PROSPECTUS
February 29, 1996
INVESCO STRATEGIC PORTFOLIOS
Energy
Environmental Services
Financial Services
Gold
Health Sciences
Leisure
Technology
The seven INVESCO Strategic Portfolios (the "Portfolios") described in
this prospectus are actively managed to seek capital appreciation. Each
Portfolio, which is a separate series of INVESCO Strategic Portfolios, Inc.,
normally invests 80% or more of its total assets in companies principally
engaged in a specific business sector. Most of their holdings are in common
stocks, but the Portfolios have the flexibility to invest in other types of
securities.
This prospectus provides you with the basic information you should know
before investing in any of the Portfolios. You should read it and keep it for
future reference. A Statement of Additional Information containing further
information about the Portfolios, dated February 29, 1996, has been filed with
the Securities and Exchange Commission, and is incorporated by reference into
this prospectus. To obtain a free copy, write to INVESCO Funds Group, Inc., P.O.
Box 173706, Denver, Colorado 80217-3706; or call 1-800- 525-8085.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
^CONTENTS
ESSENTIAL INFORMATION...................................................... 2
ANNUAL FUND EXPENSES....................................................... 3
FINANCIAL HIGHLIGHTS....................................................... 5
INVESTMENT OBJECTIVE AND STRATEGY.......................................... 12
INVESTMENT POLICIES AND RISKS.............................................. 12
THE FUND AND ITS MANAGEMENT................................................ 15
FUND PRICE AND PERFORMANCE............................................... ^ 18
HOW TO BUY SHARES........................................................ ^ 18
FUND SERVICES............................................................ ^ 20
HOW TO SELL SHARES....................................................... ^ 20
TAXES, DIVIDENDS^ AND CAPITAL GAIN DISTRIBUTIONS........................... 21
ADDITIONAL INFORMATION................................................... ^ 22
<PAGE>
ESSENTIAL INFORMATION
- ---------------------
Investment Goal And Strategy. INVESCO Strategic Portfolios, Inc. (the
"Fund") is a mutual fund made up of a series of individually managed Portfolios.
Each Portfolio described in this prospectus is actively managed to seek capital
appreciation. Employing an aggressive investment philosophy, the Portfolios
normally invest at least 80% of their total assets in equity securities of
companies principally engaged in a specific business sector. There is no
guarantee that the Portfolios will meet their investment objective. See
"Investment Objective And Strategy" and "Investment Policies And Risks."
Designed For: Investors seeking capital appreciation. While not a complete
investment program, one or more of these Portfolios may be a valuable element of
your investment portfolio. You also may wish to consider one or more of the
Portfolios as part of a Uniform Gift/Trust To Minors Account or systematic
investing strategy. The Portfolios may be a suitable investment for many types
of retirement programs, including the IRA, SEP-IRA, SARSEP, 401(k), Profit
Sharing, Money Purchase Pension, and 403(b) plans.
Time Horizon. Stock prices fluctuate on a daily basis, and each Portfolio's
price per share therefore varies daily. Potential shareholders should consider
this a medium- to long-term investment.
Risks. The Portfolios generally use an aggressive investment strategy and
may experience relatively rapid portfolio turnover. Because the Portfolios focus
on narrow business segments, they may experience greater short-term volatility
than more diversified funds. Rapid portfolio turnover may result in higher
brokerage commissions and the acceleration of taxable capital gains. The returns
on foreign investments may be influenced by currency fluctuations and other
risks of investing overseas. These policies make the Fund unsuitable for that
portion of your savings dedicated to current income or to preservation of
capital over the short-term. See "Investment Objective and Strategy" and
"Investment Policies and Risks."
Organization and Management. The Portfolios are series of the Fund, a
diversified, managed, no-load mutual fund. Each Portfolio is owned by its
shareholders. The Fund employs INVESCO Funds Group, Inc. ("IFG") (founded in
1932) to serve as investment adviser, administrator, distributor, and transfer
agent; and INVESCO Trust Company ("INVESCO Trust") (founded in 1969) as
investment sub-adviser.
Each Portfolio's investments are selected by its portfolio manager or
managers. See "The Fund And Its Management."
IFG and INVESCO Trust (collectively, "Fund Management") are part of a
global firm that managed approximately $74 billion as of June 30, 1995. The
parent company, INVESCO PLC, is based in London, with money managers located in
Europe, North America, and the Far East.
<PAGE>
The Fund offers all of the following services at no charge:
----------------------------------------------------------
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans, such as EasiVest (the Fund's automatic monthly
investment program), Direct Payroll Purchase, and Automatic Monthly
Exchange
Periodic withdrawal plans
See "How To Buy Shares" and "How To Sell Shares."
Minimum Initial Investment: $1,000 per Portfolio, which is waived for
regular investment plans, including EasiVest and Direct Payroll Purchase, and
certain retirement plans.
Minimum Subsequent Investment: $50 per Portfolio (Minimums are lower for
certain retirement plans.)
ANNUAL FUND EXPENSES
- --------------------
The Portfolios whose shares are offered through this ^ prospectus are the
Energy, Environmental Services, Financial Services, Gold, Health Sciences,
Leisure, and Technology Portfolios. These Portfolios are 100% no-load; there are
no fees to purchase, exchange or redeem shares, nor any ongoing marketing
("12b-1") expenses. Lower expenses benefit Fund shareholders by increasing the
Fund's total return.
Like any company, each Portfolio has operating expenses -- such as
portfolio management, accounting, shareholder servicing, maintenance of
shareholder accounts, and other expenses. These expenses are paid from each
Portfolio's assets. Lower expenses therefore benefit investors by increasing a
Portfolio's total return. We calculate annual operating expenses as a percentage
of each Portfolio's average annual net assets.
^
<PAGE>
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Energy Portfolio
Management Fee 0.75%
12b-1 Fees None
Other Expenses(1) 0.78%
Total Portfolio Operating
Expenses(1) 1.53%
Environmental Services Portfolio
Management Fee 0.75%
12b-1 Fees None
Other Expenses (after absorbed expenses)(2) 0.82%
Total Portfolio Operating
Expenses (after absorbed expenses)(2) 1.57%
Financial Services Portfolio
Management Fee 0.75%
12b-1 Fees None
Other Expenses(1) 0.51%
Total Portfolio Operating
Expenses(1) 1.26%
Gold Portfolio
Management Fee 0.75%
12b-1 Fees None
Other Expenses(1) 0.57%
Total Portfolio Operating
Expenses(1) 1.32%
Health Sciences Portfolio
Management Fee 0.71%
12b-1 Fees None
Other Expenses(1) 0.44%
Total Portfolio Operating
Expenses(1) 1.15%
Leisure Portfolio
Management Fee 0.75%
12b-1 Fees None
Other Expenses(1) 0.54%
Total Portfolio Operating
Expenses(1) 1.29%
Technology Portfolio
Management Fee 0.73%
12b-1 Fees None
Other Expenses(1) 0.39%
Total Portfolio Operating
Expenses(1) 1.12%
<PAGE>
(1) ^ Portions of the brokerage commissions paid by the Portfolios were used to
reduce portfolio expenses, and the Portfolios' custodian fees were reduced under
an expense offset arrangement. However, as a result of a new requirement, the
figures shown above do not reflect these reductions. In comparing expenses for
different years, please note that the Ratios of Expenses to Average Net Assets
shown under "Financial Highlights" do reflect any reductions for periods prior
to the fiscal year ended October 31, 1995.
(2) Certain expenses of the Environmental Services Portfolio are being absorbed
voluntarily by IFG. Ratio reflects total expenses, less absorbed expenses by
IFG, prior to any expense offset. In the absence of such voluntary expense
limitation, the Portfolio's "Other Expenses" and "Total Portfolio Operating
Expenses" would have been 1.18% and 1.93%, respectively, based on the
Portfolio's actual expenses for the fiscal year ended October 31, 1995.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
each Portfolio's assets, and are deducted from the amount of income available
for distribution to shareholders; they are not charged directly to shareholder
accounts.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Energy Portfolio $16 $49 $84 $183
Environmental Services 16 50 86 188
Portfolio
Financial Services 13 40 70 153
Portfolio
Gold Portfolio 14 42 73 160
Health Sciences 12 37 64 140
Portfolio
Leisure Portfolio 13 41 71 156
Technology Portfolio 11 36 62 137
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR EXPENSES,
AND ACTUAL ANNUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
For more information on each Portfolio's expenses, see "The Fund and Its
Management" and "How to Buy Shares -- Distribution Expenses."
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
(For a Fund Share Outstanding Throughout Each Period)
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the independent accountant's report appearing
in the Fund's 1995 Annual Report to Shareholders, which is incorporated by
reference into the Statement of Additional Information. Both are available
without charge by contacting IFG at the address or telephone number on the cover
of this prospectus. The Annual Report also contains more information about the
Fund's performance.
<TABLE>
<CAPTION>
Year Ended October 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Energy Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $10.77 $11.53 $ 9.14 $11.28 $12.06 $11.68 $ 9.29 $ 8.22 $ 8.33 $ 8.29
----------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income 0.09 0.06 0.13 0.05 0.09 0.16 0.20 0.11 0.11 0.14
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) (0.68) (0.76) 2.36 (2.17) (0.76) 0.33 2.43 1.24 0.42 0.21
----------------------------------------------------------------------------------------
Total from Investment
Operations (0.59) (0.70) 2.49 (2.12) (0.67) 0.49 2.63 1.35 0.53 0.35
----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.09 0.06 0.10 0.02 0.11 0.11 0.24 0.17 0.11 0.14
Distributions from
Capital Gains 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.11 0.53 0.17
----------------------------------------------------------------------------------------
Total Distributions 0.09 0.06 0.10 0.02 0.11 0.11 0.24 0.28 0.64 0.31
----------------------------------------------------------------------------------------
Net Asset Value -
End of Period $10.09 $10.77 $11.53 $ 9.14 $11.28 $12.06 $11.68 $ 9.29 $ 8.22 $ 8.33
========================================================================================
<PAGE>
TOTAL RETURN (5.45%) (6.04%) 27.18% (18.74%) (5.55%) 4.18% 28.32% 16.77% 6.31% 4.19%
RATIOS
Net Assets - End of Period
($000 Omitted) $48,284 $73,767 $50,272 $17,048 $12,130 $19,476 $8,617 $5,831 $12,023 $1,693
Ratio of Expenses to
Average Net Assets 1.53%@ 1.35% 1.18% 1.73% 1.69% 1.42% 1.75% 1.90% 1.30% 1.50%
Ratio of Net Investment
Income to Average
Net Assets 0.72% 0.65% 0.86% 0.32% 0.83% 1.04% 1.73% 0.99% 1.32% 2.85%
Portfolio Turnover Rate 300% 123% 190% 370% 337% 321% 109% 177% 452% 629%
<FN>
@ Ratio reflects ^ Total Expenses prior to any expense offset.
[/FN]
</TABLE>
<PAGE>
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period
Ended
October
Year Ended October 31 31
--------------------------------------------
1995 1994 1993 1992 1991^
<S> <C> <C> <C> <C> <C>
Environmental Services Portfolio<
PER SHARE DATA
Net Asset Value - Beginning of Period $ 6.50 $ 6.80 $ 7.54 $ 8.97 $ 8.00
--------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.08 0.06 (0.02) (0.04) (0.07)
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 1.62 (0.30) (0.72) (1.39) 1.04
--------------------------------------------
Total from Investment Operations 1.70 (0.24) (0.74) (1.43) 0.97
--------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.08 0.06 0.00 0.00 0.00
--------------------------------------------
Net Asset Value - End of Period $ 8.12 $ 6.50 $ 6.80 $ 7.54 $ 8.97
============================================
TOTAL RETURN 26.09% (3.51%) (9.85%) (15.90%) 12.11%*
RATIOS
Net Assets - End of Period ($000 Omitted) $22,756 $29,276 $40,589 $17,685 $8,001
Ratio of Expenses to Average Net Assets# 1.57%@ 1.29% 1.62% 1.85% 2.50%~
Ratio of Net Investment Income (Loss) to Average Net Assets# 0.65% 0.61% (0.40%) (1.23%) (1.81%)~
Portfolio Turnover Rate 195% 211% 155% 113% 69%*
<FN>
^ From January 2, 1991, commencement of operations, to October 31, 1991.
< The per share information for the Environmental Services Portfolio for 1994
and 1993 was computed based on weighted average shares.
* These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
years ended October 31, 1995 and 1994. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 1.93% and
1.43%, respectively, and ratio of net investment income to average net assets
would have been 0.29% and 0.47%, respectively.
@ Ratio reflects ^ Total Expenses, less absorbed expenses by IFG, prior to any
expense offset.
~ Annualized
[/FN]
</TABLE>
<PAGE>
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period
Ended
October
Year Ended October 31 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986^
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial Services Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $15.31 $20.28 $15.28 $14.67 $ 7.19 $ 9.05 $ 7.55 $ 6.37 $ 7.74 $ 8.00
----------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.29 0.29 0.24 0.20 0.10 (0.01) 0.10 0.12 0.07 0.02
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 3.64 (0.66) 5.00 1.52 7.56 (1.82) 2.30 1.19 (1.26) (0.26)
Total from Investment
Operations 3.93 (0.37) 5.24 1.72 7.66 (1.83) 2.40 1.31 (1.19) (0.24)
----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.29 0.29 0.24 0.20 0.08 0.01 0.09 0.13 0.06 0.02
Distributions from
Capital Gains 0.00 4.31 0.00 0.91 0.10 0.02 0.81 0.00 0.12 0.00
---------------------------------------------------------------------------------------
Total Distributions 0.29 4.60 0.24 1.11 0.18 0.03 0.90 0.13 0.18 0.02
---------------------------------------------------------------------------------------
Net Asset Value -
End of Period $18.95 $15.31 $20.28 $15.28 $14.67 $ 7.19 $ 9.05 $ 7.55 $ 6.37 $ 7.74
=======================================================================================
TOTAL RETURN 25.80% (2.24%) 34.33% 11.74% 106.63% (20.25%) 31.66% 20.69% (15.37%)(2.96%)*
RATIOS
Net Assets - End of Period
($000 Omitted) $410,048 $266,170 $384,131 $189,708 $95,144 $1,315 $2,208 $2,322 $1,194 $543
Ratio of Expenses to
Average Net Assets 1.26%@ 1.18% 1.03% 1.07% 1.13% 2.50% 2.50% 1.95% 1.50% 1.50%~
Ratio of Net Investment
Income (Loss) to Average
Net Assets 2.10% 1.66% 1.16% 1.28% 1.76% (0.16%) 1.05% 1.71% 1.18% 1.15%~
Portfolio Turnover Rate 171% 88% 236% 208% 249% 528% 217% 175% 284% 76%*
<FN>
^ From June 2, 1986, commencement of operations, to October 31, 1986.
* These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
@ Ratio reflects ^ Total Expenses prior to any expense offset.
~ Annualized
[/FN]
</TABLE>
<PAGE>
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gold Portfolio<
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 5.68 $ 6.23 $ 3.99 $ 4.26 $ 4.29 $ 5.29 $ 5.03 $ 5.60 $ 5.08 $ 3.99
----------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.01 (0.02) (0.01) (0.01) (0.01) 0.01 0.03 0.03 0.06 0.08
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) (0.47) (0.53) 2.25 (0.26) (0.02) (1.00) 0.28 (0.58) 0.57 1.13
----------------------------------------------------------------------------------------
Total from Investment
Operations (0.46) (0.55) 2.24 (0.27) (0.03) (0.99) 0.31 (0.55) 0.63 1.21
----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.01 0.00 0.00 0.00 0.00 0.01 0.05 0.02 0.06 0.08
Distributions from
Capital Gains 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.05 0.04
----------------------------------------------------------------------------------------
Total Distributions 0.01 0.00 0.00 0.00 0.00 0.01 0.05 0.02 0.11 0.12
----------------------------------------------------------------------------------------
Net Asset Value -
End of Period $ 5.21 $ 5.68 $ 6.23 $ 3.99 $ 4.26 $ 4.29 $ 5.29 $ 5.03 $ 5.60 $ 5.08
========================================================================================
TOTAL RETURN (8.12%) (8.83%) 56.27% (6.51%) (0.51%) (18.70%) 6.13% (9.84%) 12.43% 30.30%
RATIOS
Net Assets - End of Period
($000 Omitted) $151,779 $271,163 $292,940 $46,212 $46,383 $35,757 $34,255 $32,481 $37,853 $5,151
Ratio of Expenses to
Average Net Assets 1.32%@ 1.07% 1.03% 1.41% 1.47% 1.32% 1.63% 1.58% 1.15% 1.50%
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.13% (0.32%) (0.21%) (0.23%) (0.25%) 0.26% 0.69% 0.62% 0.98% 2.35%
Portfolio Turnover Rate 72% 97% 142% 101% 43% 107% 77% 47% 124% 232%
<FN>
< The per share information for the Gold Portfolio for 1993 was computed based
on weighted average shares.
@ Ratio reflects ^ Total Expenses prior to any expense offset.
[/FN]
</TABLE>
<PAGE>
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Health Sciences Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $35.09 $33.49 $35.65 $40.60 $20.61 $19.49 $14.29 $11.69 $12.78 $ 9.75
----------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.03) (0.24) (0.13) 0.11 0.14 0.21 0.15 (0.09) (0.01) (0.03)
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) 15.41 1.84 (2.02) (4.52) 23.45 1.32 7.06 2.72 (0.18) 4.42
----------------------------------------------------------------------------------------
Total from Investment
Operations 15.38 1.60 (2.15) (4.41) 23.59 1.53 7.21 2.63 (0.19) 4.39
----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.00 0.01 0.10 0.12 0.20 0.06 0.00 0.00 0.00
Distributions from
Capital Gains+ 0.00 0.00 0.00 0.44 3.48 0.21 1.95 0.03 0.90 1.36
----------------------------------------------------------------------------------------
Total Distributions 0.00 0.00 0.01 0.54 3.60 0.41 2.01 0.03 0.90 1.36
----------------------------------------------------------------------------------------
Net Asset Value-
End of Period $50.47 $35.09 $33.49 $35.65 $40.60 $20.61 $19.49 $14.29 $11.69 $12.78
========================================================================================
TOTAL RETURN 43.83% 4.78% (6.01%) (10.86%) 114.54% 7.85% 50.47% 22.56% (1.50%) 45.01%
RATIOS
Net Assets - End of Period
($000 Omitted) $860,926 $473,926 $560,294 $756,791 $744,927 $88,150 $26,765 $10,027 $10,405 $4,099
Ratio of Expenses to
Average Net Assets 1.15% @ 1.19% 1.16% 1.00% 1.03% 1.12% 1.42% 1.65% 1.42% 1.50%
Ratio of Net Investment
Income (Loss) to Average
Net Assets (0.08%) (0.57%) (0.34%) 0.26% 0.55% 1.18% 0.79% (0.48%) (0.17%) (0.28%)
Portfolio Turnover Rate 107% 80% 87% 91% 100% 242% 272% 280% 364% 479%
<FN>
+ ^ For the year ended October 31, 1993, the Health Sciences Portfolio declared
a ^ capital gains distribution which aggregated less that $0.01 on a per share
basis.
@ Ratio reflects ^ Total Expenses prior to any expense offset.
