent Directors of the Funds and one director of the Funds who is not an
Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.
b. Powers of the Committee. The Committee will represent and act on behalf
of the Funds in respect of the Plan and, subject to the other provisions of the
Plan, the Committee may adopt, amend or repeal bylaws or other regulations
relating to the administration of the Plan, the conduct of the Committee's
affairs, its rights or powers, or the rights or powers of its members. The
Committee will report to the Independent Directors and to the Boards of the
Funds from time to time on its activities in respect of the Plan. The Committee
or persons designated by it will cause such records to be kept as may be
necessary for the administration of the Plan.
9. Miscellaneous Provisions
a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.
b. Amendment, etc. The Committee, with the concurrence of the Board of any
Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver. Notwithstanding any other provisions of this Plan which
may imply the contrary, amendments to the Plan which directly or indirectly
increase or otherwise enhance or improve the First Year Retirement Payments, the
Benefit, or other Plan provisions will be applied prospectively, but not
retroactively, to Independent Directors who have reached their Service
Termination Dates and who either are eligible in the future to receive, or are
receiving, First Year Retirement Payments or Benefits.
c. No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board of any Fund to nominate any Independent Director for
reelection.
d. Consulting. Subsequent to his/her Service Termination Date, an
Independent Director may render such services for any Fund, for such
compensation, as may be agreed upon from time to time by such Independent
Director and the Board of the Fund which desires to procure such services.
<PAGE>
e. Effectiveness. The Plan will be effective for all Independent Directors
who have Service Termination Dates occurring on and after October 20, 1993.
Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will
become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.
Adopted October 20, 1993.
Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
Amended May 13, 1998, effective July 1, 1998.
Amended November 10, 1999.
<PAGE>
SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS
INVESCO Bond Funds, Inc.
INVESCO Combination Stock and 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 Variable Investment Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
EXHIBIT g(5)
[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
July 14, 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 Chris:
This is to advise you that effective July 15, 1999, INVESCO Stock Funds, Inc.
(the "Company") has reorganized INVECO Blue Chip Growth Fund, a series of
INVESCO Growth Fund, Inc.; INVESCO Small Company Growth Fund, a series of
INVESCO Emerging Opportunity Funds, Inc.; INVESCO S&P 500 Index Fund, a series
of INVESCO Specialty Funds, Inc.; and INVESCO Value Equity Fund, a series of
INVESCO Value Trust, into INVESCO Stock Funds, Inc.
In accordance with the Additional Funds provision in Paragraph 17 of the
Custodian Contract dated October 20, 1993 between the Company and State Street
Bank and Trust Company, the Company hereby requests that you act as Custodian
for the new series under the terms of the Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Company and retaining one copy for your
records.
Sincerely,
/s/ Alan I. Watson
- --------------------
Alan I. Watson
Assistant Secretary
Agreed to this 14th day of July, 1999.
STATE STREET BANK AND TRUST COMPANY
By: ____________________________
Vice President
EXHIBIT g(6)
STATE STREET BANK
INVESCO Funds Group - per Attached Addendum
Custodian Fee Schedule
- --------------------------------------------------------------------------------
I. Administration
Custody Service - Maintain custody of fund assets. Settle portfolio purchases
and sales. Report buy and sell fails. Determine and collect portfolio income.
Make cash disbursements and report cash transactions. Monitor corporate actions.
The administration fee shown below is an annual charge, billed and payable
monthly, based on average monthly net assets.
ANNUAL FEES (BASIS POINTS) GROUP A
----------------------------------
Aggregate
Fund Net Assets Complex Wide
- --------------- ------------
First $10 Billion 1.40 Basis Points
Next $10 Billion .70 Basis Points
Next $10 Billion .40 Basis Points
Remainder .25 Basis Points
Minimum Monthly Charge None
II. Global Custody
Maintain custody of fund assets. Settle portfolio purchases and sales. Report
buy and sell fails. Determine and collect portfolio income. Make cash
disbursements and report cash transactions in local and base currency. Withhold
foreign taxes. File foreign tax reclaims. Monitor corporate actions.
Report portfolio positions.
A. Country Grouping
Group B Group C Group D Group E
- -------- ------- ------- -------
Australia Austria Botswana Argentina
Canada Belgium Brazil Bangladesh
Denmark Finland China Bolivia*
Euroclear Hong Kong Czech Republic Chile
France Indonesia Ecuador* Colombia
Germany Ireland Egypt Cyprus
Italy Malaysia Ghana Greece
Japan Mexico Israel Hungary
New Zealand Netherlands Kenya India
Spain Norway Luxembourg Jamaica*
Switzerland Philippines Morocco Jordan
U.K. Portugal South Africa Mauritus
Singapore Sri Lanka Namibia
Sweden Taiwan Pakistan
Thailand Trinidad and Tobago* Peru
Turkey Poland
Zambia Slovakia*
Zimbabwe South Korea
Tunisia *
Uruguay
Venezuela
* 17f-5 Ineligible at this time
<PAGE>
B. Transaction Charges
Group B Group C Group D Group E
------- ------- ------- -------
$25 $50 $100 $150
C. Holding Charges in Basis Points (Annual Fee)
Group B Group C Group D Group E
------- ------- ------- -------
7.5 15.0 40.0 50.0
III. Portfolio Trades - For each line item processed - Group A
State Street Bank Repos $7.00
DTC or Fed Book Entry $7.00
New York Physical Settlements $20.00
Maturity Collections N/C
PTC Purchase, Sale, Deposit or Withdrawal $8.00
All other trades $16.00
IV. Options
Option charge for each option written or closing
contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
V. Lending of Securities
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt
of loaned securities $15.00
Deliver securities collateral versus receipt
of loaned securities $25.00
Loan administration--mark-to-market per day, per loan $3.00
<PAGE>
VI. Interest Rate Futures
Transactions--no security movement $8.00
VIl. Principal Reduction Payments
Per Paydown $10.00
VIll. Dividend Charges (For items $50.00
held at the Request of Traders
over record date in street form)
IX. Special Services
Fees for activities of a non-recurring nature such as fund consolidations or
reorganizations, extraordinary security shipments and the preparation of special
reports will be subject to negotiation.
X. Shareholder-Check Writing Withdrawal
Per Item $0.30
XI. Out-of-Pocket Expenses
A billing for the recovery of the following out-of-pocket expenses will be made
as of the end of each month.
Wire Charges ($5.00 per wire in and $5.50 out)
Legal Fees
Sub-custodian Charges limited to telex charges and taxes
Other out-of-pocket expenses as negotiated by State Street and INVESCO
XIl. Payment
Upon proper notification of the above fees will be charged against the fund's
custodian checking account within five (5) business days.
XIII. Balance Credits
Balance credits will be calculated based upon 90% of the monthly average balance
of accounts at State Street using 91 day Treasury Bill Rate in effect at the
month end. Balance Credits will be applied against Custody Fees. Excess balance
credits may accumulate from month to month and will be reviewed and resolved
periodically by State Street and INVESCO.
XIV. Effective Date
This schedule will be effective on January 1, 2000
<PAGE>
INVESCO Funds Group State Street Bank
By: /s/ Ronald L. Grooms By: /s/ Charles R. Whittemore
-------------------- -------------------------
Title: Senior Vice President Title: Vice President
Date: December 20, 1999 Date: December 16, 1999
<PAGE>
INVESCO Funds Group - Appendix A
INVIESCO Stock Funds, Inc.
INVESCO Endeavor Fund
INVESCO Dynamics Fund
INVESCO Blue Chip Growth Fund
INVESCO Growth & Income Fund
INVESCO S & P 500 Index Fund
INVESCO Small Company Growth Fund
INVESCO Value Equity Fund
INVESCO Bond Funds, Inc.
INVESCO High Yield Fund
INVESCO Tax-Free Bond Fund
INVESCO Select Income Fund
INVESCO U.S. Government Securities Fund
INVESCO Combination Stock and Bond Funds, Inc.
INVESCO Balanced Fund
INVESCO Equity Income Fund
INVESCO Total Return Fund
INVESCO International Funds, Inc.
INVESCO International Blue Chip Fund
INVESCO Latin American Growth Fund
INVESCO Pacific Basin Fund
INVESCO European Fund
INVESCO Money Maket Funds, Inc.
INVESCO Cash Reserves Fund
INVESCO Tax-Free Money Fund
INVESCO U.S. Government Money Fund
INVESCO Sector Funds, Inc.
INVESCO Telecommunications Fund
INVESCO Energy Fund
INVESCO Financial Services Fund
INVESCO Gold Fund
INVESCO Health Sciences Fund
INVESCO Leisure Fund
INVESCO Realty Fund
INVESCO Technology Fund
INVESCO Utilities Fund
<PAGE>
INVESCO Treasurer's Series Funds, Inc.
INVESCO Treasurer's Money Market Reserve Fund
INVESCO Treasurer's Tax-Exempt Reserve Fund
INVESCO Variable Investment Funds, Inc.
INVESCO VIF - Dynamics Fund
INVESCO VIF - Blue Chip Growth Fund
INVESCO VIF - Health Sciences Fund
INVESCO VIF - High Yield Fund
INVESCO VIF - Equity Income Fund
INVESCO VIF - Realty Fund
INVESCO VIF - Small Company Growth Fund
INVESCO VIF - Technology Fund
INVESCO VIF - Total Return Fund
INVESCO VIF - Utilities Fund
INVESCO VIF - Financial Services Fund
INVESCO VIF - Market Neutral Fund
INVESCO VIF - Telecommunications Fund
INVESCO Global Health Sciences Fund
EXHIBIT h(2)(a)
AMENDMENT TO ADMINISTRATIVE SERVICES AGREEMENT
This is an Amendment to the Administrative Services Agreement made and
entered into between INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), and INVESCO 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, 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 "Portfolio"); and
NOW, THEREFORE, the name of the Fund is "INVESCO Capital Appreciation
Funds, Inc."; and
The Fund is authorized to issue shares representing interests in the
Portfolio, the INVESCO Dynamics Fund.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the 18th day of May, 1997.
INVESCO FUNDS GROUP, INC.
By: /s/ Mark H. Williamson
----------------------
Mark H. Williamson
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
EXHIBIT j
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated August 25, 1999, relating to the
financial statements and financial highlights which appears in the July 31, 1999
Annual Report to Shareholders of INVESCO Stock Funds, Inc., which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights" and "Independent
Accountants" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
January 27, 2000
EXHIBIT m(1)
AMENDED PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of 30th day of September, 1997, by and between
INVESCO CAPITAL APPRECIATION FUNDS, INC., a Maryland corporation (hereinafter
called the "Company"), and INVESCO DISTRIBUTORS, Inc., a Delaware corporation
("INVESCO").
WHEREAS, the Company engages in business as an open-end management
investment company, and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Company desires to finance the distribution of its shares in
accordance with this Plan and Agreement of Distribution pursuant to Rule 12b-1
under the Act (the "Plan and Agreement"); and
WHEREAS, INVESCO desires to be retained to perform services in accordance
with such Plan and Agreement and on said terms and conditions; and
WHEREAS, this Plan and Agreement has been approved by a vote of the board
of directors of the Company, including a majority of the directors who are not
interested persons of the Company, as defined in the Act, and who have no direct
or indirect financial interest in the operation of this Plan and Agreement (the
"Disinterested Directors") cast in person at a meeting called for the purpose of
voting on this Plan and Agreement;
NOW, THEREFORE, the Company hereby adopts the Plan set forth herein and
the Company and INVESCO hereby enter into this Agreement pursuant to the Plan in
accordance with the requirements of Rule 12b-1 under the Act, and provide and
agree as follows:
1. The Plan is defined as those provisions of this document by which
the Company adopts a Plan pursuant to Rule 12b- 1 under the Act
and authorizes payments as described herein. The Agreement is
defined as those provisions of this document by which the Company
retains INVESCO to provide distribution services beyond those
required by the General Distribution Agreement between the
parties, as are described herein. The Company may retain the
Plan notwithstanding termination of the Agreement. Termination
of the Plan will automatically terminate the Agreement. The
Company is hereby authorized to utilize the assets of the Company
to finance certain activities in connection with distribution of
the Company's shares.
2. Subject to the supervision of the board of directors, the Company
hereby retains INVESCO to promote the distribution of shares of
the Company by providing services and engaging in activities
beyond those specifically required by the Distribution Agreement
<PAGE>
between the Company and INVESCO and to provide related services.
The activities and services to be provided by INVESCO hereunder
shall include one or more of the following: (a) the payment of
compensation (including trail commissions and incentive
compensation) to securities dealers, financial institutions and
other organizations, which may include INVESCO-affiliated
companies, that render distribution and administrative services
in connection with the distribution of the Company's shares; (b)
the printing and distribution of reports and prospectuses for the
use of potential investors in the Company; (c) the preparing and
distributing of sales literature; (d) the providing of
advertising and engaging in other promotional activities,
including direct mail solicitation, and television, radio,
newspaper and other media advertisements; and (e) the providing
of such other services and activities as may from time to time be
agreed upon by the Company. Such reports and prospectuses, sales
literature, advertising and promotional activities and other
services and activities may be prepared and/or conducted either
by INVESCO's own staff, the staff of INVESCO-affiliated
companies, or third parties.
3. INVESCO hereby undertakes to use its best efforts to promote sales
of shares of the Company to investors by engaging in those
activities specified in paragraph (2) above as may be necessary and
as it from time to time believes will best further sales of such
shares.
4. The Company is hereby authorized to expend, out of its assets, on
a monthly basis, and shall pay INVESCO to such extent, to enable
INVESCO at its discretion to engage over a rolling twelve-month
period (or the rolling twenty-four month period specified below)
in the activities and provide the services specified in paragraph
(2) above, an amount computed at an annual rate of .25 of 1% of
the average daily net assets of the Company during the month.