[/FN]
</TABLE>
<PAGE>
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Leisure Portfolio<
PER SHARE DATA
Net Asset Value -
Beginning of Period $22.63 $25.47 $16.29 $14.85 $10.14 $14.53 $11.99 $ 9.00 $11.38 $10.03
----------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.08 (0.01) (0.02) (0.01) (0.01) 0.01 0.22 0.04 (0.05) (0.01)
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) 2.06 (0.94) 9.20 2.44 6.84 (3.69) 4.52 2.95 (0.90) 4.13
----------------------------------------------------------------------------------------
Total from Investment
Operations 2.14 (0.95) 9.18 2.43 6.83 (3.68) 4.74 2.99 (0.95) 4.12
----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.08 0.00 0.00 0.00 0.00 0.03 0.21 0.00 0.00 0.00
----------------------------------------------------------------------------------------
Distributions from
Capital Gains 0.91 1.89 0.00 0.99 2.12 0.68 1.99 0.00 1.43 2.77
Total Distributions 0.99 1.89 0.00 0.99 2.12 0.71 2.20 0.00 1.43 2.77
----------------------------------------------------------------------------------------
Net Asset Value -
End of Period $23.78 $22.63 $25.47 $16.29 $14.85 $10.14 $14.53 $11.99 $ 9.00 $11.38
========================================================================================
TOTAL RETURN 9.98% (3.92%) 56.36% 16.34% 67.40% (25.33%) 39.58% 33.21% (8.38%) 41.08%
RATIOS
Net Assets - End of Period
($000 Omitted) $265,181 $282,649 $351,685 $40,140 $14,406 $5,064 $12,569 $5,624 $2,721 $2,804
Ratio of Expenses to
Average Net Assets 1.29%@ 1.17% 1.14% 1.51% 1.86% 1.84% 1.38% 1.89% 1.50% 1.50%
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.31% 0.00% (0.11%) (0.33%) (0.24%) 0.10% 1.44% 0.16% (0.37%) (0.11%)
Portfolio Turnover Rate 119% 116% 116% 148% 122% 89% 119% 136% 376% 458%
<FN>
< The per share information for the Leisure Portfolio for 1993 was computed
based on weighted average shares.
+ Distributions in excess of net investment income for the year ended October
31, 1995, aggregated less than $0.01 on a per share basis.
@ Ratio reflects ^ Total Expenses prior to any expense offset.
[/FN]
</TABLE>
<PAGE>
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Technology Portfolio<
PER SHARE DATA
Net Asset Value -
Beginning of Period $24.94 $26.99 $20.20 $18.10 $11.61 $12.66 $10.11 $ 8.49 $ 9.29 $ 7.59
----------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Loss (0.02) (0.02) (0.15) (0.09) (0.09) (0.01) (0.29) (0.29) (0.11) (0.05)
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) 10.20 1.19 6.94 2.19 10.97 (1.04) 2.84 1.91 (0.68) 2.82
----------------------------------------------------------------------------------------
Total from Investment
Operations 10.18 1.17 6.79 2.10 10.88 (1.05) 2.55 1.62 (0.79) 2.77
----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from
Capital Gains 0.79 3.22 0.00 0.00 4.39 0.00 0.00 0.00 0.01 1.07
Net Asset Value -
End of Period $34.33 $24.94 $26.99 $20.20 $18.10 $11.61 $12.66 $10.11 $ 8.49 $9.29
========================================================================================
TOTAL RETURN 42.19% 5.04% 33.63% 11.57% 93.73% (8.28%) 25.24% 19.02% (8.54%) 36.55%
RATIOS
Net Assets - End of Period
($000 Omitted) $563,109 $327,260 $248,803 $165,083 $63,119 $20,190 $8,525 $9,652 $9,289 $4,696
Ratio of Expenses to
Average Net Assets 1.12% @ 1.17% 1.13% 1.12% 1.19% 1.25% 1.59% 1.72% 1.47% 1.50%
Ratio of Net Investment
Loss to Average
Net Assets (0.06%) (0.55%) (0.69%) (0.45%) (0.53%) (0.06%) (0.62%) (0.90%) (0.68%) (0.71%)
Portfolio Turnover Rate 191% 145% 184% 169% 307% 345% 259% 356%# 556% 368%
<FN>
< The per share information for the Technology Portfolio for 1992, 1991 and 1990
was computed based on weighted average shares.
@ Ratio reflects ^ Total Expenses prior to any expense offset.
# For the year ended October 31, 1988, the value of securities acquired in
connection with the acquisition of the net assets of World of Technology, Inc.
was excluded when computing the Portfolio turnover rate.
[/FN]
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
- ---------------------------------
Each Portfolio, which is a separate series of the Fund, seeks capital
appreciation. This investment objective is fundamental and cannot be changed
without the approval of the Portfolio's shareholders. The investment strategy is
aggressive; holdings are focused on equity securities whose price appreciation
is expected to outpace that of the overall sector in which the Portfolio
invests. These stocks may not pay regular dividends. Each Portfolio normally
invests at least 80% of its total assets in the equity securities (common and
preferred stocks, and convertible bonds) of companies principally engaged in a
specific business sector. There is no assurance that the Fund's investment
objective will be met.
Each business sector typically consists of numerous industries. In
deciding whether a company is principally engaged in a particular business
sector, Fund Management must determine that the company derives more than 50% of
its gross income or net sales from activities in that sector; or that the
company dedicates more than 50% of its assets to the production of revenues from
that sector, or, if based on available financial information, a question exists
whether a company meets one of these standards, Fund Management determines that
the company's primary business is within the business sector designated for
investment by that Portfolio.
The remainder of each Portfolio's assets may be invested in any securities
or other instruments deemed appropriate by Fund Management, consistent with the
Portfolio's investment policies and restrictions. These investments include debt
securities issued by companies principally engaged in the Portfolio's business
sector, debt or equity securities issued by companies outside the Portfolio's
business sector, short-term high grade debt obligations maturing no later than
one year from the date of purchase (including U.S. government and agency
securities, domestic bank certificates of deposit, commercial paper rated at
least A-2 by Standard & Poor's or P-2 by Moody's Investors Service, Inc., and
repurchase agreements), and cash.
The Portfolios are actively traded. Economic conditions and market
circumstances vary from day to day; securities may be bought and sold relatively
frequently as their suitability as a portfolio holding changes.
When Fund Management believes market or economic conditions are adverse, a
Portfolio may act defensively -- that is, temporarily invest up to 100% of its
total assets in short-term high grade debt obligations as described above or
cash, seeking to protect its assets until conditions stabilize.
<PAGE>
INVESTMENT POLICIES AND RISKS
- -----------------------------
Industry Concentration. Each Portfolio's holdings normally will be
concentrated in a single, specific business sector. Compared to the broad
market, an individual sector may be more strongly affected by changes in the
economic climate; broad market shifts; moves in a particular, dominant stock; or
regulatory changes. Investors should be prepared for volatile short-term
movement in net asset value. Each Portfolio attempts to reduce these risks by
diversifying its investments among many individual securities; further, a
Portfolio may not invest more than 5% of its total assets in the securities of
any one issuer (other than obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities). However, of itself, an
investment in one or more of the Portfolios does not constitute a balanced
investment program.
The Technology Portfolio may not invest more than 25% of its total assets
in a single industry (e.g., computer software) within the technology business
sector. The other Portfolios do not operate under this restriction.
The Portfolios are concentrated in these industry sectors:
Energy: energy companies including oil, natural gas, coal, uranium;
geothermal, solar, or nuclear power; or new energy sources. Companies may be in
the business of exploration, development, production, processing or distribution
of these energy resources. Companies may also provide supplies, services, or
transportation to energy companies, or energy conservation or pollution control
technologies. Up to 25% of the Portfolio's total assets, measured at the time of
purchase, may be invested in foreign securities. Securities of Canadian issuers
and American Depository Receipts ("ADRs") are not subject to this 25%
limitation.
Market prices of these businesses may be adversely affected by federal or
state regulations on energy production, distribution and sale.
Environmental Services: waste management, pollution control, and similar
companies offering products and services related to environmental concerns in
the United States and foreign countries. Environmental services include
treatment, reduction, and/or disposal of waste; decontamination, monitoring or
transportation; remedial services; landfills, recycling, incineration, pollution
reduction projects and systems; environmental insurance and surety bonding;
development of alternative energy sources; safety and protection equipment for
environmental workers; specialty environmental services; and the production of
biodegradable or otherwise environmentally safe products and technologies
related to pollution control. Up to 100% of the Portfolio's total assets may be
invested in foreign companies.
<PAGE>
The environmental services sector has been positively influenced by
legislation that has resulted in stricter government regulations and enforcement
policies for both commercial and government generators of waste materials, as
well as specific expenditures designated for remedial clean-up efforts. These
regulations are subject to change, which could adversely affect these
businesses. Since the materials handled and processes involved include hazardous
components, there is significant liability risk. In addition, there are also
risks of intense competition within this sector.
Financial Services: financial service companies including commercial and
industrial banks, savings & loan associations, consumer and industrial finance,
leasing, securities brokerage and insurance companies. Up to 25% of the
Portfolio's total assets, measured at the time of purchase, may be invested in
foreign securities. Securities of Canadian issuers and ADRs are not subject to
this 25% limitation.
Many of these industries are subject to extensive governmental regulation,
which may change frequently. The firms' profitability is largely dependent upon
the availability and cost of capital funds, and may fluctuate significantly in
response to changes in interest rates, as well as changes in general economic
conditions. From time to time, severe competition may also affect the
profitability of insurance companies in particular.
Gold: companies engaged in mining, exploring, processing, or dealing or
investing in gold. Up to 10% of the Portfolio's total assets may be invested in
gold bullion. Up to 100% of the Portfolio's total assets may be invested in
foreign companies.
Due to monetary and political policies on a national and international
level, the price of gold is subject to substantial fluctuations, which will have
an effect on the profitability and market value of these companies. Changes in
political or economic climate for the two largest producers -- South Africa and
the former Soviet Union -- may have a direct impact on the price of gold
worldwide. The Gold Portfolio's investments in gold bullion will earn no income
return; appreciation in the market price of gold is the sole manner in which the
Portfolio would be able to realize gains. Furthermore, the Portfolio may
encounter storage and transaction costs in connection with its ownership of gold
bullion that may be higher than those associated with the purchase, holding and
sale of more traditional types of investments.
Health Sciences: companies which develop, produce, or distribute products
or services related to health-care. These include medical equipment or supplies,
pharmaceuticals, health-care facilities, and applied research and development of
new products or processes. Up to 25% of the Portfolio's total assets, measured
at the time of purchase, may be invested in foreign securities. Securities of
Canadian issuers and ADRs are not subject to this 25% limitation.
<PAGE>
Many of these activities are funded or subsidized by federal and state
governments; withdrawal or curtailment of this support could have an adverse
impact on the profitability, and market prices, of such companies. Changes in
government regulation could also have an adverse impact. Further, continuing
technological advances may mean rapid obsolescence of products and services.
Leisure: companies that design, produce or distribute leisure-time
products or services. These include recreational equipment, toys, games,
photographic equipment, and musical instruments, as well as entertainment
industries such as cable television, music, motion ^ pictures and broadcasting.
In addition, companies engaged in air transportation, lodging, sports arenas,
gambling casinos, amusement or theme parks, and restaurants may be included. Up
to 25% of the Portfolio's total assets, measured at the time of purchase, may be
invested in foreign securities. Securities of Canadian issuers and ADRs are not
subject to this 25% limitation.
Many of these industries are dependent upon consumer discretionary
spending, which may fluctuate, particularly during economic downturns.
Securities of gambling casinos may be subject to above-average price volatility
and considered speculative. Video and electronic games are subject to risks of
rapid obsolescence. These factors may adversely affect the market value of the
securities of the companies involved.
Technology: technology-related industries such as computers,
communications, video, electronics, oceanography, office and factory automation,
and robotics. Up to 25% of the Portfolio's total assets, measured at the time of
purchase, may be invested in foreign securities. Securities of Canadian issuers
and ADRs are not subject to this 25% limitation.
Many of these products and services are subject to rapid obsolescence,
which may adversely affect market value of the securities of the companies
involved.
Equity Securities. The equity securities in which the Portfolios invest
may be issued by either established, well- capitalized companies, or
newly-formed small capitalization ("small cap") companies. These securities may
be traded on national, regional or foreign stock exchanges or in the
over-the-counter market. Small cap companies frequently have limited operating
histories, product lines and financial and managerial resources, and may face
intense competitive pressures from larger companies. The market prices of small
cap stocks may be more volatile than the stocks of larger companies both because
they typically trade in lower volumes and because small cap firms may be more
vulnerable to changes in their earnings and prospects.
<PAGE>
Foreign Securities. Each Portfolio's investments may include foreign
securities, which involve certain risks.
For U.S. investors, the returns on foreign debt securities are
influenced not only by the returns on the foreign investments
themselves, but also by currency fluctuations. That is, when the
U.S. dollar generally rises against foreign currencies, returns on
foreign securities for a U.S. investor may decrease. By contrast,
in a period when the U.S. dollar generally declines, those returns
may increase.
Other aspects of international investing to consider include:
-less publicly available information than is generally available about U.S.
issuers;
-differences in accounting, auditing and financial reporting standards;
-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility of a Portfolio experiencing difficulties in pursuing legal
remedies and collecting judgments.
ADRs represent shares of a foreign corporation held by a U.S. bank that
entitle the holder to all dividends and capital gains. ADRs are denominated in
U.S. dollars and trade in the U.S. securities markets. ADRs are subject to some
of the same risks as direct investments in foreign securities, including the
risk that material information about the issuer may not be disclosed in the
United States and the risk that currency fluctuations may adversely affect the
value of the ADR.
In order to hedge against fluctuations in foreign exchange rates, the
Portfolios may enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts"). Forward contracts and their risks are
discussed under "Investment Policies and Restrictions" in the Statement of
Additional Information.
<PAGE>
Illiquid and Rule 144A Securities. Each Portfolio may invest up to 10% of
its total assets, measured at the time of purchase, in illiquid securities,
including securities that are subject to restrictions on resale and securities
that are not readily marketable. Investments in illiquid securities are subject
to the risk that a Portfolio may not be able to dispose of a security at the
time desired or at a reasonable price, or may have to bear the expense and delay
of registering the security in order to resell it. The Portfolios' investments
in restricted securities may include securities that may be resold to
institutional investors ("Rule 144A Securities"). The liquidity of Rule 144A
Securities could be impaired if dealers or institutional investors become
uninterested in purchasing them. For more information concerning Rule 144A
Securities, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
Securities Lending. The Portfolios may seek to earn additional income by
lending securities to qualified brokers, dealers, banks, or other financial
institutions, on a fully collateralized basis. For further information on this
policy, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
Repurchase Agreements. The Portfolios may invest money, for as short a
time as overnight, using repurchase agreements ("repos"). With a repo, a
Portfolio buys a debt instrument, agreeing simultaneously to sell it back to the
prior owner at an agreed-upon price. The Portfolio could incur costs or delays
in seeking to sell the instrument if the prior owner defaults on its repurchase
obligation. To reduce that risk, securities that are the subject of the
repurchase agreement will be maintained with the Fund's custodian in an amount
at least equal to the repurchase price under the agreement (including accrued
interest). These agreements are entered into only with member banks of the
Federal Reserve System, registered broker-dealers, and registered U.S.
government securities dealers that are deemed creditworthy under standards
established by the Fund's board of directors.
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover. The Portfolios do not trade for short-term profit; however, at the
discretion of Fund Management, securities may be sold regardless of how long
they have been held when investment considerations warrant such action. The
portfolio turnover rate of each Portfolio therefore may be higher than some
other mutual funds with the same investment objective. This policy also may
result in greater brokerage commissions and acceleration of capital gains which
are taxable when distributed to shareholders. The Statement of Additional
Information includes an expanded discussion of the Portfolios' portfolio
turnover rates, their brokerage practices and certain federal income tax
matters.
For a further discussion of risks associated with an investment in the
Fund, see "Investment Policies and Restrictions" and "Investment Practices" in
the Statement of Additional Information.
<PAGE>
Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, may not be altered without the approval of
the Portfolios' shareholders. For example, a Portfolio may not borrow money
except from banks for temporary or emergency purposes (but not for investment)
in an amount not to exceed 10% of its net assets. In addition, except for the
Portfolios' policies regarding investments in foreign securities and foreign
currencies, the investment objective and policies described in this prospectus
under "Investment Objective and Strategy" and "Investment Policies and Risks"
are fundamental and may not be changed without a vote of the ^ Portfolios'
shareholders.
THE FUND AND ITS MANAGEMENT
- ---------------------------
The Fund is a no-load mutual fund, registered with the Securities and
Exchange Commission as a diversified, open-end management investment company. It
was incorporated on August 10, 1983, under the laws of Maryland.
The Fund's board of directors has responsibility for overall supervision
of the Fund, and reviews the services provided by the adviser and sub-adviser.
Under an agreement with the Fund, INVESCO Funds Group, Inc. ("IFG"), 7800 E.
Union Avenue, Denver, Colorado 80237, serves as investment manager for each
Portfolio; it is primarily responsible for providing the Fund with various
administrative services. IFG's wholly-owned subsidiary, INVESCO Trust Company
("INVESCO Trust"), is the Fund's sub-adviser and is primarily responsible for
managing the Portfolios' investments. Together, IFG and INVESCO Trust constitute
"Fund Management."
The following managers have the responsibility for the day-to-day
management of each Portfolio's holdings:
Energy: Since 1995, Thomas R. Samuelson, portfolio manager of INVESCO Trust
Company. Previously, he was associate director of Swiss Bank Capital Markets
(1992-1995) and a partner of Duff & Phelps, Inc. (1985-1992). He earned his
M.B.A. and B.S. from the University of Tulsa. He is a Chartered Financial
Analyst.
Environmental Services: Since 1995, Jeffrey G. Morris, portfolio manager of
INVESCO Trust Company. Mr. Morris also manages the INVESCO Strategic Utilities
Portfolio and the INVESCO VIF- Utilities Portfolio. Mr. Morris joined INVESCO in
1991 and served as a research analyst (1994-1995). Previously, he was a loan
processor for Norwest Mortgage (1991). He earned a B.S. from Colorado State
University. He is a Chartered Financial Analyst.
Financial Services: Since 1992, Douglas N. Pratt, portfolio manager and
vice president (since 1993) of INVESCO Trust Company. He also serves as
portfolio manager of INVESCO Growth Fund. Mr. Pratt began his financial and
<PAGE>
analytical research career in 1982; before joining INVESCO, he was an
equity analyst with Loomis, Sayles & Company (1987-1992). He earned an M.B.A.
from Columbia University and an A.B. from Brown University. He is a Chartered
Financial Analyst.
Gold ^: Since 1989^, Daniel B. Leonard. He also serves as co-portfolio
manager of the Technology Portfolio. He joined INVESCO in 1975, and was
appointed successively portfolio manager (1977-1983; 1985-1991) and senior vice
president (1975-1983; 1985-1991) of INVESCO Funds Group, Inc., as well as vice
president (1977-1983) and senior vice president (1991 to present) of INVESCO
Trust Company. Mr. Leonard earned a B.A. from Washington & Lee University. He
began his investment career in 1960.
Health Sciences: ^ Portfolio manager since 1996 and co-portfolio manager
from 1994 to 1996, John Schroer. Mr. Schroer is a vice president (since ^ 1995)
and portfolio manager (since ^ 1993) of INVESCO Trust Company. ^ He also serves
as vice president ^ and portfolio manager ^ of The Global Health Sciences Fund^
and ^ as co-portfolio manager of INVESCO Emerging Growth Fund. Previously, he
was an assistant vice president with Trust Company of the West. Mr. Schroer
earned his M.B.A. and B.S. from the University of Wisconsin-Madison.^ He is a
Chartered Financial Analyst.
Leisure: Since 1996, Mark Greenberg, portfolio manager of INVESCO Trust
Company. Previously, Mr. Greenberg was vice president and global media and
entertainment analyst for Scudder, Stevens & Clark (1990 to 1996); media,
technology and telecommunications analyst for Campbell Advisors (1988 to 1989);
media and technology analyst for Irving Trust Company (1983 to 1988); and
analyst for Argus Research and Bernstein Macauley (1980 to 1983). He earned a
B.S.B.A. from Marquette University and is a Chartered Financial Analyst.