INVESCO shall not be entitled hereunder to payment for overhead
expenses (overhead expenses defined as customary overhead not
including the costs of INVESCO's personnel whose primary
responsibilities involve marketing of the INVESCO Funds).
Payments by the Company hereunder, for any month, may be used to
compensate INVESCO for: (a) activities engaged in and services
provided by INVESCO during the rolling twelve-month period in
which that month falls, or (b) to the extent permitted by
applicable law, for any month during the first twenty-four months
following the Company's commencement of operations, activities
engaged in and services provided by INVESCO during the rolling
twenty-four month period in which that month falls, and any
obligations incurred by INVESCO in excess of the limitation
described above shall not be paid for out of Fund assets. The
Company shall not be authorized to expend, for any month, a
greater percentage of its assets to pay INVESCO for activities
engaged in and services provided by INVESCO during the rolling
twenty-four month period referred to above than it would
otherwise be authorized to expend out of its assets to pay
<PAGE>
INVESCO for activities engaged in and services provided by
INVESCO during the rolling twelve-month period referred to above,
and the Company shall not be authorized to expend, for any month,
a greater percentage of its assets to pay INVESCO for activities
engaged in and services provided by INVESCO pursuant to the Plan
and Agreement than it would otherwise have been authorized to
expend out of its assets to reimburse INVESCO for expenditures
incurred by INVESCO pursuant to the Plan and Agreement as it
existed prior to February 5, 1997. No payments will be made by
the Company hereunder after the date of termination of the Plan
and Agreement.
5. To the extent that obligations incurred by INVESCO out of its own
resources to finance any activity primarily intended to result in
the sale of shares of the Company, pursuant to this Plan and
Agreement or otherwise, may be deemed to constitute the indirect use
of Company assets, such indirect use of Company assets is hereby
authorized in addition to, and not in lieu of, any other payments
authorized under this Plan and Agreement.
6. The Treasurer of INVESCO shall provide to the board of directors
of the Company, at least quarterly, a written report of all
moneys spent by INVESCO on the activities and services specified
in paragraph (2) above pursuant to the Plan and Agreement. Each
such report shall itemize the activities engaged in and services
provided by INVESCO to a Fund as authorized by the penultimate
sentence of paragraph (4) above. Upon request, but no less
frequently than annually, INVESCO shall provide to the board of
directors of the Company such information as may reasonably be
required for it to review the continuing appropriateness of the
Plan and Agreement.
7. This Plan and Agreement shall each become effective immediately
since the predecessor Plan and Agreement had already been
approved by a vote of a majority of the outstanding voting
securities of the Company as defined in the Act, and shall
continue in effect until September 30, 1998 unless terminated as
provided below. Thereafter, the Plan and Agreement shall
continue in effect from year to year, provided that the
continuance of each is approved at least annually by a vote of
the board of directors of the Company, including a majority of
the Disinterested Directors, cast in person at a meeting called
for the purpose of voting on such continuance. The Plan may be
terminated at any time, without penalty, by the vote of a
majority of the Disinterested Directors or by the vote of a
majority of the outstanding voting securities of the Company.
INVESCO, or the Company, by vote of a majority of the
Disinterested Directors or of the holders of a majority of the
outstanding voting securities of the Company, may terminate the
<PAGE>
Agreement under this Plan, without penalty, upon 30 days' written
notice to the other party. In the event that neither INVESCO nor
any affiliate of INVESCO serves the Company as investment
adviser, the agreement with INVESCO pursuant to this Plan shall
terminate at such time. The board of directors may determine to
approve a continuance of the Plan, but not a continuance of the
Agreement, hereunder.
8. So long as the Plan remains in effect, the selection and
nomination of persons to serve as directors of the Company who
are not "interested persons" of the Company shall be committed to
the discretion of the directors then in office who are not
"interested persons" of the Company. However, nothing contained
herein shall prevent the participation of other persons in the
selection and nomination process, provided that a final decision
on any such selection or nomination is within the discretion of,
and approved by, a majority of the directors of the Company then
in office who are not "interested persons" of the Company.
9. This Plan may not be amended to increase the amount to be spent by
the Company hereunder without approval of a majority of the
outstanding voting securities of the Company. All material
amendments to the Plan and to the Agreement must be approved by the
vote of the board of directors of the Company, including a majority
of the Disinterested Directors, cast in person at a meeting called
for the purpose of voting on such amendment.
10. To the extent that this Plan and Agreement constitutes a Plan of
Distribution adopted pursuant to Rule 12b-1 under the Act it
shall remain in effect as such, so as to authorize the use by the
Company of its assets in the amounts and for the purposes set
forth herein, notwithstanding the occurrence of an "assignment,"
as defined by the Act and the rules thereunder. To the extent it
constitutes an agreement with INVESCO pursuant to a plan, it
shall terminate automatically in the event of such "assignment."
Upon a termination of the agreement with INVESCO, the Company may
continue to make payments pursuant to the Plan only upon the
approval of a new agreement under this Plan and Agreement, which
may or may not be with INVESCO, or the adoption of other
arrangements regarding the use of the amounts authorized to be
paid by the Funds hereunder, by the Company's board of directors
in accordance with the procedures set forth in paragraph 7 above.
<PAGE>
11. The Company shall preserve copies of this Plan and Agreement and
all reports made pursuant to paragraph 6 hereof, together with
minutes of all board of directors meetings at which the adoption,
amendment or continuance of the Plan were considered (describing
the factors considered and the basis for decision), for a period
of not less than six years from the date of this Plan and
Agreement, or any such reports or minutes, as the case may be,
the first two years in an easily accessible place.
12. This Plan and Agreement shall be construed in accordance with the
laws of the State of Colorado and applicable provisions of the Act.
To the extent the applicable laws of the State of Colorado, or any
provisions herein, conflict with the applicable provisions of the
Act, the latter shall control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Plan and Agreement on the 30th day of September, 1997.
INVESCO CAPITAL APPRECIATION FUNDS, INC.
By: /s/ Dan J. Hesser
-----------------------
Dan J. Hesser, President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: /s/ Ronald L. Grooms
------------------------
Ronald L. Grooms,
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
EXHIBIT m(1)(a)
AMENDMENT TO AMENDED PLAN AND AGREEMENT OF
DISTRIBUTION PURSUANT TO RULE 12b-1
Agreement made by and between INVESCO Capital Appreciation Funds, Inc.
(the "Fund") and INVESCO Distributors, Inc. (the "Underwriter").
WHEREAS, the Fund and Underwriter are parties to an Amended Plan and
Agreement of Distribution Pursuant to Rule 12b-1 dated September 30, 1997, (the
"Distribution Agreement") governing the terms and conditions under which the
Underwriter engages in the business of selling the shares of the Fund; and
WHEREAS, the Fund and Underwriter desire to amend the Distribution
Agreement;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the Fund and Underwriter hereby amend the Distribution Agreement by the
addition of the following terms and provisions:
1. The name of the Fund is changed to INVESCO Equity Funds, Inc.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this August 28, 1998.