Technology: Co-portfolio manager since 1996 and portfolio manager from 1985
to 1996, Daniel B. Leonard. Mr. Leonard also serves as portfolio manager of the
Gold Portfolio. He joined INVESCO in 1975, and was appointed successively
portfolio manager (1977-1983; 1985-1991) and senior vice president (1975-1983;
1985- 1991) of INVESCO Funds Group, Inc., as well as vice president (1977-1983)
and senior vice president (1991 to present) of INVESCO Trust Company. Mr.
Leonard earned a B.A. from Washington & Lee University. He began his investment
career in 1960.
Co-portfolio manager since 1996, Gerard F. Hallaren, Jr. Mr. Hallaren
joined INVESCO Trust Company in 1994, served as a research analyst from 1994 to
1995 and became a vice president in 1995. Previously, Mr. Hallaren was a vice
president and research analyst with Hanifen Imhoff (1992 to 1994); a retail
broker with Merrill Lynch (1991); director of business planning for MiniScribe
Corporation (1989 to 1990); and served as a research analyst with various firms
beginning in 1978. Mr. Hallaren earned a B.A. from the University of
Massachusetts, Amherst, and is a Chartered Financial Analyst.
<PAGE>
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires Fund Management's personnel to conduct
their personal investment activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients. See
the Statement of Additional Information for more detailed information.
Each Portfolio pays IFG a monthly management fee which is based upon a
percentage of that Portfolio's average net assets determined daily. The
management fee is computed at the annual rate of 0.75% on the first $350 million
of a Portfolio's average net assets; 0.65% on the next $350 million of a
Portfolio's average net assets; and 0.55% on a Portfolio's average net assets
over $700 million. While the portion of the management fee that is equal to
0.75% of a Portfolio's average net assets is higher than the management fees
incurred by most other mutual funds, it is not higher than the management fees
paid by most other sector funds on comparable levels of assets. For the fiscal
year ended October 31, 1995, the Portfolios paid fees equal to the following
percentages of their average net assets: Energy 0.75%, Environmental Services
0.75%, Financial Services 0.75%, Gold 0.75%, Health Sciences 0.71%, Leisure
0.75%, Technology 0.73%.
Out of these advisory fees received from the Fund, IFG paid to INVESCO
Trust as a sub-advisory fee an amount equal to the following percentages of each
Portfolio's average net assets: Energy 0.25%, Environmental Services 0.25%,
Financial Services 0.24%, Gold 0.25%, Health Sciences 0.22%, Leisure 0.24%, and
Technology 0.22%. No fee is paid by any Portfolio to INVESCO Trust.
Under a Transfer Agency Agreement, IFG acts as registrar, transfer agent,
and dividend disbursing agent for the Fund. The Fund pays an annual fee of
$14.00 per shareholder account or omnibus account participant for these
services. Registered broker-dealers, third party administrators of tax-qualified
retirement plans and other entities, including affiliates of IFG, may provide
equivalent services to the Fund. In these cases, IFG may pay, out of the fee it
receives from the Fund, an annual sub-transfer agency or record-keeping fee to
the third party.
In addition, under an Administrative Services Agreement, IFG handles
additional administrative, record-keeping, and internal sub-accounting services
for the Fund. For the fiscal year ended October 31, 1995, the Portfolios paid
IFG fees for these services equal to the following percentages of the respective
Portfolios' average net assets: Energy 0.03%; Environmental Services 0.05%,
Financial Services 0.02%, Gold 0.02%, Health Sciences 0.02%, Leisure 0.02%, and
Technology 0.02%.
<PAGE>
Each Portfolio's expenses, which are accrued daily, are deducted from
total income before dividends are paid. Total expenses of each Portfolio (prior
to any expense offset) for the fiscal year ended October 31, 1995, including
investment management fees (but excluding brokerage commissions, which are a
cost of acquiring securities), amounted to the following percentages of each
Portfolio's average net assets: Energy 1.53%, Environmental Services 1.57%,
Financial Services 1.26%, Gold 1.32%, Health Sciences 1.15%, Leisure 1.29%, and
Technology 1.12%. Certain expenses of the Environmental Services Portfolio are
absorbed voluntarily by IFG pursuant to a commitment to the Fund. This
commitment may be changed following consultation with the Fund's board of
directors. In the absence of this voluntary expense limitation, the total
operating expenses of the Environmental Services Portfolio for the year ended
October 31, 1995, would have been 1.93% of the Portfolio's average net assets.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. Each Portfolio may place orders for portfolio
transactions with qualified broker/dealers that recommend the Portfolio, or sell
shares of the Portfolio, to clients, or act as agent in the purchase of
Portfolio shares for clients, if Fund Management believes that the quality of
the execution of the transaction and level of commission are comparable to those
available from other qualified brokerage firms. For further information, see
"Investment Practices - Placement of Portfolio Brokerage" in the Statement of
Additional Information.
The parent company for IFG and INVESCO Trust is INVESCO PLC, a publicly
traded holding company whose subsidiaries provide investment services around the
world. IFG was established in 1932 and, as of October 31, 1995, managed 14
mutual funds, consisting of 38 separate portfolios, with combined assets of
approximately $11.1 billion on behalf of over 784,000 shareholders. INVESCO
Trust (founded in 1969) served as adviser or sub-adviser to 41 investment
portfolios as of October 31, 1995, including 27 portfolios in the INVESCO group.
These 41 portfolios had aggregate assets of approximately $10.3 billion as of
October 31, 1995. In addition, INVESCO Trust provides investment management
services to private clients, including employee benefit plans that may be
invested in a collective trust sponsored by INVESCO Trust.
FUND PRICE AND PERFORMANCE
- --------------------------
Determining Price. The value of your investment in a Portfolio will vary
daily. The price per share is also known as the Net Asset Value (NAV). IFG
prices the Portfolios every day that the New York Stock Exchange is open, as of
the close of regular trading (normally, 4:00 p.m., New York time). NAV is
calculated by adding together the current market value of each Portfolio's
<PAGE>
assets, including accrued interest and dividends; then subtracting liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of shares outstanding of that Portfolio.
Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise a Portfolio's total return for one-, five-, and
ten-year periods (or since inception). Total return figures show the rate of
return on a $1,000 investment in a Portfolio, 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; average annual total
return represents the average annual percentage change of an investment. Both
cumulative and average annual total returns tend to "smooth out" fluctuations in
a Portfolio's investment results, not showing the interim variations in
performance over the periods cited. More information about the Portfolios'
recent and historical performance is contained in the Fund's Annual Report to
shareholders. You can get a free copy by calling or writing to IFG using the
phone number or address on the cover of this prospectus.
When we quote mutual fund rankings published by Lipper Analytical
Services, Inc., we may compare the Portfolios to the broad-based Lipper general
fund groupings, or to others in their respective categories:
Portfolio Lipper Mutual Fund Category
- --------- ---------------------------
Energy Natural Resources
Environmental Services Environmental
Financial Services Financial Services
Gold Gold Oriented
Health Sciences Health/Biotechnology
Leisure Specialty/Miscellaneous
Technology Science & Technology
These rankings allow you to compare the Portfolios to their peers. Other
independent financial media also produce performance- or service-related
comparisons, which you may see in our promotional materials. For more
information see "Fund Performance" in the Statement of Additional Information.
Performance figures are based on historical investment results and are not
intended to suggest future performance.
HOW TO BUY SHARES
- -----------------
The ^ chart on page 19 shows several convenient ways to invest in one or
more Portfolios. Your new Portfolio shares will be priced at the NAV next
determined after your order is received in proper form. There is no charge to
invest, exchange, or redeem shares when you make transactions directly through
IFG. However, if you invest in a Portfolio through a securities broker, you may
be charged a commission or transaction fee. IFG may from time to time make
<PAGE>
payments from its revenues to securities dealers and other financial
institutions that provide distribution-related and/or administrative services
for the Fund. For all new accounts, please send a completed application form.
Please specify which Portfolio you wish to purchase.
Fund Management reserves the right to reduce or waive the minimum
investment requirements in its sole discretion, where it determines this action
is in the best interests of the Portfolios. Further, Fund Management reserves
the right in its sole discretion to reject any order for the purchase of
Portfolio shares (including purchases by exchange) when, in its judgment, such
rejection is in the Portfolio's best interests.
================================================================================
Method Investment Minimum Please Remember
Per Portfolio
- --------------------------------------------------------------------------------
By Check $1,000 for regular If your check does
Mail to: account; not clear, you will
INVESCO Funds $250 for an be responsible for
Group, Inc. Individual any related loss
P.O. Box 173706 Retirement Account; the Portfolio or
Denver, CO 80217- $50 minimum for IFG incurs. If you
3706. each subsequent are already a
Or you may send investment. shareholder in the
your check by INVESCO funds, the
overnight courier Portfolio may seek
to: 7800 E. Union reimbursement from
Ave., your existing
Denver, CO 80237. account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or $1,000. Payment must be
Wire received within 3
Call 1-800-525-8085 business days, or
to request your the transaction may
purchase. Then send be cancelled. If a
your check by telephone purchase
overnight courier is cancelled due to
to our street nonpayment, you
address: will be responsible
7800 E. Union Ave., for any related
Denver, CO 80237. loss the Portfolio
Or you may transmit or IFG incurs. If
your payment by you are already a
bank wire (call IFG shareholder in the
for instructions). INVESCO funds, the
Portfolio may seek
reimbursement from your
existing account(s) for
any loss incurred.
<PAGE>
- --------------------------------------------------------------------------------
With EasiVest or $50 per month for Like all regular
Direct Payroll EasiVest; $50 per investment plans,
Purchase pay period for neither EasiVest
You may enroll on Direct Payroll nor Direct Payroll
the fund Purchase. You may Purchase ensures a
application, or start or stop your profit or protects
call us for the regular investment against loss in a
correct form and plan at any time, falling market.
more details. with two weeks' Because you'll
Investing the same notice to IFG. invest continually,
amount on a monthly regardless of
basis allows you to varying price
buy more shares levels, consider
when prices are low your financial
and fewer shares ability to keep
when prices are buying through low
high. This "dollar- price levels. And
cost averaging" may remember that you
help offset market will lose money if
fluctuations. Over you redeem your
a period of time, shares when the
your average cost market value of all
per share may be your shares is less
less than the than their cost.
actual average
price per share.
- --------------------------------------------------------------------------------
By PAL $1,000. Be sure to write
Your "Personal down the
Account Line" is confirmation number
available for provided by PAL.
subsequent Payment must be
purchases and received within 3
exchanges 24-hours business days, or
a day. Simply call the transaction may
1-800-424-8085. be cancelled. If a
telephone purchase is
cancelled due to
nonpayment, you will be
responsible for any
related loss the
Portfolio or IFG incurs.
If you are already a
shareholder in the
INVESCO funds, the
Portfolio may seek
reimbursement from your
existing account(s) for
any loss incurred.
<PAGE>
- --------------------------------------------------------------------------------
By Exchange $1,000 to open a See "Exchange
Between this and new account; $50 Privilege^," page
another of the for written 20.
INVESCO funds. Call requests to
1-800-525-8085 for purchase additional
prospectuses of shares for an
other INVESCO existing account.
funds. You may also (The exchange
establish an minimum is $250 for
Automatic Monthly purchases requested
Exchange service by telephone.)
between two INVESCO
funds; call IFG for
further details and
the correct form.
================================================================================
Exchange Privilege. You may exchange your shares in this Portfolio for
those in another Portfolio or INVESCO fund, on the basis of their respective net
asset values at the time of the exchange. Before making any exchange, be sure to
review the prospectuses of the funds involved and consider their differences.
Please note these policies regarding exchanges of fund shares:
1) The fund accounts must be identically registered.
2) You may make four exchanges out of each fund during each
calendar year.
3) An exchange is the redemption of shares from one fund 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, your account is tax-deferred).
4) The Fund reserves the right to reject any exchange request, or to
modify or terminate exchange privileges, in the best interests of
the Fund and its shareholders. Notice of all such modifications or
termination will be given at least 60 days prior to the effective
date of the change in privilege, except for unusual instances (such
as when redemptions of the exchanged shares are suspended under
Section 22(e) of the Investment Company Act of 1940, or when sales
of the fund into which you are exchanging are temporarily stopped).
FUND SERVICES
- -------------
Shareholder Accounts. IFG will maintain a share account that reflects your
current holdings. Share certificates will be issued only upon specific request.
You will have greater flexibility to conduct transactions if you do not request
certificates.
<PAGE>
Transaction Confirmations. You will receive detailed confirmations of
individual purchases, exchanges, and redemptions. If you choose certain
recurring transaction plans (for instance, EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.
Investment Summaries. Each calendar quarter, shareholders receive a
written statement which consolidates and summarizes account activity and value
at the beginning and end of the period for each of their INVESCO funds.
Reinvestment of Distributions. Dividends and capital gain distributions
are automatically invested in additional fund shares at the NAV on the
ex-dividend date, unless you choose to have dividends and/or capital gain
distributions automatically reinvested in another INVESCO fund or paid by check
(minimum of $10.00).
Telephone Transactions. All shareholders may exchange and redeem Portfolio
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application, a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Portfolio
has followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephoned instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.
Retirement Plans And IRAs. Shares of these Portfolios may be purchased for
Individual Retirement Accounts (IRAs) and many types of tax-deferred retirement
plans. IFG can supply you with information and forms to establish or transfer
your existing plan or account.
HOW TO SELL SHARES
- ------------------
The ^ chart on page 21 shows several convenient ways to redeem your
Portfolio shares. Shares of any Portfolio may be redeemed at any time at their
current NAV next determined after a request in proper form is received at the
Fund's office. The NAV at the time of the redemption may be more or less than
the price you paid to purchase your shares, depending primarily upon that
Portfolio's investment performance.
Please be specific from which Portfolio you wish to redeem shares.
Shareholders have a separate account for each fund or Portfolio in which they
invest.
<PAGE>
================================================================================
Method Minimum Redemption Please Remember
Per Portfolio
================================================================================
By Telephone $250 (or, if less, This option is not
Call us toll-free full liquidation of available for
at 1-800-525-8085. the account) for a shares held in
redemption check; Individual
$1,000 for a wire Retirement Accounts
to bank of record. (IRAs).
The maximum amount
which may be
redeemed by
telephone is
generally $25,000.
These telephone
redemption
privileges may be
modified or
terminated in the
future at the
discretion of IFG.
- --------------------------------------------------------------------------------
In Writing Any amount. The If the shares to be
Mail your request redemption request redeemed are
to INVESCO Funds must be signed by represented by
Group, Inc., P.O. all registered stock certificates,
Box 173706 shareholders(s). the certificates
Denver, CO 80217- Payment will be must be sent to
3706. You may also mailed to your IFG.
send your request address of record,
by overnight or to a pre-
courier to 7800 E. designated bank.
Union Ave., Denver,
CO 80237.
- --------------------------------------------------------------------------------
By Exchange $1,000 to open a See "Exchange
Between this and new account; $50 Privilege," ^ page
another of the for written 20.
INVESCO funds. Call requests to
1-800-525-8085 for purchase additional
prospectuses of shares for an
other INVESCO existing account.
funds. You may also (The exchange
establish an minimum is $250 for
automatic monthly exchanges requested
exchange service by telephone.)
between two INVESCO
funds; call IFG for
further details and
the correct form.
<PAGE>
- --------------------------------------------------------------------------------
Periodic Withdrawal $100 per payment, You must have at
Plan on a monthly or least $10,000 total
You may call us to quarterly basis. invested with the
request the The redemption INVESCO funds, with
appropriate form check may be made at least $5,000 of
and more payable to any that total invested
information at 1- party you in the fund from
800-525-8085. designate. which withdrawals
will be made.
- --------------------------------------------------------------------------------
Payment To Third Any amount. All registered
Party owners of the
Mail your request account must sign
to INVESCO Funds the request, with a
Group, Inc., P.O. signature guarantee
Box 173706 from an eligible
Denver, CO 80217- guarantor financial
3706. institution, such
as a commercial
bank or recognized
national or
regional securities
firm.
================================================================================
While the Portfolios will attempt 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.
Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances -- for instance, if normal trading is not
taking place on the New York Stock Exchange or during an emergency as defined by
the Securities and Exchange Commission. If your shares were purchased by a check
which has not yet cleared, payment will be made promptly upon clearance of the
purchase check (which may take up to 15 days).
If you participate in Easivest, the Portfolios' automatic monthly
investment program, and redeem all of the shares in your account, we will
terminate any further Easivest purchases unless you instruct us otherwise.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Portfolios reserve the right to involuntarily redeem all shares in
such account, in which case the account would be liquidated and the proceeds
forwarded to the shareholder. Prior to any such redemption, a shareholder will
be notified and given 60 days to increase the value of the account to $250 or
more.
<PAGE>
TAXES, DIVIDENDS^ AND CAPITAL GAIN DISTRIBUTIONS
- ------------------------------------------------
Taxes. Each of the Portfolios intends to distribute to shareholders
substantially all of its net investment income, net capital gains and net gains
from foreign currency transactions, if any, in order to continue to qualify for
tax treatment as a regulated investment company. Thus, the Portfolios do not
expect to pay any federal income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and capital gain distributions in taxable income for federal, state,
and local income tax purposes. Dividends and other distributions are taxable
whether they are received in cash or automatically distributed in shares of that
Portfolio or another fund in the INVESCO group.
A Portfolio may be subject to withholding of foreign taxes on dividends or
interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of that Portfolio unless that Portfolio qualifies and
elects to pass these taxes through to shareholders for use by them as a foreign
tax credit or deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless you are subject to
backup withholding for other reasons, you can avoid backup withholding on your
Portfolio account by ensuring that we have a correct, certified tax
identification number.
Dividends and Capital Gain Distributions. Each Portfolio may earn ordinary
or net investment income in the form of dividends and interest on its
investments. The Portfolios' policy is to distribute substantially all of this
income, less Portfolio expenses, to shareholders on an annual basis, at the
discretion of the Fund's board of directors.
In addition, a Portfolio realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), that Portfolio
has a net realized capital gain. Net realized capital gains, if any, are
distributed to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of distribution regardless of how long the shares have
been held. A Portfolio's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying the full purchase price, a portion of
which is then returned in the form of a taxable distribution.
<PAGE>
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending upon how long
that Portfolio held the security which gave rise to the gains. The capital gains
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 income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell their
Portfolio shares at more or less than the price originally paid.
We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Capital Gain Distributions and Taxes" in
the Statement of Additional Information.
<PAGE>
ADDITIONAL INFORMATION
- ----------------------
Voting Rights. All shares of the Fund have equal voting rights based on
one vote for each share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all of the Portfolios voting together. In other cases, such as voting upon an
investment advisory contract, voting is on a Portfolio-by-Portfolio basis. To
the extent permitted by law, when not all Portfolios are affected by a matter to
be voted upon, only shareholders of the Portfolio or Portfolios affected by the
matter will be entitled to vote thereon. The Fund 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 Fund or as may be required by applicable law or the Fund'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 Fund. The Fund will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.
<PAGE>
INVESCO STRATEGIC PORTFOLIOS, INC.
A no-load mutual fund seeking
appreciation of capital.
PROSPECTUS
February 29, 1996
To receive general information and prospectuses on any of the INVESCO funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line (PAL), call:
1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor^
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, please visit one of our convenient Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center, 7800 East Union Avenue, Lobby Level
<PAGE>
PROSPECTUS
February 29, 1996
INVESCO STRATEGIC UTILITIES PORTFOLIO
INVESCO Strategic Utilities Portfolio (the "Portfolio") is actively
managed to seek capital appreciation and income. The Portfolio, which is a
separate series of INVESCO Strategic Portfolios, Inc., normally invests 80% or
more of its total assets in companies principally engaged in business as public
utilities. Most of the Portfolio's holdings are in common stocks, but the
Portfolio has the flexibility to invest in other types of securities.