INVESCO CAPITAL APPRECIATION FUNDS, INC.
By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: /s/ William J. Galvin
---------------------
William J. Galvin
Senior Vice President
EXHIBIT m(1)(b)
AMENDMENT TO AMENDED PLAN AND AGREEMENT OF
DISTRIBUTION PURSUANT TO RULE 12b-1
Agreement made by and between INVESCO Equity Funds, Inc. (the "Fund")
and INVESCO Distributors, Inc. (the "Underwriter").
WHEREAS, the Fund and Underwriter are parties to an Amended Plan and
Agreement of Distribution Pursuant to Rule 12b-1 dated September 30, 1997, (the
"Distribution Agreement") governing the terms and conditions under which the
Underwriter engages in the business of selling the shares of the Fund; and
WHEREAS, the Fund and Underwriter desire to amend the Distribution
Agreement;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the Fund and Underwriter hereby amend the Distribution Agreement by the
addition of the following terms and provisions:
1. The name of the Fund is changed to INVESCO Stock Funds, Inc.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this October 29, 1998.
INVESCO EQUITY FUNDS, INC.
By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: /s/ William J. Galvin
---------------------
William J. Galvin
Senior Vice President
EXHIBIT m(2)
FORM OF MASTER DISTRIBUTION PLAN AND AGREEMENT
BETWEEN
INVESCO _______ FUNDS, INC.
(CLASS C SHARES)
AND
INVESCO DISTRIBUTORS, INC.
THIS AGREEMENT made as of the ____ day of January, 2000, by and between
INVESCO ____________FUNDS, Inc. a Maryland Corporation (the "Company"), with
respect to the series of shares of the common stock of the Funds set forth on
Appendix A to this Agreement (the "Funds") (the shares of each of the Funds
hereinafter referred to as the "Class C Shares") and INVESCO DISTRIBUTORS, INC.,
a Delaware corporation (the "Distributor").
WHEREAS, the Company engages in business as an open-end management
investment company, and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Company desires to finance the distribution of the Class C
Shares of common stock of each Fund, together with the Class C Shares of any
additional Fund that may hereafter be offered to the public, in accordance with
this Master Distribution Plan and Agreement of Distribution pursuant to Rule
12b-1 under the Act (the "Plan and Agreement"); and
WHEREAS, Distributor desires to be retained to perform services in
accordance with such Plan and Agreement and on said terms and conditions; and
WHEREAS, this Plan and Agreement has been approved by a vote of the board
of directors of the Company, including a majority of the directors who are not
interested persons of the Company, as defined in the Act, and who have no direct
or indirect financial interest in the operation of this Plan and Agreement (the
"Independent Directors"), cast in person at a meeting called for the purpose of
voting on this Plan and Agreement;
NOW, THEREFORE, the Company hereby adopts the Plan set forth herein and
the Company and Distributor hereby enter into this Agreement pursuant to the
Plan in accordance with the requirements of Rule 12b-1 under the Act, and
provide and agree as follows:
<PAGE>
FIRST: The Plan is defined as those provisions of this document by which
the Company adopts a Plan pursuant to Rule 12b-1 under the Act and authorizes
payments as described herein. The Agreement is defined as those provisions of
this document by which the Company retains Distributor to provide distribution
services beyond those required by the General Distribution Agreement between the
parties, as are described herein. The Company may retain the Plan
notwithstanding termination of the Agreement. Termination of the Plan will
automatically terminate the Agreement. Each Fund is hereby authorized to utilize
the assets of the Company to finance certain activities in connection with
distribution of the Company's Class C Shares.
SECOND: The Company on behalf of the Class C Shares hereby appoints the
Distributor as its exclusive agent for the sale of the Class C Shares to the
public directly and through investment dealers and financial institutions in the
United States and throughout the world in accordance with the terms of the
current prospectuses applicable to the Funds.
THIRD: The Class C shares of each Fund may incur expenses per annum of the
average daily net assets of the Company attributable to the Class C Shares at
the rates set forth in Schedule A subject to any limitations imposed from time
to time by applicable rules of the National Association of Securities Dealers,
Inc.
FOURTH: The Company shall not sell any Class C Shares except through the
Distributor and under the terms and conditions set forth in the FIFTH paragraph
below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Class C Shares to any other investment company
or personal holding company, or to the shareholders thereof, in exchange for all
or a majority of the shares or assets of any such company; and
(B) the Company may issue Class C Shares at their net asset value in
connection with certain classes of transactions or to certain categories of
persons, in accordance with Rule 22d-1 under the Act, provided that any such
category is specified in the then current prospectus of the applicable Class C
Shares.
FIFTH: The Distributor hereby accepts appointment as exclusive agent for
the sale of the Class C Shares and agrees that it will use its best efforts to
sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of
the Class C Shares shall, suspend its efforts to effectuate such sales at any
time when, in the opinion of the Distributor or of the Company, no sales should
be made because of market or other economic considerations or abnormal
circumstances of any kind; and
(B) the Company may withdraw the offering of the Class C Shares at any
time without the consent of the Distributor. It is mutually understood and
agreed that the Distributor does not undertake to sell any specific amount of
the Class C Shares. The Company shall have the right to specify minimum amounts
for initial and subsequent orders for the purchase of Class C Shares.
<PAGE>
(C ) To the extent that obligations incurred by Distributor out of its own
resources to finance any activity primarily intended to result in the sale of
Class C Shares of a Fund, pursuant to this Plan and Agreement or otherwise, may
be deemed to constitute the indirect use of Class C Shares Fund assets, such
indirect use of Class C Shares Fund assets is hereby authorized in addition to,
and not in lieu of, any other payments authorized under this Plan and Agreement.
(D) Distributor shall provide to the Company's Board of Directors and the
Board of Directors shall review, at least quarterly, a written report of the
amounts expended pursuant to the Plan and Agreement and the purposes for which
such expenditures were made.
SIXTH:
(A) The public offering price of the Class C shares shall be the net asset
value per share of the applicable Class C shares. Net asset value per share
shall be determined in accordance with the provisions of the then current
prospectus and statement of additional information of the applicable Fund. The
Company's Board of Directors may establish a schedule of contingent deferred
sales charges to be imposed at the time of redemption of the Class C Shares, and
such schedule shall be disclosed in the current prospectus or statement of
additional information of each Fund. Such schedule of contingent deferred sales
charges may reflect variations in or waivers of such charges on redemptions of
Class C shares, either generally to the public or to any specified class of
shareholders and/or in connection with any specified class of transactions, in
accordance with applicable rules and regulations and exemptive relief granted by
the Securities and Exchange Commission, and as set forth in the Funds' current
prospectus(es) or statement(s) of additional information. The Distributor and
the Company shall apply any then applicable scheduled variation in or waiver of
contingent deferred sales charges uniformly to all shareholders and/or all
transactions belonging to a specified class.
(B) The Distributor may pay to investment dealers and other financial
institutions through whom Class C Shares are sold, such sales commission as the
Distributor may specify from time to time. Payment of any such sales commissions
shall be the sole obligation of the Distributor.
( C) Amounts set forth in Schedule A may be used to finance any activity
which is primarily intended to result in the sale of the Class C Shares,
including, but not limited to, expenses of organizing and conducting sales
seminars, advertising programs, finders fees, printing of prospectuses and
statements of additional information (and supplements thereto) and reports for
other than existing shareholders, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions as asset-based sales charges and providing such other services and
activities as may from time to time be agreed upon by the Company. Such reports,
prospectuses and statements of additional information (and supplements thereto),
sales literature, advertising and other services and activities may be prepared
and/or conducted either by Distributor's own staff, the staff of affiliated
companies of the Distributor, or third parties.
<PAGE>
(D) Amounts set forth in Schedule A may also be used to finance payments
of service fees under a shareholder service arrangement to be established by
Distributor in accordance with Section E below, and the costs of administering
the Plan and Agreement. To the extent that amounts paid hereunder are not used
specifically to compensate Distributor for any such expense, such amounts may be
treated as compensation for Distributor's distribution-related services. All
amounts expended pursuant to the Plan and Agreement shall be paid to Distributor
and are the legal obligation of the Company and not of Distributor. That portion
of the amounts paid under the Plan and Agreement that is not paid or advanced by
Distributor to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section E below shall be deemed
an asset-based sales charge. No provision of this Plan and Agreement shall be
interpreted to prohibit any payments by the Company during periods when the
Company has suspended or otherwise limited sales.
(E) Amounts expended by the Company under the Plan shall be used in part
for the implementation by Distributor of shareholder service arrangements. The
maximum service fee paid to any service provider shall be twenty-five
one-hundredths of one percent (0.25%), per annum of the average daily net assets
of the Company attributable to the Shares owned by the customers of such service
provider, or such lower rate for the Fund as is specified on Schedule A.
(1) Pursuant to this program, Distributor may enter into agreements
("Service Agreements") with such broker-dealers ("Dealers") as may
be selected from time to time by Distributor for the provision of
distribution-related personal shareholder services in connection
with the sale of Shares to the Dealers' clients and customers
("Customers") to Customers who may from time to time directly or
beneficially own Shares. The distribution-related personal
continuing shareholder services to be rendered by Dealers under the
Service Agreements may include, but shall not be limited to, the
following : (i) distributing sales literature; (ii) answering
routine Customer inquiries concerning the Company and the Shares;
(iii) assisting Customers in changing dividend options, account
designations and addresses, and in enrolling into any of several
retirement plans offered in connection with the purchase of Shares;
(iv) assisting in the establishment and maintenance of customer
accounts and records, and in the processing of purchase and
redemption transactions; (v) investing dividends and capital gains
distributions automatically in Shares; and (vi) providing such
other information and services as the Company or the Customer may
reasonably request.
<PAGE>
(2) Distributor may also enter into agreements ("Third Party
Agreements") with selected banks, financial planners, retirement
plan service providers and other appropriate third parties acting in
an agency capacity for their customers ("Third Parties"). Third
Parties acting in such capacity will provide some or all of the
shareholder services to their customers as set forth in the Third
Party Agreements from time to time.
(3) Distributor may also enter into variable group annuity
contractholder service agreements ("Variable Contract Agreements")
with selected insurance companies ("Insurance Companies") offering
variable annuity contracts to employers as funding vehicles for
retirement plans qualified under Section 401(a) of the Internal
Revenue Code, where amounts contributed under such plans are
invested pursuant to such variable annuity contracts in Shares of
the Company. The Insurance Companies receiving payments under such
Variable Contract Agreements will provide specialized services to
contractholders and plan participants, as set forth in the Variable
Contract Agreements from time to time.
(4) Distributor may also enter into shareholder service agreements
("Bank Trust Department Agreements and Brokers for Bank Trust
Department Agreements") with selected bank trust departments and
brokers for bank trust departments. Such bank trust departments and
brokers for bank trust departments will provide some or all of the
shareholder services to their customers as set forth in the Bank
Trust Department Agreements and Brokers for Bank Trust Department
Agreements.
(F) No provision of this Plan and Agreement shall be deemed to prohibit
any payments by a Fund to the Distributor or by a Fund or the Distributor to
investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under the Plan and Agreement.
(G) The Company shall redeem Class C Shares from shareholders in
accordance with the terms set forth from time to time in the current prospectus
and statement of additional information of each Fund. The price to be paid to a
shareholder to redeem Class C Shares shall be equal to the net asset value of
the Class C Shares being redeemed, less any applicable contingent deferred sales
charge. The Distributor shall be entitled to receive the amount of any
applicable contingent deferred sales charge that has been subtracted from gross
redemption proceeds. The Company shall pay or cause the Company's transfer agent
to pay the applicable contingent deferred sales charge to the Distributor on the
date net redemption proceeds are payable to the redeeming shareholder.
<PAGE>
SEVENTH: The Distributor shall act as agent of the Company on behalf of
each Fund in connection with the sale and repurchase of Class C Shares. Except
with respect to such sales and repurchases, the Distributor shall act as
principal in all matters relating to the promotion or the sale of Class C Shares
and shall enter into all of its own engagements, agreements and contracts as
principal on its own account. The Distributor shall enter into agreements with
investment dealers and financial institutions selected by the Distributor,
authorizing such investment dealers and financial institutions to offer and sell
Class C Shares to the public upon the terms and conditions set forth therein,
which shall not be inconsistent with the provisions of this Agreement. Each
agreement shall provide that the investment dealer and financial institution
shall act as a principal, and not as an agent, of the Company on behalf of the
Funds. The Distributor or such other investment dealers or financial
institutions will be deemed to have performed all services required to be
performed in order to be entitled to receive the asset based sales charge
portion of any amounts payable with respect to Class C Shares to the Distributor
pursuant to the Plan and Agreement adopted by the Company on behalf of each Fund
upon the settlement of each sale of a Class C Share (or a share of another fund
from which the Class C Share derives).
EIGHTH: The Funds shall bear:
(A) the expenses of qualification of Class C Shares for sale in connection
with such public offerings in such states as shall be selected by the
Distributor, and of continuing the qualification therein until the Distributor
notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
NINTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the Funds' prospectuses and statements of additional
information (including supplements thereto) relating to public offerings made by
the Distributor pursuant to this Agreement (which shall not include those
prospectuses and statements of additional information, and supplements thereto,
to be distributed to shareholders of each Fund), and any other promotional or
sales literature used by the Distributor or furnished by the Distributor to
dealers in connection with such public offerings, and expenses of advertising in
connection with such public offerings.
(B) The Distributor may be compensated for all or a portion of such
expenses, or may receive reasonable compensation for distribution related
services, to the extent permitted by the Plan and Agreement.