This prospectus provides you with the basic information you should know
before investing in the Portfolio. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Portfolio, dated February 29, 1996, has been filed with the Securities
and Exchange Commission, and is incorporated by reference into this prospectus.
To obtain a free copy, write to INVESCO Funds Group, Inc., P.O. Box 173706,
Denver, Colorado 80217-3706; or call 1-800- 525-8085.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
^CONTENTS
ESSENTIAL INFORMATION.................................................... ^ 2
ANNUAL FUND EXPENSES..................................................... ^ 3
FINANCIAL HIGHLIGHTS..................................................... ^ 4
INVESTMENT OBJECTIVE AND STRATEGY........................................ ^ 5
INVESTMENT POLICIES AND RISKS............................................ ^ 5
THE FUND AND ITS MANAGEMENT.............................................. ^ 7
FUND PRICE AND PERFORMANCE............................................... ^ 8
HOW TO BUY SHARES........................................................ ^ 9
FUND SERVICES............................................................ ^ 11
HOW TO SELL SHARES....................................................... ^ 11
TAXES, DIVIDENDS^ AND CAPITAL GAIN DISTRIBUTIONS......................... ^ 12
ADDITIONAL INFORMATION................................................... ^ 13
<PAGE>
ESSENTIAL INFORMATION
- ---------------------
Investment Goal And Strategy. INVESCO Strategic Portfolios, Inc. (the
"Fund") is a mutual fund made up of a series of individually managed portfolios.
The Utilities Portfolio described in this prospectus is actively managed to seek
capital appreciation and income. Employing a moderately aggressive investment
philosophy, the Portfolio normally invests at least 80% of total assets in the
equity securities of companies principally engaged in business in the public
utilities sector. There is no guarantee that the Portfolio will meet its
investment objective. See "Investment Objective And Strategy" and "Investment
Policies And Risks."
Designed For: Investors seeking both capital appreciation and income.
While not a complete investment program, the Portfolio may be a valuable element
of your investment portfolio. You also may wish to consider the Portfolio as
part of a Uniform Gift/Trust To Minors Account or systematic investing strategy.
The Portfolio may be a suitable investment for many types of retirement
programs, including the IRA, SEP-IRA, SARSEP, 401(k), Profit Sharing, Money
Purchase Pension, and 403(b) plans.
Time Horizon. Stock prices fluctuate on a daily basis, and the Portfolio's
price per share therefore varies daily. Potential shareholders should consider
this a medium- to long-term investment.
Risks. The Portfolio generally uses a moderately aggressive investment
strategy and may experience relatively rapid portfolio turnover. Because the
Portfolio focuses on the public utilities sector, it is subject to the economic,
regulatory and other risks associated with investments in this sector, and it
may experience greater short-term volatility than more diversified funds. Rapid
portfolio turnover may result in higher brokerage commissions and the
acceleration of taxable capital gains. The returns on foreign investments may be
influenced by currency fluctuations and other risks of investing overseas. These
policies make the Portfolio unsuitable for that portion of your savings
dedicated to preservation of capital over the short-term. See "Investment
Objective and Strategy" and "Investment Policies and Risks."
Organization and Management. The Portfolio is a series of INVESCO
Strategic Portfolios, Inc., a diversified, managed, no-load mutual fund. The
Portfolio is owned by its shareholders. The Fund employs INVESCO Funds Group,
Inc. ("IFG") (founded in 1932) to serve as investment adviser, administrator,
distributor, and transfer agent; and INVESCO Trust Company ("INVESCO Trust")
(founded in 1969) as sub-adviser.
INVESCO Trust Company ^ portfolio manager Jeffrey G. Morris has managed the
Utilities Portfolio since ^ 1996. He also manages the INVESCO Strategic
Environmental Services Portfolio and the INVESCO VIF-Utilities Portfolio.
<PAGE>
Mr. Morris earned a B.S. from Colorado State University and is a Chartered
Financial Analyst. See "The Fund And Its Management."
IFG and INVESCO Trust (collectively, "Fund Management") are part of a
global firm that managed approximately $74 billion as of June 30, 1995. The
parent company, INVESCO PLC, is based in London, with money managers located in
Europe, North America, and the Far East.
The Fund offers all of the following services at no charge:
----------------------------------------------------------
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans, such as EasiVest (the Fund's
automatic monthly investment program), Direct Payroll
Purchase, and Automatic Monthly Exchange
Periodic withdrawal plans
See "How To Buy Shares" and "How To Sell Shares."
Minimum Initial Investment: $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans.
Minimum Subsequent Investment: $50. (Minimums are lower for certain
retirement plans.)
ANNUAL FUND EXPENSES
- --------------------
Utilities Portfolio is 100% no-load; there are no fees to purchase,
exchange or redeem shares.
Like any company, the Portfolio has operating expenses -- such as
portfolio management, accounting, shareholder servicing, maintenance of
shareholder accounts, and other expenses. These expenses are paid from the
Portfolio's assets. Lower expenses benefit investors by increasing the
Portfolio's total return.
We calculate annual operating expenses as a percentage of the Portfolio's
average annual net assets. To keep expenses competitive, IFG voluntarily absorbs
certain Portfolio expenses.
<PAGE>
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fee (after expense limitation) 0.75%
12b-1 Fees None
Other Expenses (after absorbed expenses)(1) 0.43%
Total Portfolio Operating Expenses
(after absorbed expenses)(1) 1.18%
(1) Ratio reflects total expenses, less absorbed expenses by IFG, prior to any
expense offset (as described below). In the absence of the voluntary expense
limitation, the Portfolio's "Other Expenses" and "Total Portfolio Operating
Expenses" would have been 0.55% and 1.30%, respectively, based on the
Portfolio's actual expenses for the fiscal year ended October 31, 1995. ^
Portions of the brokerage commissions paid by the Portfolio were used to reduce
portfolio expenses, and the Portfolio's custodian fees were reduced under an
expense offset arrangement. However, as a result of a new requirement, the
figures shown above do not reflect these reductions. In comparing expenses for
different years, please note that the Ratios of Expenses to Average Net Assets
shown under "Financial Highlights" do reflect any reductions for periods prior
to the fiscal year ended October 31, 1995.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
the Portfolio's assets, and are deducted from the amount of income available for
distribution to shareholders; they are not charged directly to shareholder
accounts.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$12 $38 $65 $144
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR EXPENSES,
AND ACTUAL ANNUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
For more information on the Portfolio's expenses, see "The Fund and Its
Management" and "How to Buy Shares -- Distribution Expenses."
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
(For a Fund Share Outstanding Throughout Each Period)
The following information has been audited by Price Waterhouse LLP, independent
accountants. This information should be read in conjunction with the audited
financial statements and the independent accountant's report appearing in the
Fund's 1995 Annual Report to Shareholders, which is incorporated by reference
into the Statement of Additional Information. Both are available without charge
by contacting IFG at the address or telephone number on the cover of this
prospectus. The Annual Report also contains more information about the Fund's
performance.
<TABLE>
<CAPTION>
Period
Ended
October
Year Ended October 31 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986^
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Utilities Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 9.76 $12.80 $10.10 $ 9.95 $ 8.35 $ 9.39 $ 8.59 $ 8.05 $ 8.74 $ 8.00
----------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income 0.44 0.33 0.29 0.27 0.39 0.32 0.39 0.40 0.39 0.06
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) 0.84 (1.12) 2.71 0.92 1.58 (1.04) 1.51 0.54 (0.68) 0.75
----------------------------------------------------------------------------------------
Total from Investment
Operations 1.28 (0.79) 3.00 1.19 1.97 (0.72) 1.90 0.94 (0.29) 0.81
----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.43 0.25 0.30 0.26 0.37 0.32 0.38 0.40 0.39 0.06
Distributions from
Capital Gains 0.00 2.00 0.00 0.78 0.00 0.00 0.72 0.00 0.01 0.01
----------------------------------------------------------------------------------------
Total Distributions 0.43 2.25 0.30 1.04 0.37 0.32 1.10 0.40 0.40 0.07
----------------------------------------------------------------------------------------
Net Asset Value -
End of Period $10.61 $ 9.76 $12.80 $10.10 $ 9.95 $ 8.35 $ 9.39 $ 8.59 $ 8.05 $8.74
========================================================================================
TOTAL RETURN 13.48% (7.22%) 29.88% 12.04% 23.98% (7.82%) 22.40% 12.16% (3.41%) 10.05%*
RATIOS
Net Assets - End of Period
($000 Omitted) $134,468 $139,579 $181,738 $107,561 $69,267 $30,730 $23,955 $18,407 $16,111 $7,522
Ratio of Expenses to
Average Net Assets# 1.18%@ 1.13% 1.06% 1.13% 1.21% 1.26% 1.35% 1.39% 1.39% 1.50%~
Ratio of Net Investment
Income to Average
Net Assets# 4.47% 3.33% 2.66% 2.73% 4.19% 3.48% 4.07% 4.93% 5.07% 4.06%~
Portfolio Turnover Rate 185% 180% 202% 226% 151% 264% 220% 164% 84% 69%*
<PAGE>
<FN>
^ From June 2, 1986, commencement of operations, to October 31, 1986.
* These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
years ended October 31, 1995 and 1994. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 1.30% and
1.14%, respectively, and ratio of net investment income to average net assets
would have been 4.34% and 3.32%, respectively.
@ Ratio reflects ^ Total Expenses, less absorbed expenses by IFG, prior to any
expense offset.
~ Annualized
[/FN]
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
- ---------------------------------
The Utilities Portfolio, which is a separate series of the Fund, seeks
capital appreciation and income. This investment objective is fundamental and
cannot be changed without the approval of the Portfolio's shareholders. The
investment strategy is moderately aggressive; holdings are focused on equity
securities whose price appreciation is expected to outpace that of the overall
market for public utility securities. The Portfolio normally invests at least
80% of its total assets in the equity securities (common and preferred stocks,
and convertible bonds) of companies principally engaged in business in the
public utilities sector. There is no assurance that the Portfolio's investment
objective will be met.
In determining whether a company is principally engaged in the utilities
sector, Fund Management must determine that the company derives more than 50% of
its gross income or net sales from activities in the public utilities sector; or
that the company dedicates more than 50% of its assets to the production of
revenues from public utilities; or, if based on available financial information,
a question exists whether a company meets one of these standards, Fund
Management determines that the company's primary business is within the public
utilities sector.
The remainder of the Portfolio's assets may be invested in any securities
or other instruments deemed appropriate by Fund Management, consistent with the
Portfolio's investment policies and restrictions. These investments include debt
securities issued by companies principally engaged in the public utilities
sector, debt or equity securities issued by companies outside the public
utilities sector, short-term high grade debt obligations maturing no later than
one year from the date of purchase (including U.S. government and agency
securities, domestic bank certificates of deposit, commercial paper rated at
least A-2 by Standard & Poor's or P-2 by Moody's Investors Service, Inc., and
repurchase agreements), and cash.
The Portfolio is actively traded. Economic conditions and market
circumstances vary from day to day; securities may be bought and sold relatively
frequently as their suitability as a portfolio holding changes.
When Fund Management believes market or economic conditions are adverse,
the Portfolio may act defensively -- that is, temporarily invest up to 100% of
its total assets in short-term high grade debt obligations as described above or
cash, seeking to protect its assets until conditions stabilize.
<PAGE>
INVESTMENT POLICIES AND RISKS
- -----------------------------
Industry Concentration. The Portfolio's holdings normally will be
concentrated in the public utilities sector. This sector includes companies that
manufacture, produce, generate, transmit or sell gas or electricity, as well as
communications firms, such as telephone, telegraph, satellite, microwave, and
other media (excluding broadcasting).
Difficulties in obtaining adequate financing and investment return,
environmental issues, prices of fuel for electric generation, availability of
natural gas, and risks associated with nuclear power facilities may each
adversely affect the market value of the Portfolio's holdings at different
times. Compared to the broad market, the public utilities sector may be more
strongly affected by changes in the economic climate; broad market shifts; moves
in a particular, dominant stock; or regulatory changes. Investors should be
prepared for volatile short-term movement in net asset value. The Portfolio
attempts to reduce these risks by diversifying its investments among many
individual securities; further, the Portfolio may not invest more than 5% of its
total assets in the securities of any one issuer (other than obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities).
However, of itself, an investment in the Portfolio does not constitute a
balanced investment program.
Equity Securities. The equity securities in which the Portfolio invests
may be issued by either established, well- capitalized companies, or
newly-formed small capitalization ("small cap") companies. These securities may
be traded on national, regional or foreign stock exchanges or in the
over-the-counter market. Small cap companies frequently have limited operating
histories, product lines and financial and managerial resources, and may face
intense competitive pressures from larger companies. The market prices of small
cap stocks may be more volatile than the stocks of larger companies both because
they typically trade in lower volumes and because small cap firms may be more
vulnerable to changes in their earnings and prospects.
Foreign Securities. Up to 25% of the Portfolio's total assets, measured at
the time of purchase, may be invested in foreign securities. Securities of
Canadian issuers and American Depository Receipts ("ADRs") are not subject to
this 25% limitation. Investments in foreign securities involve certain risks.
For U.S. investors, the returns on foreign debt securities are influenced
not only by the returns on the foreign investments themselves, but also by
currency fluctuations. That is, when the U.S. dollar generally rises against
foreign currencies, returns on foreign securities for a U.S. investor may
decrease. By contrast, in a period when the U.S. dollar generally declines,
those returns may increase.
<PAGE>
Other aspects of international investing to consider include:
-less publicly available information than is generally available about U.S.
issuers;
-differences in accounting, auditing and financial reporting standards;
-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility of the Portfolio experiencing difficulties in pursuing legal
remedies and collecting judgments.
ADRs represent shares of a foreign corporation held by a U.S. bank that
entitle the holder to all dividends and capital gains. ADRs are denominated in
U.S. dollars and trade in the U.S. securities markets. ADRs are subject to some
of the same risks as direct investments in foreign securities, including the
risk that material information about the issuer may not be disclosed in the
United States and the risk that currency fluctuations may adversely affect the
value of the ADR.
In order to hedge against fluctuations in foreign exchange rates, the
Portfolio may enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts"). Forward contracts and their risks are
discussed under "Investment Policies and Restrictions" in the Statement of
Additional Information.
Illiquid and Rule 144A Securities. The Portfolio may invest up to 10% of
its total assets, measured at the time of purchase, in illiquid securities,
including securities that are subject to restrictions on resale and securities
that are not readily marketable. Investments in illiquid securities are subject
to the risk that the Portfolio may not be able to dispose of a security at the
time desired or at a reasonable price, or may have to bear the expense and delay
of registering the security in order to resell it. The Portfolio's investments
in restricted securities may include securities that may be resold to
institutional investors ("Rule 144A Securities"). The liquidity of Rule 144A
Securities could be impaired if dealers or institutional investors become
<PAGE>
uninterested in purchasing them. For more information concerning
Rule 144A Securities, see "Investment Policies and Restrictions" in the
Statement of Additional Information.
Securities Lending. The Portfolio may seek to earn additional income by
lending securities to qualified brokers, dealers, banks, or other financial
institutions, on a fully collateralized basis. For further information on this
policy, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
Repurchase Agreements. The Portfolio may invest money, for as short a time
as overnight, using repurchase agreements ("repos"). With a repo, the Portfolio
buys a debt instrument, agreeing simultaneously to sell it back to the prior
owner at an agreed-upon price. The Portfolio could incur costs or delays in
seeking to sell the instrument, if the prior owner defaults on its repurchase
obligation. To reduce that risk, securities that are the subject of the
repurchase agreement will be maintained with the Fund's custodian in an amount
at least equal to the repurchase price under the agreement (including accrued
interest). These agreements are entered into only with member banks of the
Federal Reserve System, registered broker-dealers, and registered U.S.
government securities dealers that are deemed creditworthy under standards
established by the Fund's board of directors.
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover. The Portfolio does not trade for short-term profit; however, at the
discretion of Fund Management, securities may be sold regardless of how long
they have been held when investment considerations warrant such action. The
portfolio turnover rate of the Portfolio therefore may be higher than some other
mutual funds with the same investment objective. This policy also may result in
greater brokerage commissions and acceleration of capital gains which are
taxable when distributed to shareholders. The Statement of Additional
Information includes an expanded discussion of the Portfolio's portfolio
turnover rate, its brokerage practices and certain federal income tax matters.
For a further discussion of risks associated with an investment in the
Portfolio, see "Investment Policies and Restrictions" and "Investment Practices"
in the Statement of Additional Information.
Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, may not be altered without the approval of
the Portfolio's shareholders. For example, the Portfolio may not borrow money
except from banks for temporary or emergency purposes (but not for investment)
in an amount not to exceed 10% of its net assets. In addition, except for the
Portfolio's policies regarding investments in foreign securities and foreign
currencies, the investment objective and policies described in this prospectus
under "Investment Objective and Strategy" and "Investment Policies and Risks"
are fundamental and may not be changed without a vote of the Portfolio's
shareholders.
<PAGE>
THE FUND AND ITS MANAGEMENT
- ---------------------------
The Fund is a no-load mutual fund, registered with the Securities and
Exchange Commission as a diversified, open-end management investment company. It
was incorporated on August 10, 1983, under the laws of Maryland.
The Fund's board of directors has responsibility for overall supervision
of the Fund, and reviews the services provided by the adviser and sub-adviser.
Under an agreement with the Fund, INVESCO Funds Group, Inc. ("IFG"), 7800 E.
Union Avenue, Denver, Colorado 80237, serves as investment manager for the
Portfolio; it is primarily responsible for providing the Fund with various
administrative services. IFG's wholly-owned subsidiary, INVESCO Trust Company
("INVESCO Trust"), is the Fund's sub-adviser and is primarily responsible for
managing the Portfolio's investments. Together, IFG and INVESCO Trust constitute
"Fund Management."
^ Jeffrey G. Morris began serving as portfolio manager for Utilities
Portfolio ^ in 1996 and is primarily responsible for the day-to-day management
of the ^ Portfolio's holdings. Mr. Morris also manages the INVESCO Strategic
Environmental Services Portfolio and the INVESCO VIF - Utilities Portfolio. ^
Mr. Morris joined INVESCO in 1991 and served as a research analyst from 1994 to
1995. Previously, he was a loan processor for Norwest Mortgage (1991). He earned
a B.S. from Colorado State University and is a Chartered Financial Analyst.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires Fund Management's personnel to conduct
their personal investment activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients. See
the Statement of Additional Information for more detailed information.
The Portfolio pays IFG a monthly management fee which is based upon a
percentage of its average net assets determined daily. The management fee is
computed at the annual rate of 0.75% on the first $350 million of average net
assets; 0.65% on the next $350 million; and 0.55% on average net assets over
$700 million. While the portion of the management fee that is equal to 0.75% of
the Portfolio's average net assets is higher than the management fees incurred
by most other mutual funds, it is not higher than the management fees paid by
most other utility funds. For the fiscal year ended October 31, 1995, the
Portfolio paid fees equal to 0.75% of its average net assets.
<PAGE>
Out of these advisory fees received from the Portfolio, IFG paid to INVESCO
Trust as a sub-advisory fee an amount equal to 0.25% of the Portfolio's average
net assets. No fee is paid by any Portfolio to INVESCO Trust.