TENTH: The Distributor will accept orders for the purchase of Class C
Shares only to the extent of purchase orders actually received and not in excess
of such orders, and it will not avail itself of any opportunity of making a
profit by expediting or withholding orders. It is mutually understood and agreed
that the Company may reject purchase orders where, in the judgment of the
Company, such rejection is in the best interest of the Company.
<PAGE>
ELEVENTH: The Company, on behalf of the Funds, and the Distributor shall
each comply with all applicable provisions of the Act, the Securities Act of
1933, rules and regulations of the National Association of Securities Dealers,
Inc. and its affiliates, and of all other federal and state laws, rules and
regulations governing the issuance and sale of Class C Shares.
TWELFTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company on behalf of the Funds agrees to indemnify the
Distributor against any and all claims, demands, liabilities and expenses which
the Distributor may incur under the Securities Act of 1933, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Funds, or any omission to state a material fact therein, the omission of which
makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company or Fund in connection therewith by or on behalf of the
Distributor. The Distributor agrees to indemnify the Company and the Funds
against any and all claims, demands, liabilities and expenses which the Company
or the Funds may incur arising out of or based upon any act or deed of the
Distributor or its sales representatives which has not been authorized by the
Company or the Funds in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the Funds against
any and all claims, demands, liabilities and expenses which the Company or the
Funds may incur under the Securities Act of 1933, or common law or otherwise,
arising out of or based upon any alleged untrue statement of a material fact
contained in any registration statement or prospectus of the Funds, or any
omission to state a material fact therein if such statement or omission was made
in reliance upon, and in conformity with, information furnished to the Company
or the Funds in connection therewith by or on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the Distributor
shall not be liable for any errors of the Funds' transfer agent, or for any
failure of any such transfer agent to perform its duties.
THIRTEENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its Articles of Incorporation, or to
any applicable statute or regulation.
<PAGE>
FOURTEENTH: This Plan and Agreement shall become effective as of the date
hereof, shall continue in force and effect until May 30, 2000, and shall
continue in force and effect from year to year thereafter, provided that such
continuance is specifically approved at least annually (a)(i) by the Board of
Directors of the Company or (ii) by the vote of a majority of the Funds'
outstanding voting securities of Class C Shares (as defined in Section 2(a)(42)
of the 1940 Act), and (b) by vote of a majority of the Company's directors who
are not parties to this Plan and Agreement or "interested persons" (as defined
in Section 2(a)(19) of the 1940 Act) of any party to this Plan and Agreement
cast in person at a meeting called for such purpose.
Any amendment to this Plan and Agreement that requires the approval of the
shareholders of Class C Shares pursuant to Rule 12b-1 under the 1940 Act shall
become effective as to such Class C Shares upon the approval of such amendment
by a "majority of the outstanding voting securities" (as defined in the 1940
Act) of such Class C Shares, provided that the Board of Directors of the Company
has approved such amendment.
FIFTEENTH: This Plan and Agreement, any amendment to this Plan and
Agreement and any agreements related to this Plan and Agreement shall become
effective immediately upon the receipt by the Company of both (a) the
affirmative vote of a majority of the Board of Directors of the Company, and (b)
the affirmative vote of a majority of those directors of the Company who are not
"interested persons" of the Company (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan and
Agreement or any agreements related to it (the "Independent Directors"), cast in
person at a meeting called for the purpose of voting on this Plan and Agreement
or such agreements. Notwithstanding the foregoing, no such amendment that
requires the approval of the shareholders of Class C Shares of a Company shall
become effective as to such Class C Shares until such amendment has been
approved by the shareholders of such Class C Shares in accordance with the
provisions of the Fourteenth paragraph of this Plan and Agreement.
This Plan and Agreement may not be amended to increase materially the
amount of distribution expenses provided for in Schedule A hereof unless such
amendment is approved in the manner provided herein, and no material amendment
to the Plan and Agreement shall be made unless approved in the manner provided
for in the Fourteenth paragraph hereof.
So long as the Plan and Agreement remains in effect, the selection and
nomination of persons to serve as directors of the Company who are not
"interested persons" of the Company shall be committed to the discretion of the
directors then in office who are not "interested persons" of the Company.
However, nothing contained herein shall prevent the participation of other
persons in the selection and nomination process, provided that a final decision
on any such selection or nomination is within the discretion of, and approved
by, a majority of the directors of the Company then in office who are not
"interested persons" of the Company.
<PAGE>
SIXTEENTH:
(A) This Plan and Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Board of Directors of the
Company or by vote of a majority of the outstanding voting
securities of Class C Shares of each Fund, or by the Distributor, on
sixty (60) days' written notice to the other party.
(B) In the event that neither Distributor nor any affiliate of
Distributor serves the Company as investment adviser, the agreement
with Distributor pursuant to this Plan shall terminate at such time.
The board of directors may determine to approve a continuance of the
Plan and/or a continuance of the Agreement, hereunder.
(C) To the extent that this Plan and Agreement constitutes a Plan of
Distribution adopted pursuant to Rule 12b-1 under the Act it
shall remain in effect as such, so as to authorize the use by the
Class C Shares of each Fund of its assets in the amounts and for
the purposes set forth herein, notwithstanding the occurrence of
an "assignment," as defined by the Act and the rules thereunder.
To the extent it constitutes an agreement with INVESCO pursuant
to a plan, it shall terminate automatically in the event of such
"assignment." Upon a termination of the agreement with
Distributor, the Funds may continue to make payments pursuant to
the Plan only upon the approval of a new agreement under this
Plan and Agreement, which may or may not be with Distributor, or
the adoption of other arrangements regarding the use of the
amounts authorized to be paid by the Funds hereunder, by the
Company's board of directors in accordance with the procedures
set forth above.
SEVENTEENTH: Any notice under this Plan and Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, it is agreed that the addresses of both the
Company and the Distributor shall be 7800 East Union Avenue, Mail Stop 201,
Denver, Colorado 80237.
EIGHTEENTH: This Plan and Agreement shall be governed by and construed
in accordance with the laws (without reference to conflicts of law
provisions) of the State of Maryland.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Plan and Agreement to be
executed in duplicate on the day and year first above written.
INVESCO _______FUNDS, Inc.
Attest:
By: ________________________
____________________ Name: Mark H. Williamson
Name: Title: President
Title:
INVESCO DISTRIBUTORS, INC.
Attest:
By: ______________________
____________________ Name: Glen A. Payne
Name: Title: Secretary
Title:
<PAGE>
APPENDIX A
TO
MASTER DISTRIBUTION PLAN AND AGREEMENT
OF
INVESCO __________ FUNDS, Inc.
CLASS C SHARES
INVESCO _______ Fund
INVESCO _______ Fund
<PAGE>
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN and AGREEMENT
OF
INVESCO __________FUNDS, INC.