Under a Transfer Agency Agreement, IFG acts as registrar, transfer agent,
and dividend disbursing agent for the Fund. The Fund pays an annual fee of
$14.00 per shareholder account or omnibus account participant for these
services. Registered broker-dealers, third party administrators of tax-qualified
retirement plans and other entities, including affiliates of IFG, may provide
equivalent services to the Fund. In these cases, IFG may pay, out of the fee it
receives from the Fund, an annual sub-transfer agency or record-keeping fee to
the third party.
In addition, under an Administrative Services Agreement, IFG handles
additional administrative, record-keeping, and internal sub-accounting services
for the Portfolio. For the fiscal year ended October 31, 1995, the Portfolio
paid IFG a fee for these services equal to 0.02% of the Portfolio's average net
assets.
The Portfolio's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of the Portfolio (prior to
expense offset) for the fiscal year ended October 31, 1995, including investment
management fees (but excluding brokerage commissions, which are a cost of
acquiring securities), amounted to 1.18% of the Portfolio's average net assets.
Certain Portfolio expenses are absorbed voluntarily by IFG pursuant to a
commitment to the Fund. This commitment may be changed following consultation
with the Fund's board of directors. In the absence of this voluntary expense
limitation, the total operating expenses of the Portfolio for the year ended
October 31, 1995, would have been 1.30% of the Portfolio's average net assets.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. The Portfolio may place orders for portfolio
transactions with qualified ^ broker-dealers which recommend the Portfolio, or
sell shares of the Portfolio, to clients, or act as agent in the purchase of
Portfolio shares for clients, if Fund Management believes that the quality of
the execution of the transaction and level of commission are comparable to those
available from other qualified brokerage firms. For further information, see
"Investment Practices - Placement of Portfolio Brokerage" in the Statement of
Additional Information.
The parent company for IFG and INVESCO Trust is INVESCO PLC, a publicly
traded holding company whose subsidiaries provide investment services around the
world. IFG was established in 1932 and, as of October 31, 1995, managed 14
mutual funds, consisting of 38 separate portfolios, with combined assets of
approximately $11.1 billion on behalf of over 784,000 shareholders. INVESCO
Trust (founded in 1969) served as adviser or sub-adviser to 41 investment
portfolios as of October 31, 1995, including 27 portfolios in the INVESCO Group
<PAGE>
These 41 portfolios had aggregate assets of approximately $10.3 billion as
of October 31, 1995. In addition, INVESCO Trust provides investment management
services to private clients, including employee benefit plans that may be
invested in a collective trust sponsored by INVESCO Trust.
FUND PRICE AND PERFORMANCE
- --------------------------
Determining Price. The value of your investment in the Portfolio will vary
daily. The price per share is also known as the Net Asset Value (NAV). IFG
prices the Portfolio every day that the New York Stock Exchange is open, as of
the close of regular trading (normally, 4:00 p.m., New York time). NAV is
calculated by adding together the current market value of the Portfolio's
assets, including accrued interest and dividends; then subtracting liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of shares outstanding.
Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise the Portfolio's total return for one-, five-, and
ten-year periods (or since inception). Total return figures show the rate of
return on a $1,000 investment in the Portfolio, assuming reinvestment of all
dividends and capital gain distributions for the period cited. Cumulative total
return shows the actual rate of return on an investment; average annual total
return represents the average annual percentage change of an investment. Both
cumulative and average annual total returns tend to "smooth out" fluctuations in
the Portfolio's investment results, not showing the interim variations in
performance over the periods cited. More information about the Portfolio's
recent and historical performance is contained in the Fund's Annual Report to ^
Shareholders. You can get a free copy by calling or writing to IFG using the
phone number or address on the cover of this prospectus.
When we quote mutual fund rankings published by Lipper Analytical
Services, Inc., we may compare the Portfolio to others in the Utility Fund
category or to the broad-based Lipper general fund groupings. These rankings
allow you to compare the Portfolio to its peers. Other independent financial
media also produce performance- or service-related comparisons, which you may
see in our promotional materials. For more information see "Fund Performance" in
the Statement of Additional Information.
Performance figures are based on historical investment results and are not
intended to suggest future performance.
HOW TO BUY SHARES
- -----------------
The ^ chart on page 10 shows several convenient ways to invest in the
Portfolio. Your new Portfolio shares will be priced at the NAV next determined
after your order is received in proper form. There is no charge to invest,
exchange, or redeem shares when you make transactions directly through IFG.
<PAGE>
However, if you invest in the Portfolio through a securities broker, you
may be charged a commission or transaction fee. IFG may from time to time make
payments from its revenues to securities dealers and other financial
institutions that provide distribution-related and/or administrative services
for the Fund. For all new accounts, please send a completed application form.
Please specify which Portfolio you wish to purchase.
Fund Management reserves the right to reduce or waive the minimum
investment requirements in its sole discretion, where it determines this action
is in the best interests of the Fund. Further, Fund Management reserves the
right in its sole discretion to reject any order for the purchase of Portfolio
shares (including purchases by exchange) when, in its judgment, such rejection
is in ^ the Portfolio's best interests.
================================================================================
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
By Check $1,000 for regular If your check does
Mail to: account; not clear, you will
INVESCO Funds $250 for an be responsible for
Group, Inc. Individual any related loss
P.O. Box 173706 Retirement Account; the Portfolio or
Denver, CO 80217- $50 minimum for IFG incurs. If you
3706. each subsequent are already a
Or you may send investment. shareholder in the
your check by INVESCO funds, the
overnight courier Portfolio may seek
to: 7800 E. Union reimbursement from
Ave., your existing
Denver, CO 80237. account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or $1,000. Payment must be
Wire received within 3
Call 1-800-525-8085 business days, or
to request your the transaction may
purchase. Then send be cancelled. If a
your check by telephone purchase
overnight courier is cancelled due to
to our street nonpayment, you
address: will be responsible
7800 E. Union Ave., for any related
Denver, CO 80237. loss the Portfolio
Or you may transmit or IFG incurs. If
your payment by you are already a
bank wire (call IFG shareholder in the
for instructions). INVESCO funds, the
Portfolio may seek
reimbursement from your
existing account(s) for
any loss incurred.
<PAGE>
- --------------------------------------------------------------------------------
With EasiVest or $50 per month for Like all regular
Direct Payroll EasiVest; $50 per investment plans,
Purchase pay period for neither EasiVest
You may enroll on Direct Payroll nor Direct Payroll
the fund Purchase. You may Purchase ensures a
application, or start or stop your profit or protects
call us for the regular investment against loss in a
correct form and plan at any time, falling market.
more details. with two weeks' Because you'll
Investing the same notice to IFG. invest continually,
amount on a monthly regardless of
basis allows you to varying price
buy more shares levels, consider
when prices are low your financial
and fewer shares ability to keep
when prices are buying through low
high. This "dollar- price levels. And
cost averaging" may remember that you
help offset market will lose money if
fluctuations. Over you redeem your
a period of time, shares when the
your average cost market value of all
per share may be your shares is less
less than the than their cost.
actual average
price per share.
- --------------------------------------------------------------------------------
By PAL $1,000. Be sure to write
Your "Personal down the
Account Line" is confirmation number
available for provided by PAL.
subsequent Payment must be
purchases and received within 3
exchanges 24-hours business days, or
a day. Simply call the transaction may
1-800-424-8085. be cancelled. If a
telephone purchase is
cancelled due to
nonpayment, you will be
responsible for any
related loss the Fund or
IFG incurs. If you are
already a shareholder in
the INVESCO funds, the
Fund may seek
reimbursement from your
existing account(s) for
any loss incurred.
<PAGE>
- --------------------------------------------------------------------------------
By Exchange $1,000 to open a See "Exchange
Between this and new account; $50 Privilege^," page
another of the for written 9.
INVESCO funds. Call requests to
1-800-525-8085 for purchase additional
prospectuses of shares for an
other INVESCO existing account.
funds. You may also (The exchange
establish an minimum is $250 for
Automatic Monthly purchases requested
by telephone.)
Exchange service
between two INVESCO
funds; call IFG for
further details and
the correct form.
================================================================================
Exchange Privilege. You may exchange your shares in this Portfolio for
those in another Fund Portfolio or INVESCO fund, on the basis of their
respective net asset values at the time of the exchange. Before making any
exchange, be sure to review the prospectuses of the funds involved and consider
their differences.
Please note these policies regarding exchanges of fund shares:
1) The fund accounts must be identically registered.
2) You may make four exchanges out of each fund during each
calendar year.
3) An exchange is the redemption of shares from one fund 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, your account is tax-deferred).
4) The Fund reserves the right to reject any exchange
request, or to modify or terminate exchange privileges,
in the best interests of the Fund and its shareholders.
Notice of all such modifications or termination will be
given at least 60 days prior to the effective date of the
change in privilege, except for unusual instances (such
as when redemptions of the exchanged shares are suspended
under Section 22(e) of the Investment Company Act of
1940, or when sales of the fund into which you are
exchanging are temporarily stopped).
FUND SERVICES
- -------------
Shareholder Accounts. IFG will maintain a share account that reflects your
current holdings. Share certificates will be issued only upon specific request.
You will have greater flexibility to conduct transactions if you do not request
certificates.
<PAGE>
Transaction Confirmations. You will receive detailed confirmations of
individual purchases, exchanges, and redemptions. If you choose certain
recurring transaction plans (for instance, EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.
Investment Summaries. Each calendar quarter, shareholders receive a
written statement which consolidates and summarizes account activity and value
at the beginning and end of the period for each of their INVESCO funds.
Reinvestment of Distributions. Dividends and capital gain distributions
are automatically invested in additional fund shares at the NAV on the
ex-dividend date, unless you choose to have dividends and/or capital gain
distributions automatically reinvested in another INVESCO fund or paid by check
(minimum of $10.00).
Telephone Transactions. All shareholders may exchange and redeem Portfolio
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application, a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Portfolio
has followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephoned instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.
Retirement Plans And IRAs. Shares of the Portfolio may be purchased for
Individual Retirement Accounts (IRAs) and many types of tax-deferred retirement
plans. IFG can supply you with information and forms to establish or transfer
your existing plan or account.
HOW TO SELL SHARES
- ------------------
The ^ chart on page 12 shows several convenient ways to redeem your
Portfolio shares. Shares of the Portfolio may be redeemed at any time at its
current NAV next determined after a request in proper form is received at the
Fund's office. The NAV at the time of the redemption may be more or less than
the price you paid to purchase your shares, depending primarily upon the
Portfolio's investment performance.
Please be specific from which Portfolio you wish to redeem shares.
Shareholders have a separate account for each fund or Portfolio in which they
invest.
<PAGE>
================================================================================
Method Minimum Redemption Please Remember
================================================================================
By Telephone $250 (or, if less, This option is not
Call us toll-free full liquidation of available for
at 1-800-525-8085. the account) for a shares held in
redemption check; Individual
$1,000 for a wire Retirement Accounts
to bank of record. (IRAs).
The maximum amount
which may be
redeemed by
telephone is
generally $25,000.
These telephone
redemption
privileges may be
modified or
terminated in the
future at the
discretion of IFG.
- --------------------------------------------------------------------------------
In Writing Any amount. The If the shares to be
Mail your request redemption request redeemed are
to INVESCO Funds must be signed by represented by
Group, Inc., P.O. all registered stock certificates,
Box 173706 shareholders(s). the certificates
Denver, CO 80217- Payment will be must be sent to
3706. You may also mailed to your IFG.
send your request address of record,
by overnight or to a pre-
courier to 7800 E. designated bank.
Union Ave., Denver,
CO 80237.
- --------------------------------------------------------------------------------
By Exchange $1,000 to open a See "Exchange
Between this and new account; $50 Privilege," above.
another of the for written
INVESCO funds. Call requests to
1-800-525-8085 for purchase additional
prospectuses of shares for an
other INVESCO existing account.
funds. You may also (The exchange
establish an minimum is $250 for
automatic monthly exchanges requested
exchange service by telephone.)
between two INVESCO
funds; call IFG for
further details and
the correct form.
- --------------------------------------------------------------------------------
Periodic Withdrawal $100 per payment, You must have at
Plan on a monthly or least $10,000 total
You may call us to quarterly basis. invested with the
request the The redemption INVESCO funds, with
appropriate form check may be made at least $5,000 of
and more payable to any that total invested
information at 1- party you in the fund from
800-525-8085. designate. which withdrawals
will be made.
<PAGE>
- --------------------------------------------------------------------------------
Payment To Third Any amount. All registered
Party owners of the
Mail your request account must sign
to INVESCO Funds the request, with a
Group, Inc., P.O. signature guarantee
Box 173706 from an eligible
Denver, CO 80217- guarantor financial
3706. institution, such
as a commercial
bank or recognized
national or
regional securities
firm.
================================================================================
While the Portfolio will attempt 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.
Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances -- for instance, if normal trading is not
taking place on the New York Stock Exchange or during an emergency as defined by
the Securities and Exchange Commission. If your shares were purchased by a check
which has not yet cleared, payment will be made promptly upon clearance of the
purchase check (which may take up to 15 days).
If you participate in Easivest, the Portfolio's automatic monthly
investment program, and redeem all of the shares in your account, we will
terminate any further Easivest purchases unless you instruct us otherwise.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the ^ Portfolio reserves the right to involuntarily redeem all shares in
such account, in which case the account would be liquidated and the proceeds
forwarded to the shareholder. Prior to any such redemption, a shareholder will
be notified and given 60 days to increase the value of the account to $250 or
more.
<PAGE>
TAXES, DIVIDENDS^ AND CAPITAL GAIN DISTRIBUTIONS
- ------------------------------------------------
Taxes. The Portfolio intends to distribute to shareholders substantially
all of its net investment income, net capital gains and net gains from foreign
currency transactions, if any, in order to continue to qualify for tax treatment
as a regulated investment company. Thus, the Portfolio does not expect to pay
any federal income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and capital gain distributions in taxable income for federal, state,
and local income tax purposes. Dividends and other distributions are taxable
whether they are received in cash or automatically distributed in shares of the
Portfolio or another fund in the INVESCO group.
The Portfolio may be subject to withholding of foreign taxes on dividends
or interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Portfolio unless the Portfolio qualifies and elects
to pass these taxes through to shareholders for use by them as a foreign tax
credit or deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless you are subject to
backup withholding for other reasons, you can avoid backup withholding on your
Portfolio account by ensuring that we have a correct, certified tax
identification number.
Dividends and Capital Gain Distributions. The Portfolio may earn ordinary
or net investment income in the form of dividends and interest on its
investments. The Portfolio's policy is to distribute substantially all of this
income, less Portfolio expenses, to shareholders at the discretion of the Fund's
board of directors.
In addition, the Portfolio realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Portfolio has
a net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of distribution regardless of how long the shares have
been held. The Portfolio's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying the full purchase price, a portion of
which is then returned in the form of a taxable distribution.
<PAGE>
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending upon how long
the Portfolio held the security which gave rise to the gains. The capital gains
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 income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell their
Portfolio shares at more or less than the price originally paid.
We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Capital Gain Distributions and Taxes" in
the Statement of Additional Information.
<PAGE>
ADDITIONAL INFORMATION
- ----------------------
Voting Rights. All shares of the Portfolio and the other portfolios of the
Fund have equal voting rights based on one vote for each share owned. Voting
with respect to certain matters, such as ratification of independent accountants
and the election of directors, will be by all of the portfolios voting together.
In other cases, such as voting upon an investment advisory contract, voting is
on a portfolio-by-portfolio basis. To the extent permitted by law, when not all
portfolios are affected by a matter to be voted upon, only shareholders of the
portfolio or portfolios affected by the matter will be entitled to vote thereon.
The Fund 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 Fund or as may be
required by applicable law or the Fund'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 Fund.
The Fund will assist shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940.
<PAGE>
INVESCO STRATEGIC PORTFOLIOS, INC.
Utilities Portfolio
A no-load mutual fund seeking
capital appreciation and income.
PROSPECTUS
February 29, 1996
To receive general information and prospectuses on any of the INVESCO funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line (PAL), call:
1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
^ Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, please visit one of our convenient Investor Centers:
Cherry Creek
155-B Fillmore Street;
Denver Tech Center
7800 East Union Avenue, Lobby Level
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
February 29, 1996
INVESCO STRATEGIC PORTFOLIOS, INC.
A no-load mutual fund seeking capital appreciation through
investment in designated market sectors
Address: Mailing Address:
7800 E. Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
- --------------------------------------------------------------------------------
INVESCO STRATEGIC PORTFOLIOS, INC. (the "Fund") is a diversified, managed,
no-load mutual fund consisting of eight separate Portfolios of investments. It
seeks to provide investors with capital appreciation through the investment of
assets of its professionally managed Portfolios primarily in equity securities.
Each of the Fund's separate Portfolios concentrates its investments in
securities of companies principally engaged in the sector of business activity
designated for investment by that Portfolio. Investors may purchase shares of
any or all Portfolios. The following are available:
ENERGY Portfolio HEALTH SCIENCES Portfolio
ENVIRONMENTAL SERVICES Portfolio LEISURE Portfolio
FINANCIAL SERVICES Portfolio TECHNOLOGY Portfolio
GOLD Portfolio UTILITIES Portfolio
Additional portfolios may be offered in the future.
A Prospectus dated February 29, 1996 for all of the Portfolios of the Fund
with the exception of the Utilities Portfolio, and a separate Prospectus dated
February 29, 1996 for the Utilities Portfolio, which provide the basic
information you should know before investing in the respective Portfolios, may
be obtained without charge from INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. This Statement of Additional Information is
not a Prospectus, but contains information in addition to and more detailed than
that set forth in each Prospectus. It is intended to provide you additional
information regarding the activities and operations of the Fund and should be
read in conjunction with the Prospectus.
Investment Adviser and Distributor: INVESCO Funds Group, Inc.
<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT POLICIES AND RESTRICTIONS..................................... ^ 3
THE FUND AND ITS MANAGEMENT.............................................. ^ 9
HOW SHARES CAN BE PURCHASED.............................................. ^ 23
HOW SHARES ARE VALUED.................................................... ^ 23
FUND PERFORMANCE......................................................... ^ 25
SERVICES PROVIDED BY THE FUND............................................ ^ 27
TAX-DEFERRED RETIREMENT PLANS............................................ ^ 28
HOW TO REDEEM SHARES..................................................... ^ 28
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES.......................... ^ 29
INVESTMENT PRACTICES..................................................... ^ 31
ADDITIONAL INFORMATION................................................... ^ 35
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
- ------------------------------------
In selecting securities for investment, each Portfolio's investment adviser
attempts to identify companies that have better-than-average earnings growth
potential. The Fund seeks to purchase the securities of companies that are
thought to be best situated in the relevant industry groupings for each
Portfolio to benefit from the predicted economic environment.
Foreign Securities. The Gold and Environmental Services Portfolios may
invest in foreign securities without limitation on the percentage of assets
which may be so invested. Each of the other Portfolios (Energy, Financial
Services, Health Sciences, Leisure, Technology and Utilities) may invest up to
25% of its total assets, measured at the time of purchase, directly in foreign
securities. Securities of Canadian issuers and securities purchased by means of
American Depository Receipts ("ADRs") are not subject to this 25% limitation. As
described in the section of each Portfolio's Prospectus entitled "Investment
Policies and Risks," foreign securities involve certain risks not associated
with investment in domestic companies. Foreign companies generally are not
subject to uniform accounting, auditing, and financial reporting standards
comparable to those applicable to domestic companies. Securities of many foreign
companies may be less liquid and more volatile than securities of comparable
domestic companies. With respect to certain foreign countries, there may be a
possibility of political developments which could affect investments in those
countries. Finally, it may be more difficult for the Fund to obtain or to
enforce a judgment against a foreign issuer than against a domestic issuer. In
determining individual portfolio investments, however, the investment advisers
will carefully consider all of the above.
Securities denominated in foreign currency, whether issued by a foreign or
a domestic issuer, may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and costs will be incurred
in connection with conversions between various currencies.