(DISTRIBUTION FEE)
The Company shall pay the Distributor as full compensation for all
services rendered and all facilities furnished under the Distribution Plan and
Agreement for each Fund (or Class thereof) designated below, a Distribution Fee*
determined by applying the annual rate set forth below as to each Fund (or Class
thereof) to the average daily net assets of the Fund (or Class thereof) for the
plan year, computed in a manner used for the determination of the offering price
of shares of the Fund.
Maximum Asset Maximum Maximum
Fund Based Sales Service Aggregate
Class C Shares Charge Fee Fee
-------------- ------------- -------- ---------
INVESCO _______ Fund 0.75% 0.25% 1.00%
INVESCO _______ Fund 0.75% 0.25% 1.00%
- -----------------
* The Distribution Fee is payable apart from the sales charge, if any, as
stated in the current prospectus for the applicable Fund (or Class
thereof).
EXHIBIT o(2)
INVESCO BLUE CHIP GROWTH FUND PLAN PURSUANT TO RULE 18F-3
November 9, 1999
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Blue Chip Growth Fund (the "Fund") for INVESCO Distributors, Inc.
("IDI"), the general distributor of shares of the Fund and INVESCO
Funds Group, Inc. ("INVESCO"), the investment adviser of the Fund. It
is the written plan contemplated by Rule 18f-3 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund may issue multiple classes of shares. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in the Rule.
2. Similarities and Differences Among Classes. The Fund agrees that one or
more classes of that Fund:
(1) may have a separate service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred
pursuant to that arrangement, and may pay a different share of
expenses ("Class Expenses") if such expenses are actually incurred
in a different amount by that class, or if the class receives
services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1
Plan fees, (b) transfer and shareholder servicing agent fees and
administrative service fees, (c) shareholder meeting expenses, (d)
blue sky and SEC registration fees and (e) any other incremental
expenses subsequently identified that should be allocated to one
class which shall be approved by a vote of that Fund's Board of
Directors (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class
or to the entire Fund; such expenses constitute Class Expenses only
when they are attributable to a specific class. Because Class
Expenses may be accrued at different rates for each class of the
Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the Fund.
<PAGE>
(2) shall have exclusive voting rights on any matters that relate solely
to that class's arrangements, including without limitation voting with
respect to a 12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class;
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption
features, exchange privileges, loan privileges, the availability of
certificated shares and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as
each other class.
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses
of the Fund or of one or more of its classes, but is not required to do
so or to continue to do so for any period of time. The quarterly
report by the Advisor to the Directors of Fund expense reimbursements
shall disclose any reimbursements that are not equal for all classes of
the Fund.
<PAGE>
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Stock Funds, Inc.
(the "Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report required by
the Company's 12b-1 Plan. The report shall include information on (i) the
amounts expended pursuant to the 12b-1 Plan, (ii) the purposes for which
such expenditures were made and (iii) the amount of INVESCO's unpaid
distribution costs (if recovery of such costs in future periods is
permitted by that 12b-1 Plan), taking into account 12b-1 Plan payments paid
to INVESCO.
<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 November 9, 1999.
/s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
EXHIBIT o(3)
INVESCO DYNAMICS FUND PLAN PURSUANT TO RULE 18F-3
November 9, 1999
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Dynamics Fund (the "Fund") for INVESCO Distributors, Inc.
("IDI"), the general distributor of shares of the Fund and INVESCO
Funds Group, Inc. ("INVESCO"), the investment adviser of the Fund. It
is the written plan contemplated by Rule 18f-3 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund may issue multiple classes of shares. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in the Rule.
2. Similarities and Differences Among Classes. The Fund agrees that one or
more classes of that Fund:
(1) may have a separate service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred
pursuant to that arrangement, and may pay a different share of
expenses ("Class Expenses") if such expenses are actually incurred
in a different amount by that class, or if the class receives
services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1
Plan fees, (b) transfer and shareholder servicing agent fees and
administrative service fees, (c) shareholder meeting expenses, (d)
blue sky and SEC registration fees and (e) any other incremental
expenses subsequently identified that should be allocated to one
class which shall be approved by a vote of that Fund's Board of
Directors (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class
or to the entire Fund; such expenses constitute Class Expenses only
when they are attributable to a specific class. Because Class
Expenses may be accrued at different rates for each class of the
Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the Fund.
<PAGE>
(2) shall have exclusive voting rights on any matters that relate solely
to that class's arrangements, including without limitation voting with
respect to a 12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class;
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption
features, exchange privileges, loan privileges, the availability of
certificated shares and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as
each other class.
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses
of the Fund or of one or more of its classes, but is not required to do
so or to continue to do so for any period of time. The quarterly
report by the Advisor to the Directors of Fund expense reimbursements
shall disclose any reimbursements that are not equal for all classes of
the Fund.
<PAGE>
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Stock Funds, Inc.
(the "Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report required by
the Company's 12b-1 Plan. The report shall include information on (i) the
amounts expended pursuant to the 12b-1 Plan, (ii) the purposes for which
such expenditures were made and (iii) the amount of INVESCO's unpaid
distribution costs (if recovery of such costs in future periods is
permitted by that 12b-1 Plan), taking into account 12b-1 Plan payments paid
to INVESCO.
<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 November 9, 1999.
/s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
EXHIBIT o(4)
INVESCO ENDEAVOR FUND PLAN PURSUANT TO RULE 18F-3
November 9, 1999
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Endeavor Fund (the "Fund") for INVESCO Distributors, Inc.
("IDI"), the general distributor of shares of the Fund and INVESCO
Funds Group, Inc. ("INVESCO"), the investment adviser of the Fund. It
is the written plan contemplated by Rule 18f-3 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund may issue multiple classes of shares. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in the Rule.
2. Similarities and Differences Among Classes. The Fund agrees that one or
more classes of that Fund:
(1) may have a separate service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred
pursuant to that arrangement, and may pay a different share of
expenses ("Class Expenses") if such expenses are actually incurred
in a different amount by that class, or if the class receives
services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1
Plan fees, (b) transfer and shareholder servicing agent fees and
administrative service fees, (c) shareholder meeting expenses, (d)
blue sky and SEC registration fees and (e) any other incremental
expenses subsequently identified that should be allocated to one
class which shall be approved by a vote of that Fund's Board of
Directors (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class
or to the entire Fund; such expenses constitute Class Expenses only
when they are attributable to a specific class. Because Class
Expenses may be accrued at different rates for each class of the
Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the Fund.
<PAGE>
(2) shall have exclusive voting rights on any matters that relate solely
to that class's arrangements, including without limitation voting with
respect to a 12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class;
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption
features, exchange privileges, loan privileges, the availability of
certificated shares and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as
each other class.
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses
of the Fund or of one or more of its classes, but is not required to do
so or to continue to do so for any period of time. The quarterly
report by the Advisor to the Directors of Fund expense reimbursements
shall disclose any reimbursements that are not equal for all classes of
the Fund.
<PAGE>
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Stock Funds, Inc.