Restricted/144A Securities. In recent years, a large institutional market
has developed for certain securities that are not registered under the
Securities Act of 1933 (the "1933 Act"). Institutional investors generally will
not seek to sell these instruments to the general public, but instead will often
depend on an efficient institutional market in which such unregistered
securities can readily be resold 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 is not dispositive of
the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
<PAGE>
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing a Rule 144A-eligible
security held by a Portfolio, however, could adversely affect the marketability
of such portfolio security and the Portfolio might be unable to dispose of such
security promptly or at reasonable prices.
American Depository Receipts. As discussed in the Prospectuses, the
Portfolios may invest in American Depository Receipts ("ADRs"). ADRs are
receipts representing shares of a foreign corporation held by a U.S. bank that
entitle the holder to all dividends and capital gains. ADRs are denominated in
U.S. dollars and trade in the U.S. securities markets. ADRs may be issued in
sponsored or unsponsored programs. In sponsored programs, the issuer makes
arrangements to have its securities traded in the form of ADRs; in unsponsored
programs, the issuer may not be directly involved in the creation of the
program. Although the regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, the issuers of unsponsored ADRs are
not obligated to disclose material information in the United States and,
therefore, such information may not be reflected in the market value of the
ADRs.
Forward Foreign Currency Contracts. As discussed in the section of each
Portfolio's Prospectus entitled "Investment Policies and Risks," the Fund may
enter into forward contracts, which are included in the types of instruments
sometimes known as derivatives, to purchase or sell foreign currencies as a
hedge against possible variations in foreign exchange rates. A forward foreign
currency contract is an agreement between the contracting parties to exchange an
amount of currency at some future time at an agreed upon rate. The rate can be
higher or lower than the spot rate between the currencies that are the subject
of the contract. A forward contract generally has no deposit requirement, and
such transactions do not involve commissions. By entering into a forward
contract for the purchase or sale of the amount of foreign currency invested in
a foreign security transaction, the Fund can hedge against possible variations
in the value of the dollar versus the subject currency either between the date
the foreign security is purchased or sold and the date on which payment is made
or received or during the time the Fund holds the foreign security. The Fund
will not speculate in forward currency contracts. The Fund will not attempt to
hedge all of its foreign portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by Fund management.
The Fund will not enter into a forward contract for a term of more than one
year. Investors should be aware that hedging against a decline in the value of a
currency in the foregoing manner does not eliminate fluctuations in the prices
of portfolio securities or prevent losses if the prices of such securities
decline. Furthermore, such hedging transactions preclude the opportunity for
<PAGE>
gain if the value of the hedged currency should rise. No predictions can be
made with respect to whether the total of such transactions will result in a
better or a worse position than had the Portfolio not entered into any forward
contracts. Forward contracts may, from time to time, be considered illiquid, in
which case they would be subject to the Portfolio's limitation on investing in
illiquid securities, discussed in the Prospectus.
Repurchase Agreements. As discussed in each Portfolio's Prospectus, the
Portfolios may enter into repurchase agreements with respect to debt instruments
eligible for investment by the Portfolios with member banks of the Federal
Reserve System, registered broker-dealers, and registered government securities
dealers. A repurchase agreement may be considered a loan collateralized by
securities. The resale price reflects an agreed upon interest rate effective for
the period the instrument is held by a Portfolio and is unrelated to the
interest rate on the underlying instrument. In these transactions, the
collateral securities acquired by a Portfolio (including accrued interest earned
thereon) must have a total value in excess of the value of the repurchase
agreement, and are held as collateral by the Fund's custodian bank until the
repurchase agreement is completed.
Securities Lending. Each Portfolio also may lend its securities to
qualified brokers, dealers, banks, or other financial institutions. This
practice permits the Portfolio to earn income, which, in turn, can be invested
in additional securities to pursue the Portfolio's investment objectives. Loans
of securities by a Portfolio will be collateralized by cash, letters of credit,
or securities issued or guaranteed by the U.S. government or its agencies equal
to at least 100% of the current market value of the loaned securities,
determined on a daily basis. Lending securities involves certain risks, the most
significant of which is the risk that a borrower may fail to return a portfolio
security. The Fund monitors the creditworthiness of borrowers in order to
minimize such risks. A Portfolio will not lend any security if, as a result of
the loan, the aggregate value of securities then on loan would exceed 33 1/3% of
the Portfolio's total assets (taken at market value).
Gold Bullion. As is also discussed in its Prospectus, the Gold Portfolio
may invest up to 10% of its total assets in gold bullion. The two largest
national producers of gold bullion are the Republic of South Africa and the
Commonwealth of Independent States (the former Soviet Union). Changes in
political and economic conditions affecting either country may have direct
impact on that country's sales of gold bullion. The Gold Portfolio will purchase
gold bullion from, and sell gold bullion to, banks (both U.S. and foreign) and
dealers who are members of, or affiliated with members of, a regulated U.S.
commodities exchange, in accordance with applicable investment laws. Values of
gold bullion held by the Gold Portfolio are based upon daily quotes provided by
banks or brokers dealing in such commodities.
<PAGE>
Gas and Electric Utilities. The gas and electric public utilities
industries are subject to various uncertainties, including: difficulty in
obtaining adequate returns on invested capital; frequent difficulty in obtaining
approval of rate increases by public service commissions; increased costs,
delays and restrictions as a result of environmental considerations; difficulty
and delay in securing financing of large construction projects; difficulties of
the capital markets in absorbing utility debt and equity securities;
difficulties in obtaining fuel for electric generation at reasonable prices;
difficulty in obtaining natural gas for resale; and special risks associated
with the construction and operation of nuclear power generating facilities,
including technical and cost factors of such construction and operation and the
possibility of imposition of additional governmental requirements for
construction and operation.
Investment Restrictions. As described in the section of each Portfolio's
Prospectus entitled "Investment Objective and Policies," the Fund and each of
the Portfolios operate under certain investment restrictions. These policies are
fundamental and may not be changed with respect to a particular Portfolio
without the prior approval of the holders of a majority, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act") of the outstanding
voting securities of that Portfolio. For purposes of the following limitations,
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 the
Portfolio.
Under these restrictions, neither the Fund nor any Portfolio will:
(1) issue senior securities as defined in the Investment
Company Act (except insofar as the Fund may be deemed to
have issued a senior security by reason of entering into
a repurchase agreement, or borrowing money, in accordance
with the restrictions described below, and in accordance
with the position of the staff of the Securities and
Exchange Commission set forth in Investment Company Act
Release No. 10666);
(2) mortgage, pledge or hypothecate portfolio securities or
borrow money, except borrowings from banks for temporary
or emergency purposes (but not for investment) are
permitted in an amount not exceeding 10% of total net
assets. A Portfolio will not purchase additional
securities while any borrowings on behalf of that
Portfolio exist;
(3) buy or sell commodities, commodity contracts, oil, gas or other
mineral interests or exploration programs (however, the Fund may
purchase securities of companies which in the foregoing and may
<PAGE>
enter into forward contracts for the purchase or sale of foreign
currencies, and the Gold Portfolio may invest up to 10% of its
total assets in gold bullion);
(4) purchase the securities of any company if as a result of
such purchase more than 10% of total assets would be
invested in securities which are subject to legal or
contractual restrictions on resale ("restricted
securities") and in securities for which there are no
readily available market quotations; or enter into a
repurchase agreement maturing in more than seven days,
if as a result, such repurchase agreements, together with
restricted securities and securities for which there are
not readily available market quotations, would constitute
more than 10% of total assets;
(5) sell short or buy on margin, or write, purchase or sell
puts or calls or combinations thereof;
(6) buy or sell real estate or interests therein (however, securities
issued by companies which invest in real estate or interests therein
may be purchased and sold);
(7) invest in the securities of any other investment company except for
a purchase or acquisition in accordance with a plan of
reorganization, merger or consolidation;
(8) invest in any company for the purpose of exercising
control or management;
(9) engage in the underwriting of any securities, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933
in disposing of a portfolio security;
(10) make loans to any person, except through the purchase
of debt securities in accordance with the investment
policies of the Portfolios, or the lending of portfolio
securities to broker-dealers or other institutional
investors, or the entering into repurchase agreements
with member banks of the Federal Reserve System,
registered broker-dealers and registered government
securities dealers. The aggregate value of all portfolio
securities loaned may not exceed 33-1/3% of a Portfolio's
total net assets (taken at current value). No more than
10% of a Portfolio's total net assets may be invested in
repurchase agreements maturing in more than seven days;
(11) purchase securities of any company in which any officer or director
of the Fund or its investment adviser owns more than 1/2 of 1% of
the outstanding securities of such company and in which the officers
and directors of the Fund and its investment adviser, as a group,
own more than 5% of such securities;
<PAGE>
(12) purchase securities (except obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities) if the purchase would cause a
Portfolio at the time to have more than 5% of the value
of its total assets invested in the securities of any one
issuer or to own more than 10% of the outstanding voting
securities of any one issuer;
(13) invest more than 5% of its total assets in an issuer having a
record, together with predecessors, of less than three years'
continuous operation.
In addition to the above restrictions, a fundamental policy of the
Technology Portfolio is not to invest more than 25% of its total assets (taken
at market value at the time of each investment) in the securities of issuers in
any one industry. In applying this restriction, the Technology Portfolio uses an
industry classification system based on the O'Neil Database published by William
O'Neil & Co., Inc.
In applying restriction (4) above, each Portfolio also includes illiquid
securities (those which cannot be sold in the ordinary course of business within
seven days at approximately the valuation given to them by the Fund) among the
securities subject to the 10% of total assets limit.
With respect to investment restriction (4) above, the board of directors
has delegated to the Fund's investment adviser the authority to determine that a
liquid market exists for securities eligible for resale pursuant to Rule 144A
under the 1933 Act, or any successor to such rule, and that such securities are
not subject to ^ the Fund's limitations on investing in illiquid securities and
securities for which there are no readily available market quotations. Under
guidelines established by the board of directors, the adviser will consider the
following factors, among others, in making this determination: (1) the
unregistered nature of a Rule 144A security; (2) the frequency of trades and
quotes for the security; (3) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (4) dealer
undertakings to make a market in the security; and (5) the nature of the
security and the nature of marketplace trades (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of transfer).
However, Rule 144A Securities are still subject to the Fund's limitation on
investments in restricted securities (securities for which there are legal or
contractual restrictions on resale), unless they are readily marketable outside
the United States, in which case they are not deemed to be restricted.
The Fund has given undertakings to the State of Arizona regarding various
Portfolios' investments in warrants. The Financial Services Portfolio's and the
Utilities Portfolio's investment in warrants, valued at the lower of cost or
<PAGE>
market, will not exceed 5% of the value of the Portfolio's net assets, of
which amount not more than 2% of the value of the Portfolio's net assets may be
warrants which are not listed on the New York or American Stock Exchange.
The Fund has also given the following undertakings to the State of Texas.
The Portfolios' investments in warrants, valued at the lower of cost or market,
will not exceed 5% of the value of the Portfolio's net assets, of which amount
not more than 2% of the value of the Portfolio's net assets may be warrants
which are not listed on the New York or American Stock Exchange. No Portfolio of
the Fund will buy or sell any oil, gas, or other mineral interests (including
mineral leases) or exploration programs. No Portfolio will buy or sell real
property (including limited partnership interests therein), but may buy or sell
readily marketable interests in real estate investment trusts or readily
marketable securities of companies which invest in real estate.
THE FUND AND ITS MANAGEMENT
- ---------------------------
The Fund. The Fund was incorporated under the laws of Maryland on August
10, 1983 as "Financial Strategic Portfolios, Inc." On December 2, 1994 the Fund
changed its name to INVESCO Strategic Portfolios, Inc.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), is employed as the Fund's investment adviser. INVESCO was
established in 1932 and also serves as an investment adviser to INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO
Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty
Funds, Inc., INVESCO Tax-Free Income Funds, Inc., INVESCO Value Trust, and
INVESCO Variable Investment Funds, Inc.
The Sub-Adviser. INVESCO, as investment adviser, has contracted with
INVESCO Trust Company ("INVESCO Trust") to provide investment advisory and
research services on behalf of the Portfolios. INVESCO Trust, a trust company
founded in 1969, and a wholly owned subsidiary of INVESCO, has the primary
responsibility of providing portfolio investment management services to the
Portfolios.
INVESCO is an indirect, wholly-owned subsidiary of INVESCO PLC, a publicly
traded holding company organized in 1935. Through subsidiaries located in
London, Denver, Atlanta, Boston, Louisville, Dallas, Tokyo, Hong Kong, and the
Channel Islands, INVESCO PLC provides investrment services around the world.
INVESCO was acquired by INVESCO PLC in 1982 and as of October 31, 1995 managed
<PAGE>
14 mutual funds, consisting of 38 separate portfolios, on behalf of over
784,000 shareholders. INVESCO PLC's other North American subsidiaries include
the following:
--INVESCO Capital Management, Inc. of Atlanta, Georgia manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer whose primary business is the
distribution of shares of two registered investment companies.
--INVESCO Management & Research, Inc. (formerly Gardner and Preston Moss,
Inc.), of Boston, Massachusetts, primarily manages pension and endowment
accounts.
--PRIMCO Capital Management, Inc. of Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
--INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for
providing advisory services in the U.S. real estate markets for INVESCO PLC's
clients worldwide. Clients include corporate plans, public pension funds as well
as endowment and foundation accounts.
The corporate headquarters of INVESCO PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England.
As indicated in the Prospectuses, INVESCO permits investment and other
personnel to purchase and sell securities for their own accounts in accordance
with a compliance policy governing personal investing by directors, officers and
employees of INVESCO and its North American affiliates. The policy requires
officers, inside directors, investment and other personnel of INVESCO and its
North American affiliates to pre-clear all transactions in securities not
otherwise exempt under the policy. Requests for trading authority will be denied
when, among other reasons, the proposed personal transaction would be contrary
to the provisions of the policy or would be deemed to adversely affect any
transaction then known to be under consideration for or to have been effected on
behalf of any client accounts, including the Portfolios.
In addition to the pre-clearance requirements described above, the policy
subjects officers, inside directors, investment and other personnel of INVESCO
and its North American affiliates to various trading restrictions and reporting
obligations. All reportable transactions are reviewed for compliance with the
policy. The provisions of the policy are administered by and subject to
exceptions authorized by INVESCO.
Investment Advisory Agreement. INVESCO serves as investment adviser
pursuant to an investment advisory agreement (the "Agreement") with the Fund
which was approved on April 24, 1991, by a vote cast in person by a majority of
<PAGE>
the directors of the Fund, including a majority of the directors who are
not "interested persons" of the Fund or INVESCO at a meeting called for such
purpose. The Agreement was approved by shareholders of each Portfolio of the
Fund on September 30, 1991, for an initial term expiring April 30, 1993, and has
been continued by action of the board of directors until April 30, 1996.
Thereafter, the Agreement may be continued from year to year as to each
Portfolio as long as such continuance is specifically approved at least annually
by the board of directors of the Fund, or by a vote of the holders of a
majority, as defined in the 1940 Act, of the outstanding shares of the
Portfolio. Any such continuance also must be approved by a majority of the
Fund's directors who are not parties to the Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such continuance. The Agreement may be terminated
at any time without penalty by either party upon sixty (60) days' written notice
and terminates automatically in the event of an assignment to the extent
required by the 1940 Act and the rules thereunder.
The Agreement provides that INVESCO shall manage the investment portfolios
of the Fund's Portfolios in conformity with the Portfolios' investment policies
(either directly or by delegation to a sub-adviser which may be a company
affiliated with INVESCO). Further, INVESCO shall perform all administrative,
internal accounting (including computation of net asset value), clerical,
statistical, secretarial and all other services necessary or incidental to the
administration of the affairs of the Fund excluding, however, those services
that are the subject of separate agreement between the Fund and INVESCO or any
affiliate thereof, including the distribution and sale of Fund shares and
provision of transfer agency, dividend disbursing agency, and registrar
services, and services furnished under an Administrative Services Agreement with
INVESCO discussed below. Services provided under the Agreement include, but are
not limited to: supplying the Fund with officers, clerical staff and other
employees, if any, who are necessary in connection with the Fund's operations;
furnishing office space, facilities, equipment, and supplies; providing
personnel and facilities required to respond to inquiries related to shareholder
accounts; conducting periodic compliance reviews of the Fund's operations;
preparation and review of required documents, reports and filings by INVESCO's
in-house legal and accounting staff (including the prospectus, statement of
additional information, proxy statements, shareholder reports, tax returns,
reports to the SEC, and other corporate documents of the Fund), except insofar
as the assistance of independent accountants or attorneys is necessary or
desirable; supplying basic telephone service and other utilities; and preparing
and maintaining certain of the books and records required to be prepared and
maintained by the Fund under the 1940 Act. Expenses not assumed by INVESCO are
borne by the Fund.
As full compensation for its advisory services to the Fund, INVESCO
receives a monthly fee. The fee is calculated daily at an annual rate of: 0.75%
on the first $350 million of the average net assets of each Portfolio of the
<PAGE>
Fund; 0.65% on the next $350 million of the average net assets of each
Portfolio of the Fund; and 0.55% of each Portfolio's average net assets in
excess of $700 million. The advisory fee is calculated daily at the applicable
annual rate and paid monthly. While the portions of INVESCO's fees which are
equal to 0.75% of the net assets are higher than those generally charged by
investment advisers to mutual funds, they are not higher than those charged by
most other investment advisers to funds comparable to the Portfolios of the
Fund, whose assets are primarily invested in securities of companies principally
engaged in the sector or business activity designated for investment by each
Portfolio.
Certain states in which the shares of the Fund are qualified for sale
currently impose limitations on the expenses of the Fund. At the date of this
Statement of Additional Information, the most restrictive state-imposed annual
expense limitation requires that INVESCO absorb the amount necessary to prevent
each Portfolio's aggregate ordinary operating expenses (excluding interest,
taxes, brokerage fees and commissions, and extraordinary charges such as
litigation costs) from exceeding in any fiscal year 2.5% of a Portfolio's first
$30,000,000 of average net assets, 2.0% of the next $70,000,000 of average net
assets and 1.5% of the remaining average net assets. No payment of the
investment advisory fee will be made to the investment adviser which would
result in any Portfolio's expenses exceeding on a cumulative annualized basis
this state limitation. During the past year, INVESCO did not absorb any amounts
under this provision.
Sub-Advisory Agreements. INVESCO Trust serves as sub-adviser to all of the
Portfolios pursuant to a sub-advisory agreement (the "Sub-Agreement") with
INVESCO which was approved on April 24, 1991, by a vote cast in person by a
majority of the directors of the Fund, including a majority of the directors who
are not "interested persons" of the Fund, INVESCO, or INVESCO Trust at a meeting
called for such purpose. The Sub-Agreement was approved on September 30, 1991,
by the shareholders of each of the Portfolios for an initial term expiring April
30, 1993, and has been continued by action of the board of directors until April
30, 1996. Thereafter, the Sub- Agreement may be continued from year to year as
to each Portfolio as long as such continuance is specifically approved by the
board of directors of the Fund, or by a vote of the holders of a majority, as
defined in the 1940 Act, of the outstanding shares of the Portfolio. Each such
continuance also must be approved by a majority of the directors who are not
parties to the Sub-Agreement or interested persons (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such continuance. The Sub-Agreement may be terminated at any time without
penalty by either party or the Fund upon sixty (60) days' written notice, and
terminate automatically in the event of an assignment to the extent required by
the 1940 Act and the rules thereunder.
<PAGE>
The Sub-Agreement provides that INVESCO Trust, subject to the supervision
of INVESCO, shall manage the investment portfolios of the Portfolios in
conformity with each such Portfolio's investment policies. These management
services would include: (a) managing the investment and reinvestment of all the
assets, now or hereafter acquired, of the Portfolios, and executing all
purchases and sales of portfolio securities; (b) maintaining a continuous
investment program for the Fund's Portfolios, consistent with (i) the Fund's
Portfolios' investment policies as set forth in the Fund'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 Fund, as from time to time amended and in use
under the 1933 Act, and (ii) the Fund'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 Portfolio, unless otherwise
directed by the directors of the Fund or INVESCO, and executing transactions
accordingly; (d) providing each Portfolio 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) determining
what portion of each Portfolio should be invested in the various types of
securities authorized for purchase by such Portfolio; and (f) making
recommendations as to the manner in which voting rights, rights to consent to
Fund action and any other rights pertaining to the portfolio securities of each
Portfolio shall be exercised.
The Sub-Agreement with INVESCO Trust provides that as compensation for its
services, INVESCO Trust shall receive from INVESCO, at the end of each month, a
fee based upon the average daily value of the Portfolios' average net assets at
the following annual rates: 0.25% on the first $200 million of each Portfolio's
average net assets, and 0.20% of each Portfolio's average net assets in excess
of $200 million. The Sub-Advisory fee is paid by INVESCO, NOT the Fund's
Portfolios.
Administrative Services Agreement. INVESCO, either directly or through
affiliated companies, also provides certain administrative, sub-accounting, and
recordkeeping services to the Fund pursuant to an Administrative Services
Agreement dated April 30, 1993 (the "Administrative Agreement"). The
Administrative Agreement was approved on April 21, 1993, by a vote cast in
person by all of the directors of the Fund, including all of the directors who
are not "interested persons" of the Fund or INVESCO at a meeting called for such
purpose. The Administrative Agreement was for an initial term of one year and
has been continued by action of the board of directors until April 30, 1996.
Thereafter, the Administrative Agreement may be continued from year to year as
long as each such continuance is specifically approved by the board of directors
of the Fund, including a majority of the directors who are not parties to the
<PAGE>
Administrative Agreement or interested persons (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such continuance. The Administrative Agreement may be terminated at any time
without penalty by INVESCO on sixty (60) days' written notice, or by the Fund
upon thirty (30) days' written notice, and terminates automatically in the event
of an assignment unless the Fund's board of directors approves such assignment.
The Administrative Agreement provides that INVESCO shall provide the
following services to the Fund: (A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Fund; and (B) such sub-accounting, recordkeeping, and administrative services
and functions 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 Agreement, the Fund pays a fee to INVESCO
consisting of a base fee of $10,000 per year per Portfolio, plus an additional
incremental fee computed daily and paid monthly, by each Portfolio, at an annual
rate of 0.015% of the average net assets of the Portfolio.
Transfer Agency Agreement. INVESCO also performs transfer agent, dividend
disbursing agent, and registrar services for the Fund pursuant to a Transfer
Agency Agreement, which was approved by the board of directors of each Portfolio
of the Fund, including a majority of the Fund's directors who are not parties to
the Transfer Agency Agreement or "interested persons" of any such party, in
April 1991, for a term of one year. The Transfer Agency Agreement has been
continued by action of the board of directors until April 30, 1996, and
thereafter may be continued from year to year as to each Portfolio as long as
such continuance is specifically approved at least annually by the board of
directors of the Fund, or by a vote of the holders of a majority of the
outstanding shares of the Portfolio. Any such continuance must also be approved
by a majority of the Fund's directors who are not parties to the Transfer Agency
Agreement or interested persons (as defined by the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such
continuance. The Transfer Agency Agreement may be terminated at any time without
penalty by either party upon sixty (60) days' written notice and terminates
automatically in the event of assignment.
The Transfer Agency Agreement provides that the Fund shall pay to INVESCO
a fee of $14.00 per shareholder account or omnibus account participant per year.
This fee is paid monthly at 1/12 of the annual fee and is based upon the actual
number of shareholder accounts and omnibus account participants in existence
during each month.
Set forth below is a table showing the advisory fees, transfer agency fees
and administrative fees paid by each of the Fund's Portfolios for the fiscal
years ended October 31, 1995, 1994, and 1993.
<PAGE>
<TABLE>
<CAPTION>
Year Ended October 31, 1995 Year Ended October 31, 1994 Year Ended October 31, 1993
--------------------------- --------------------------- ---------------------------
Adminis- Adminis- Adminis-
Transfer trative Transfer trative Transfer trative
Advisory Agency Services Advisory Agency Services Advisory Agency Services
^ Fees Fees(1) Fees Fees Fees Fees Fees Fees Fees
--------- --------- -------- ---------- --------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Energy $454,001 $304,482 $19,080 $441,225 $194,559 $18,824 $393,342 $104,903 $17,867
Environmental
Services(2) 234,331 250,666 14,686 377,534 202,954 17,551 199,497 126,176 13,990
Financial
Services 2,128,548 1,083,492 52,704 2,263,193 876,890 55,272 2,756,422 684,471 66,232
Gold 1,544,711 826,471 40,898 2,271,031 546,153 55,432 1,310,881 275,920 36,223
Health
Sciences 4,221,937 1,991,219 99,730 3,612,598 1,722,908 85,291 4,286,232 1,738,040 101,300
Leisure 2,063,891 1,099,340 51,278 2,114,155 773,534 52,285 1,120,218 369,109 32,404
Technology 3,210,186 1,236,694 76,216 1,936,283 726,596 48,725 1,666,457 513,346 43,329
Utilities(2) 952,421 481,868 29,048 1,118,503 350,954 32,370 1,073,539 235,743 31,471
---------- ---------- -------- ---------- ---------- -------- ---------- ---------- --------
Totals $14,810,026 $7,274,232 $383,640 $14,134,522 $5,394,548 $365,750 $12,806,588 $4,047,708 $342,816
<FN>
(1) Includes amounts earned as credits by the Portfolios from security brokerage
transactions under certain broker/service arrangements with third parties.
(2) These amounts do not reflect the voluntary expense limitations applicable to
the Environmental Services and Utilities Portfolios described in the Portfolios'
Prospectuses.
</FN>
</TABLE>
<PAGE>
Officers and Directors of the Fund. The overall direction and supervision
of the Fund is the responsibility of the board of directors, which has the
primary duty of seeing that the Fund's general investment policies and programs
of the Fund are carried out and that the Fund's Portfolios are properly
administered. The officers of the Fund, all of whom are officers and employees
of, and are paid by, INVESCO, are responsible for the day-to-day administration
of the Fund. The investment adviser for each Portfolio has the primary
responsibility for making investment decisions on behalf of that Portfolio.
These investment decisions are reviewed by the investment committee of INVESCO.
All of the officers and directors of the Fund hold comparable positions
with INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO
Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income
Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International Funds,
Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc.,
INVESCO Specialty Funds, Inc., INVESCO Tax-Free Income Funds, Inc., and INVESCO
Variable Investment Funds, Inc. All of the directors of the Fund also serve as
trustees of INVESCO Value Trust. In addition, all of the directors of the Fund
also are: with the exception of Messrs. Hesser and Sim, directors of INVESCO
Advisor Funds, Inc. and trustees of INVESCO Treasurer's Series Trust. All of the
officers of the Fund also hold comparable positions with INVESCO Value Trust.
Set forth below is information with respect to each of the Fund's officers and
directors. Unless otherwise indicated, the address of the directors and officers
is Post Office Box 173706, Denver, Colorado 80217-3706. Their affiliations
represent their principal occupations during the past five years.
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of INVESCO PLC, London, England, and of subsidiaries thereof; Chairman
of the Board of INVESCO Advisor Funds, Inc., INVESCO Treasurer's Series Trust
and The Global Health Sciences Fund. Address: 1315 Peachtree Street, NE,
Atlanta, Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of INVESCO
Advisor Funds, Inc. and INVESCO Treasurer's Series Trust. Trustee of The Global
Health Sciences Fund. Formerly, Chairman of the Executive Committee and Chairman
of the Board of Security Life of Denver Insurance Company, Denver, Colorado;
Director ^ of ING America Life^ Insurance ^ Company, Urbaine Life Insurance
Company and Midwestern United Life Insurance Company. Address: Security Life
Center, 1290 Broadway, Denver, Colorado. Born: January 12, 1928.
DAN J. HESSER,+* President and Director. Chairman of the Board, President,
and Chief Executive Officer of INVESCO Funds Group, Inc., and Director of
INVESCO Trust Company. Trustee of The Global Health Sciences Fund. Born:
December 27, 1939.
<PAGE>
VICTOR L. ANDREWS,** Director. ^ Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance at Georgia State
University, Atlanta, Georgia^; 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. Dr. Andrews is also a director
of the Southeastern Thrift and Bank Fund, Inc. and The Sheffield Funds, Inc.
Address: ^ 4625 Jettridge Drive, Atlanta, Georgia. Born: June 23, 1930.
BOB R. BAKER,+** Director. President and Chief Executive Officer of AMC
Cancer Research Center, Denver, Colorado, since January 1989; until mid-December
1988, Vice Chairman of the Board of First Columbia Financial Corporation (a
financial institution), Englewood, Colorado. Formerly, Chairman of the Board and
Chief Executive Officer of First Columbia Financial Corporation. ^ Address: 1775
Sherman Street, #1000, Denver, Colorado. Born: August 7, 1936.
FRANK M. BISHOP*, Director. President and Chief Operating Officer of
INVESCO Inc. since February, 1993; Director of INVESCO Funds Group, Inc. since
March 1993; Director (since February 1993), Vice President (since December
1991), and Portfolio Manager (since February 1987), of INVESCO Capital
Management, Inc. (and predecessor firms), Atlanta, Georgia. Address: 1315
Peachtree Street, N.E., Atlanta, Georgia. Born: December 7, 1943.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant Treasurer of
Colt Industries Inc., New York, New York, from 1966 to 1988. Address: 15
Sterling Road, Armonk, New York. Born: August 1, 1923.
A. D. FRAZIER, JR.,** Director. Chief Operating Officer of the Atlanta
Committee for the Olympic Games. From 1982 to 1991, Mr. Frazier was employed in
various capacities by First Chicago Bank, most recently as Executive Vice
President of the North American Banking Group. Trustee of The Global Health
Sciences Fund. Director of Charter Medical Corp. Address: 250 Williams Street,
Suite 6000, Atlanta, Georgia 30301. Born: June ^ 23, 1944.
KENNETH T. KING,** Director. Formerly, Chairman of the Board of The Capitol
Life Insurance Company, Providence Washington Insurance Company, and Director of
numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The
Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16,
1925.
<PAGE>
JOHN W. MCINTYRE,# Director. Retired. Formerly, Vice Chairman of the Board
of Directors of the Citizens and Southern Corporation and Chairman of the Board
and Chief Executive Officer of the Citizens and Southern Georgia Corporation and
Citizens and Southern National Bank. Director of Golden Poultry Co., Inc.
Trustee of The Global Health Sciences Fund and Gables Residential Trust.
Address: Seven Piedmont Center, Suite 100, Atlanta, Georgia 30305. Born:
September 14, 1930.
R. DALTON SIM*, Director. Chairman of the Board (since March 1993) and
President (since January 1991) of INVESCO Trust Company; Director since June
1987 and, formerly, Executive Vice President and Chief Investment Officer (June
1987 to January 1991) of INVESCO Funds Group, Inc.; President (since 1994) and
Trustee (since 1991) of The Global Health Sciences Fund. Born: July 18, 1939.
GLEN A. PAYNE, Secretary. Senior Vice President, General Counsel and
Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company; Formerly,
employee of a U.S. regulatory agency, Washington, D.C., (June 1973 through May
1989). Born: September 25, 1947.
RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO
Funds Group, Inc. and INVESCO Trust Company since January 1988. Born: October 1,
1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. and Trust Officer of INVESCO Trust Company; Vice
President of 440 Financial Group from June 1990 to August 1992; Assistant Vice
President of Putnam Companies from November 1986 to June 1990. Born: August 21,
1956.
ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group,
Inc. and Trust Officer of INVESCO Trust Company. Born: September 14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. and Trust Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the Fund.
+Member of the executive committee of the Fund. On occasion, the executive
committee acts upon the current and ordinary business of the Fund 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 Fund. All decisions are
subsequently submitted for ratification by the board of directors.
<PAGE>
*These directors are "interested persons" of the Fund as defined in the
1940 Act.
**Member of the management liaison committee of the Fund.
As of December 21, 1995, officers and directors of the Fund, as a group,
beneficially owned less than 1% of the outstanding shares of the Fund and of
each Portfolio of the Fund.
Director Compensation
The following table sets forth, for the fiscal year ended October 31,
1995: the compensation paid by the Fund to its eight independent directors for
services rendered in their capacities as directors of the Fund; the benefits
accrued as Fund 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
Fund. In addition, the table sets forth the total compensation paid by all of
the mutual funds distributed by INVESCO Funds Group, Inc. (including the Fund),
INVESCO Advisor Funds, Inc., INVESCO Treasurer's Series Trust, and The Global
Health Sciences Fund (collectively, the "INVESCO Complex") to these directors
for services rendered in their capacities as directors or trustees during the
year ended December 31, 1995. As of December 31, 1995, there were 48 funds in
the INVESCO Complex.
<PAGE>
Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
tion From Fund Upon Paid To
Fund1 Expenses2 Retirement3 Directors1
Fred A.Deering, $14,602 $3,913 $3,442 ^ $87,350
Vice Chairman of
the Board
Victor L. Andrews 13,036 3,697 3,985 68,000
Bob R. Baker 14,034 3,301 5,340 73,000
Lawrence H. Budner 13,036 3,697 3,985 ^ 68,350
Daniel D. Chabris 14,034 4,219 2,832 ^ 73,350
A. D. Frazier, Jr.4 5,836 0 0 63,500
Kenneth T. King 13,418 4,063 3,122 70,000
John W. McIntyre4 6,409 0 0 ^ 67,850
Total $94,405 $22,890 $22,706 ^ $571,400
% of Net Assets 0.0039%5 0.0009%5 ^ 0.0043%6
(1)The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees 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 figures represent the Fund's share of the estimated annual
benefits payable by the INVESCO Complex (excluding The Global Health Sciences
Fund, which does not participate in any retirement plan) upon the directors'
retirement, calculated using the current method of allocating director
compensation among the funds in the INVESCO Complex. 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 Complex, and for other reasons during the period in which
retirement benefits are accrued on behalf of the respective directors. This
results in lower estimated benefits for directors who are closer to retirement
and higher estimated benefits for directors who are further from retirement.
<PAGE>
With the exception of Messrs. Frazier and McIntyre, each of these directors
has served as a director/trustee of one or more of the funds in the INVESCO
Complex for the minimum five-year period required to be eligible to participate
in the Defined Benefit Deferred Compensation Plan.
4Messrs. Frazier and McIntyre began serving as directors of the Fund on
April 19, 1995.
5Totals as a percentage of the Fund's net assets as of October 31, 1995.
6Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1995.
Messrs. Bishop, Brady, Hesser, and Sim, as "interested persons" of the Fund
and the other funds in the INVESCO Complex, 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 Fund or the other funds in the
INVESCO Complex for their service as directors.
The boards of directors/trustees of the mutual funds managed by INVESCO,
INVESCO Advisor Funds, Inc. and INVESCO Treasurer's Series Trust have adopted a
Defined Benefit Deferred Compensation Plan for the non-interested directors and
trustees of the funds. Under this plan, each director or trustee who is not an
interested person of the funds (as defined in the 1940 Act) and who has served
for at least five years (a "qualified director") is entitled to receive, upon
retiring from the boards at the mandatory retirement age of 72 (or the
retirement age of 73 to 74, if the retirement date is extended by the boards for
one or two years but less than three years), continuation of payments for one
year (the "first year retirement benefit") of the annual basic retainer payable
by the funds to the qualified director at the time of his retirement (the "basic
retainer"). Commencing with any such director's second year of retirement, and
commencing with the first year of retirement of a director whose retirement has
been extended by the board for three years, a qualified director shall receive
quarterly payments at an annual rate equal to 25% of the basic retainer. These
payments will continue for the remainder of the qualified director's life or ten
years, whichever is longer (the "reduced retainer 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 the reduced
retainer payments will be made to him or to his beneficiary or estate. If a
qualified director becomes disabled or dies either prior to age 72 or during his
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 retainer
payments will be made to his 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, INVESCO Advisor Funds, Inc. and Treasurer's Series funds
<PAGE>
in a manner determined to be fair and equitable by the committee. The Fund is
not making any payments to directors under the plan as of the date of this
Statement of Additional Information. The Fund 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.
The Fund has an audit committee which is comprised of four of the
directors who are not interested persons of the Fund. The committee meets
periodically with the Fund's independent accountants and officers to review
accounting principles used by the Fund, the adequacy of internal controls, the
responsibilities and fees of the independent accountants, and other matters.
The Fund also has a management liaison committee which meets quarterly
with various management personnel of INVESCO in order (a) to facilitate better
understanding of management and operations of the Fund, and (b) 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.
HOW SHARES CAN BE PURCHASED
- ---------------------------
The shares of each Portfolio are sold on a continuous basis at the net
asset value per share of the Portfolio next calculated after receipt of a
purchase order in good form. The net asset value per share for each Portfolio is
computed separately for each Portfolio and is determined once each day that the
New York Stock Exchange is open as of the close of regular trading on that
Exchange, but may also be computed at other times. See "How Shares Are Valued."
INVESCO acts as the Fund's Distributor under a distribution agreement with the
Fund under which it receives no compensation and bears all expenses, including
the costs of printing and distribution of prospectuses incident to direct sales
and distribution of Fund shares on a no-load basis.
HOW SHARES ARE VALUED
- ---------------------
As described in the section of each Portfolio's Prospectus entitled "Fund
Price and Performance," the net asset value of shares of each Portfolio of the
Fund is computed once each day that the New York Stock Exchange is open as of
the close of regular trading on that Exchange (generally 4:00 p.m., New York
time) and applies to purchase and redemption orders received prior to that time.
Net asset value per share is also computed on any other day on which there is a
sufficient degree of trading in the securities held by a Portfolio that the
current net asset value per share might be materially affected by changes in the
value of the securities held, but only if on such day the Fund receives a
request to purchase or redeem shares of that Portfolio. Net asset value per
share is not calculated on days the New York Stock Exchange is closed, such as
federal holidays including New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
<PAGE>
The net asset value per share of each Portfolio is calculated by dividing
the value of all securities held by that Portfolio and its other assets
(including dividends and interest accrued but not collected), less the
Portfolio's liabilities (including accrued expenses) by the number of
outstanding shares of that Portfolio. Securities traded on national securities
exchanges, the NASDAQ National Market System, the NASDAQ Small Cap Market and
foreign markets are valued at their last sale prices on the exchanges or markets
where such securities are primarily traded. Securities traded in the
over-the-counter market for which last sales prices are not available, and
listed securities for which no sales are reported on a particular date, are
valued at their highest closing bid prices (or, for debt securities, yield
equivalents thereof) obtained from one or more dealers making markets for such
securities. If market quotations are not readily available, securities will be
valued at their fair values as determined in good faith by the Fund's board of
directors or pursuant to procedures adopted by authority of the board of
directors. The above procedures may include the use of valuations furnished by a
pricing service which employs a matrix to determine valuations for normal
institutional-size trading units of debt securities. Prior to utilizing a
pricing service, the Fund's board of directors reviews the methods used by such
service to assure itself that securities will be valued at their fair values.
The Fund's board of directors also periodically monitors the methods used by
such pricing services. Debt securities with remaining maturities of 60 days or
less at the time of purchase are normally valued at amortized cost.