(the "Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report required by
the Company's 12b-1 Plan. The report shall include information on (i) the
amounts expended pursuant to the 12b-1 Plan, (ii) the purposes for which
such expenditures were made and (iii) the amount of INVESCO's unpaid
distribution costs (if recovery of such costs in future periods is
permitted by that 12b-1 Plan), taking into account 12b-1 Plan payments paid
to INVESCO.
<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 November 9, 1999.
/s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
EXHIBIT o(5)
INVESCO GROWTH & INCOME FUND PLAN PURSUANT TO RULE 18F-3
November 9, 1999
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Growth & Income Fund (the "Fund") for INVESCO Distributors, Inc.
("IDI"), the general distributor of shares of the Fund and INVESCO
Funds Group, Inc. ("INVESCO"), the investment adviser of the Fund. It
is the written plan contemplated by Rule 18f-3 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund may issue multiple classes of shares. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in the Rule.
2. Similarities and Differences Among Classes. The Fund agrees that one or
more classes of that Fund:
(1) may have a separate service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred
pursuant to that arrangement, and may pay a different share of
expenses ("Class Expenses") if such expenses are actually incurred
in a different amount by that class, or if the class receives
services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1
Plan fees, (b) transfer and shareholder servicing agent fees and
administrative service fees, (c) shareholder meeting expenses, (d)
blue sky and SEC registration fees and (e) any other incremental
expenses subsequently identified that should be allocated to one
class which shall be approved by a vote of that Fund's Board of
Directors (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class
or to the entire Fund; such expenses constitute Class Expenses only
when they are attributable to a specific class. Because Class
Expenses may be accrued at different rates for each class of the
Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the Fund.
<PAGE>
(2) shall have exclusive voting rights on any matters that relate solely
to that class's arrangements, including without limitation voting with
respect to a 12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class;
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption
features, exchange privileges, loan privileges, the availability of
certificated shares and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as
each other class.
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses
of the Fund or of one or more of its classes, but is not required to do
so or to continue to do so for any period of time. The quarterly
report by the Advisor to the Directors of Fund expense reimbursements
shall disclose any reimbursements that are not equal for all classes of
the Fund.
<PAGE>
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Stock Funds, Inc.
(the "Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report required by
the Company's 12b-1 Plan. The report shall include information on (i) the
amounts expended pursuant to the 12b-1 Plan, (ii) the purposes for which
such expenditures were made and (iii) the amount of INVESCO's unpaid
distribution costs (if recovery of such costs in future periods is
permitted by that 12b-1 Plan), taking into account 12b-1 Plan payments paid
to INVESCO.
<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 November 9, 1999.
/s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
EXHIBIT o(6)
INVESCO SMALL COMPANY GROWTH FUND PLAN PURSUANT TO RULE 18F-3
November 9, 1999
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Small Company Growth Fund (the "Fund") for INVESCO Distributors, Inc.
("IDI"), the general distributor of shares of the Fund and INVESCO
Funds Group, Inc. ("INVESCO"), the investment adviser of the Fund. It
is the written plan contemplated by Rule 18f-3 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund may issue multiple classes of shares. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in the Rule.
2. Similarities and Differences Among Classes. The Fund agrees that one or
more classes of that Fund:
(1) may have a separate service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred
pursuant to that arrangement, and may pay a different share of
expenses ("Class Expenses") if such expenses are actually incurred
in a different amount by that class, or if the class receives
services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1
Plan fees, (b) transfer and shareholder servicing agent fees and
administrative service fees, (c) shareholder meeting expenses, (d)
blue sky and SEC registration fees and (e) any other incremental
expenses subsequently identified that should be allocated to one
class which shall be approved by a vote of that Fund's Board of
Directors (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class
or to the entire Fund; such expenses constitute Class Expenses only
when they are attributable to a specific class. Because Class
Expenses may be accrued at different rates for each class of the
Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the Fund.
<PAGE>
(2) shall have exclusive voting rights on any matters that relate solely
to that class's arrangements, including without limitation voting with
respect to a 12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class;
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption
features, exchange privileges, loan privileges, the availability of
certificated shares and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as
each other class.
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses
of the Fund or of one or more of its classes, but is not required to do
so or to continue to do so for any period of time. The quarterly
report by the Advisor to the Directors of Fund expense reimbursements
shall disclose any reimbursements that are not equal for all classes of
the Fund.
<PAGE>
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Stock Funds, Inc.
(the "Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report required by
the Company's 12b-1 Plan. The report shall include information on (i) the
amounts expended pursuant to the 12b-1 Plan, (ii) the purposes for which
such expenditures were made and (iii) the amount of INVESCO's unpaid
distribution costs (if recovery of such costs in future periods is
permitted by that 12b-1 Plan), taking into account 12b-1 Plan payments paid
to INVESCO.
<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 November 9, 1999.
/s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
EXHIBIT o(7)
INVESCO VALUE EQUITY FUND PLAN PURSUANT TO RULE 18F-3
November 9, 1999
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Value Equity Fund (the "Fund") for INVESCO Distributors, Inc.
("IDI"), the general distributor of shares of the Fund and INVESCO
Funds Group, Inc. ("INVESCO"), the investment adviser of the Fund. It
is the written plan contemplated by Rule 18f-3 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund may issue multiple classes of shares. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in the Rule.
2. Similarities and Differences Among Classes. The Fund agrees that one or
more classes of that Fund:
(1) may have a separate service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred
pursuant to that arrangement, and may pay a different share of
expenses ("Class Expenses") if such expenses are actually incurred
in a different amount by that class, or if the class receives
services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1
Plan fees, (b) transfer and shareholder servicing agent fees and
administrative service fees, (c) shareholder meeting expenses, (d)
blue sky and SEC registration fees and (e) any other incremental
expenses subsequently identified that should be allocated to one
class which shall be approved by a vote of that Fund's Board of
Directors (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class
or to the entire Fund; such expenses constitute Class Expenses only
when they are attributable to a specific class. Because Class
Expenses may be accrued at different rates for each class of the
Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the Fund.
<PAGE>
(2) shall have exclusive voting rights on any matters that relate solely
to that class's arrangements, including without limitation voting with
respect to a 12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class;
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption
features, exchange privileges, loan privileges, the availability of
certificated shares and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as
each other class.
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses
of the Fund or of one or more of its classes, but is not required to do
so or to continue to do so for any period of time. The quarterly
report by the Advisor to the Directors of Fund expense reimbursements
shall disclose any reimbursements that are not equal for all classes of
the Fund.
<PAGE>
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Stock Funds, Inc.
(the "Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report required by
the Company's 12b-1 Plan. The report shall include information on (i) the
amounts expended pursuant to the 12b-1 Plan, (ii) the purposes for which
such expenditures were made and (iii) the amount of INVESCO's unpaid
distribution costs (if recovery of such costs in future periods is
permitted by that 12b-1 Plan), taking into account 12b-1 Plan payments paid
to INVESCO.
<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 November 9, 1999.
/s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