The values of securities held by the Portfolios and other assets used in
computing net asset value generally are determined as of the time regular
trading in such securities or assets is completed each day. Since regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing
the Portfolios' net asset value. However, in the event that the closing price of
a foreign security is not available in time to calculate a Portfolio's net asset
value on a particular day, the Fund's board of directors has authorized the use
of the market price for the security obtained from an approved pricing service
at an established time during the day which may be prior to the close of regular
trading in the security. The value of all assets and liabilities expressed in
foreign currencies will be converted into U.S. dollars at the spot rate of such
currencies against U.S. dollars provided by an approved pricing service.
FUND PERFORMANCE
- ----------------
As discussed in the section of each Portfolio's Prospectus entitled "Fund
Price and Performance," the Fund advertises the total return performance of the
Portfolios, as well as the yield of the Utilities Portfolio. Average annual
<PAGE>
total return performance for each Portfolio for the indicated periods ended
October 31, 1995, was as follows:
10 Years/
Life of
Portfolio 1 Year 5 Years Portfolio
- --------- ------ ------- ---------
Energy -5.45% -2.81% 4.13%
Environmental Services 26.09% -- 0.70%(1)
Financial Services 25.80% 30.70% 15.77%(2)
Gold -8.12% 4.02% 3.33%
Health Sciences 43.83% 22.05% 22.64%
Leisure 9.98% 26.33% 19.16%
Technology 42.19% 33.96% 22.10%
Utilities 13.48% 13.69% 10.48%(2)
- -----------------
(1) 58 months (4.83 years)
(2) 113 months (9.42 years)
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 = initial payment of $1000
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 and
Portfolio indicated.
The yield of the Utilities Portfolio for the month ended October 31, 1995,
was 3.26%. This yield was computed by dividing the net investment income per
share earned during the period as calculated according to a prescribed formula
by the net asset value per share on October 31, 1995. Because dividends received
on the common stocks held by the Utilities Portfolio are generally paid near the
end of calendar quarters and are accounted for on ex- dividend dates, such
dividend income is recognized, for purposes of yield calculations, on an
annualized basis.
In conjunction with performance reports and/or analyses for the
Portfolios, comparative data between a Portfolio's performance for a given
period and recognized indices of investment results for the same period, and/or
assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
<PAGE>
Association of Securities Dealers Automated Quotations, Frank Russell
Company, Value Line Investment Survey, the American Stock Exchange, Morgan
Stanley Capital International, Wilshire Associates, the Financial Times Stock
Exchange, the New York Stock Exchange, the Nikkei Stock Average and Deutcher
Aktienindex, all of which are unmanaged market indicators. In addition,
rankings, ratings, and comparisons of investment performance and/or assessments
of the quality of shareholder service made by independent sources may be used in
advertisements, sales literature or shareholder reports, including reprints of,
or selections from, editorials or articles about the Funds. These sources
utilize information compiled (i) internally; (ii) by Lipper Analytical Services,
Inc.; or (iii) by other recognized analytical services. The Lipper Analytical
Services, Inc. mutual fund rankings and comparisons which may be used by the
Portfolios in performance reports will be drawn from the mutual fund groupings
listed in each Portfolio's prospectus, in addition to the broad-based Lipper
general fund groupings. Sources for Portfolio performance information and
articles about the Portfolios 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 Analytical Services, Inc.'s Mutual Fund Performance
Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
<PAGE>
SERVICES PROVIDED BY THE FUND
- -----------------------------
Periodic Withdrawal Plan. As described in the section of each Portfolio's
Prospectus entitled "How to Sell Shares," the Fund offers a Periodic Withdrawal
Plan. All dividends and distributions on shares owned by shareholders
participating in this Plan are reinvested in additional shares. Since withdrawal
payments represent the proceeds from sales of shares, the amount of
shareholders' investments in the Fund will be reduced to the extent that
withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under such a Plan do not represent income or a
return on investment.
A Periodic Withdrawal Plan may be terminated at any time by sending a
written request to INVESCO. Upon termination, all future dividends and capital
gain distributions will be reinvested in additional shares unless a shareholder
requests otherwise.
Exchange Privilege. As discussed in the section of each Portfolio's
Prospectus entitled "How to Buy Shares - Exchange Privilege," the Fund offers
shareholders the privilege of exchanging shares of any Portfolio of the Fund for
shares of any other Portfolio and of exchanging shares of the Fund for shares of
certain other no-load mutual funds advised by INVESCO. Exchange requests may be
made either by telephone or by written request to INVESCO Funds Group, Inc.,
using the telephone number or address on the cover of this Statement of
Additional Information. Exchanges made by telephone must be in an amount of at
least $250, if the exchange is being made into an existing account of one of the
INVESCO funds. All exchanges that establish a new account must meet the fund's
applicable minimum initial investment requirements. Written exchange requests
into an existing account have no minimum requirements other than the fund's
applicable minimum subsequent investment requirements. Any gain or loss realized
on such an exchange is recognized for federal income tax purposes. This
privilege is not an option or right to purchase securities, but is a revocable
privilege permitted under the present policies of each of the funds and is not
available in any state or other jurisdiction where the shares of the mutual fund
into which transfer is to be made are not qualified for sale, or when the net
asset value of the shares presented for exchange is less than the minimum dollar
purchase required by the appropriate prospectus.
<PAGE>
TAX-DEFERRED RETIREMENT PLANS
- -----------------------------
As described in the section of each Portfolio's Prospectus entitled "Fund
Services," shares of the Fund may be purchased as the investment medium for
various tax-deferred retirement plans. Persons who request information regarding
these plans from INVESCO will be provided with prototype documents and other
supporting information regarding the type of plan requested. Each of these plans
involves a long-term commitment of assets and is subject to possible regulatory
penalties for excess contributions, premature distributions or for insufficient
distributions after age 70-1/2. The legal and tax implications may vary
according to the circumstances of the individual investor. Therefore, the
investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.
HOW TO REDEEM SHARES
- --------------------
Normally, payments for shares redeemed will be mailed within seven (7)
days following receipt of the required documents as described in the section of
each Portfolio's Prospectus entitled "How to Sell Shares." The right of
redemption may be suspended and payment postponed when: (a) the New York Stock
Exchange is closed for other than customary weekends and holidays; (b) trading
on that exchange is restricted; (c) an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable, or
it is not reasonably practicable for the Fund fairly to determine the value of
its net assets; or (d) the Securities and Exchange Commission (the "SEC") by
order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Fund's investment adviser, make it undesirable for a Portfolio to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Fund is obligated under the 1940 Act to redeem for cash all
shares of a Portfolio presented for redemption by any one shareholder having a
value up to $250,000 (or 1% of the Portfolio's net assets if that is less) in
any 90-day period. Securities delivered in payment of redemptions are selected
entirely by the investment adviser based on what is in the best interests of the
Portfolio and its shareholders, and are valued at the value assigned to them in
computing the Portfolio's net asset value per share. Shareholders receiving such
securities are likely to incur brokerage costs on their subsequent sales of the
securities.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
- -----------------------------------------------
The Fund intends to continue to conduct its business and satisfy the
applicable diversification of assets and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. The Fund so qualified in the fiscal year ended
<PAGE>
October 31, 1995, and intends to continue to qualify during its current
fiscal year. As a result, it is anticipated that the Fund will pay no federal
income or excise taxes and will be accorded conduit or "pass through" treatment
for federal income tax purposes.
Dividends paid by the 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, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
the Fund sends shareholders information regarding the amount and character of
dividends paid in the year, information on foreign source income and foreign
taxes, and the dividends eligible for the dividends-received deduction for
corporations. Such amounts will be limited to the aggregate amount of qualifying
dividends which the Fund derives from its portfolio investments.
Distributions by the Fund of net capital gains (the excess of net
long-term capital gain over net short-term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless
of how long a shareholder has held shares of the Fund. Such distributions are
identified as such and are not eligible for the dividends-received deduction.
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares. If the net asset value of Fund 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, in effect, a return of
invested capital. The net asset value of each Portfolio's shares reflects
accrued net investment income and undistributed realized capital and foreign
currency gains; therefore, when a distribution is made, the net asset value is
reduced by the amount of the distribution. If shares 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.
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 Fund
recommends any particular method of determining cost basis. Other methods may
result in different tax consequences. If a shareholder has reported gains or
losses for a Portfolio in past years, the shareholder must continue to use the
<PAGE>
method previously used, unless the shareholder applies to the IRS for
permission to change methods.
If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares.
Each Portfolio 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 capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by each Portfolio may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate these
foreign taxes, however, and many foreign countries do not impose taxes on
capital gains in respect of investments by foreign investors. If more than 50%
of the value of a Portfolio's total assets at the close of any taxable year
consists of securities of foreign corporations, the Fund will be eligible to,
and may, file an election with the IRS that will enable its shareholders, in
effect, to receive the benefit of the foreign tax credit with respect to any
foreign and U.S. possessions income taxes paid by it. Each Portfolio will report
to its shareholders shortly after each taxable year their respective shares of
the Portfolio's income from sources within, and taxes paid to, foreign countries
and U.S. possessions if it makes this election.
The Portfolios 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 of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, a Portfolio will be
subject to federal income tax on a portion of any "excess distribution" received
on the stock of a PFIC or of any gain on disposition of the stock (collectively
"PFIC income"), plus interest thereon, even if the Portfolio distributes the
PFIC income as a taxable dividend to its shareholders. The balance of the PFIC
income will be included in the Portfolio's investment company taxable income
and, accordingly, will not be taxable to it to the extent that income is
distributed to its shareholders.
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency 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
Portfolio accrues interest, dividends or other receivables or accrues expenses
<PAGE>
or other liabilities denominated in a foreign currency and the time the
Portfolio 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 the Portfolio's investment company taxable income to
be distributed to its shareholders.
Shareholders should consult their own tax advisers 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.
INVESTMENT PRACTICES
- --------------------
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for any of the Fund's Portfolios. Brokerage costs to the Fund are
commensurate with the rate of portfolio activity. Portfolio turnover rates for
the fiscal years ended October 31, 1995 and 1994, were as follows:
Portfolio 1995 1994
--------- ---- ----
Energy 300% 123%
Environmental Services 195 211
Financial Services 171 88
Gold 72 97
Health Sciences 107 80
Leisure 119 116
Technology 191 145
Utilities 185 180
In computing the portfolio turnover rate, all investments with maturities
or expiration dates at the time of acquisition of one year or less are excluded.
Subject to this exclusion, the turnover rate is calculated by dividing (A) the
lesser of purchases or sales of portfolio securities for the fiscal year by (B)
the monthly average of the value of portfolio securities owned by the Portfolio
during the fiscal year.
The portfolio turnover rate of the Energy Portfolio increased in fiscal
1995 over fiscal 1994 primarily as a result of a restructuring of the Portfolio
that occurred during that year. The portfolio turnover rate of the Financial
Services Portfolio increased in fiscal 1995 over fiscal 1994 primarily as a
result of a significant increase in the size of the Portfolio.
Placement of Portfolio Brokerage. Either INVESCO, as the Fund's investment
adviser, or INVESCO Trust, as the Fund's sub- adviser, ^ places orders for the
purchase and sale of securities with brokers and dealers based upon INVESCO's or
INVESCO Trust's evaluation of their financial responsibility, subject to their
<PAGE>
ability to effect transactions at the best available prices. INVESCO or INVESCO
Trust evaluates the overall reasonableness of brokerage commissions ^ paid by
reviewing the quality of executions obtained on portfolio transactions of each
applicable Portfolio, viewed in terms of the size of transactions, prevailing
market conditions in the security purchased or sold, and general economic and
market conditions. In seeking to ensure that the commissions ^ charged the
Portfolios are consistent with prevailing and reasonable commissions ^, INVESCO
or INVESCO Trust also endeavor to monitor brokerage industry practices with
regard to the commissions ^ charged by brokers and dealers on transactions
effected for other comparable institutional investors. While INVESCO or INVESCO
Trust seek reasonably competitive rates, the Portfolios do not necessarily pay
the lowest commission^ or spread available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, INVESCO or INVESCO Trust may select brokers that provide
research services to effect such transactions. Research services consist of
statistical and analytical reports relating to issuers, industries, securities
and economic factors and trends, which may be of assistance or value to INVESCO
or INVESCO Trust in making informed investment decisions. Research services
prepared and furnished by brokers through which the Portfolios effect securities
transactions may be used by INVESCO or INVESCO Trust in servicing all of their
respective accounts and not all such services may be used by INVESCO or INVESCO
Trust in connection with the Fund's Portfolios.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, INVESCO or INVESCO Trust, consistent with
the standard of seeking to obtain the best execution on portfolio transactions,
may place orders with such brokers for the execution of transactions for the
Fund's Portfolios on which the commissions ^ are in excess of those which other
brokers might have charged for effecting the same transactions.
Portfolio transactions may be effected through qualified broker/dealers
who recommend the Portfolios to their clients, or who act as agent in the
purchase of any of the Portfolios' shares for their clients. When a number of
brokers and dealers can provide comparable best price and execution on a
particular transaction, the Fund's adviser may consider the sale of Portfolio
shares by a broker or dealer in selecting among qualified broker/dealers.
^ Certain brokers are paid a fee (the ^"Broker's Fee") for recordkeeping,
shareholder communications and other services provided by ^ the brokers to
investors purchasing shares of the ^ Funds through no transaction fee programs
("NTF Programs") offered by the brokers. The Broker's Fee is based on the
average daily value of the investments in each ^ Fund made by ^ a broker and
held in omnibus accounts ^ maintained on behalf of investors participating in
<PAGE>
the ^ NTF Program. The ^ Company's directors have authorized each ^ Fund to
pay ^ transfer agency fees to INVESCO based on the number of investors who have
beneficial interests in ^ a broker's omnibus accounts in that ^ Fund. INVESCO,
in turn, ^ pays these transfer agency fees to ^ the broker as a sub-transfer
agency or recordkeeping fee in payment of all or a portion of the ^ Broker's
Fee. The ^ Company's directors have further authorized INVESCO to place a
portion of each ^ Fund's brokerage transactions with ^ certain brokers that
sponsor NTF Programs, if INVESCO reasonably believes that, in effecting the ^
Fund's transactions in portfolio securities, ^ the broker is able to provide the
best execution of orders at the most favorable prices. ^ A portion of the
commissions earned by ^ a broker from executing portfolio transactions on behalf
of a specific ^ Fund may be credited by ^ the broker against the ^ sub-transfer
agency or recordkeeping fee payable with respect to that ^ Fund, on a basis
which has resulted from negotiations between INVESCO and ^ the broker. INVESCO,
in turn, applies any such credits to the transfer agency fee it charges to the ^
Fund. Thus, the Fund pays sub-transfer agency or recordkeeping fees to the
broker in payment of the Broker's Fee only to the extent that such fees are not
offset by the ^ Fund's credits. INVESCO itself pays the portion of a ^ Fund's
Broker's Fee, if any, that exceeds the ^ sub-transfer agency or recordkeeping
fee. In the event that the transfer agency fee paid by a ^ Fund to INVESCO with
respect to investors who have beneficial interests in ^ a particular broker's
omnibus accounts in that ^ Fund exceeds the ^ Broker's Fee applicable to that ^
Fund, INVESCO may carry forward the excess through the end of the Company's
fiscal year and apply it to future ^ Broker's Fees payable to that broker with
respect to the Fund. The amount of excess transfer agency fees carried forward
will be reviewed for possible adjustment by INVESCO prior to each fiscal
year-end of the Company.
The aggregate dollar amounts of brokerage commissions paid by the Fund for
the fiscal years ended October 31, 1995, 1994, and 1993, were $14,162,585,
$11,837,141, and $15,499,809, respectively. On a Portfolio basis the aggregate
amount of brokerage commissions paid in fiscal 1995 breaks down as follows:
Energy, $1,067,214; Environmental Services, $363,119; Financial Services,
$1,736,684; Gold, $1,697,231; Health Sciences, $2,351,974; Leisure, $1,679,657;
Technology, $4,337,625; and Utilities, $929,081. For the year ended October 31,
1995, brokers providing research services received $4,748,467 in commissions on
portfolio transactions effected for the Fund. The aggregate dollar amount of
such portfolio transactions was $2,199,858,469. On a Portfolio basis this figure
breaks down as follows: Energy, $177,554,452; Environmental Services,
$39,433,969; Gold, $232,738,144; Health Sciences, $446,732,942; Financial
Services, $492,323,680; Leisure, $165,564,517; Technology, $439,672,603; and
Utilities $205,838,162. The Fund paid $1,353,235 in compensation to brokers for
the sale of shares of the Fund during the fiscal year ended October 31, 1995.
The lower brokerage commissions paid by the Fund in fiscal 1994 versus
fiscal 1995 and 1993 were primarily a result of the lower volume of purchases
<PAGE>
and sales of shares in most of the Portfolios by investors, which resulted
in lower levels of purchases and sales of portfolio securities and a
corresponding decrease in the amounts of commissions paid in that year.
At October 31, 1995 the Fund's Portfolios held securities of their regular
brokers or dealers, or their parents, as follows:
Value of
Securities
Portfolio Broker or Dealer at 10/31/95
- --------- ---------------- -----------
ENERGY FUND None
ENVIRONMENTAL State Street Bank & Trust $ 5,422,000
SERVICES FUND Company
FINANCIAL SERVICES Associates Corporation of $20,344,000
FUND North America
American General Corporation $16,437,500
GOLD FUND None
HEALTH SCIENCES Chevron Oil Finance Company $39,469,000
FUND
Household Finance Corporation $31,310,000
Sears Roebuck Acceptance $39,112,000
Corporation
LEISURE FUND Sears Roebuck Acceptance $ 8,516,000
Corporation
TECHNOLOGY FUND Associates Corporation of $ 5,540,000
North America
UTILITIES FUND Associates Corporation of $ 3,920,000
North America
Prudential Funding $ 3,928,000
Corporation
Neither INVESCO nor INVESCO Trust receives any brokerage commissions on
portfolio transactions effected on behalf of the Fund, and there is no
affiliation between INVESCO, INVESCO Trust, or any person affiliated with
INVESCO, INVESCO Trust, or the Fund and any broker or dealer that executes
transactions for the Fund.
ADDITIONAL INFORMATION
- ----------------------
Common Stock. The Fund has one billion authorized shares of
common stock with a par value of $0.01 per share. Of the Fund's
authorized shares, 100,000,000 shares have been allocated to each of the Fund's
<PAGE>
eight Portfolios. As of October 31, 1995, shares outstanding for each Portfolio
were as follows:
Portfolio Shares Outstanding
--------- ------------------
Energy 4,787,269
Environmental Services 2,800,855
Financial Services 21,635,689
Gold 29,138,917
Health Sciences 17,056,506
Leisure 11,151,317
Technology 16,402,408
Utilities 12,670,733
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 of each class represent the interests of the shareholders of such
class in a particular portfolio of investments of the Fund. Each class of the
Fund's shares is preferred over all other classes in respect of the assets
specifically allocated to that class, and all income, earnings, profits and
proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that class. The assets of each class are segregated on
the books of account and are charged with the liabilities of that class and with
a share of the Fund's general liabilities. The board of directors determines
those assets and liabilities deemed to be general assets or liabilities of the
Fund, and these items are allocated among classes in proportion to the relative
total assets of each class. In the unlikely event that a liability allocable to
one class exceeds the assets belonging to the class, all or a portion of such
liability may have to be borne by the holders of shares of the Fund's other
classes.
All shares, regardless of class, have equal voting rights. Voting with
respect to certain matters, such as ratification of independent accountants or
election of directors, will be by all classes of the Fund. When not all classes
are affected by a matter to be voted upon, such as approval of an investment
advisory contract or changes in a Portfolio's investment policies, only
shareholders of the class affected by the matter may be entitled to vote. Fund
shares have noncumulative voting rights, which means that the holders of a
majority of the shares voting for the election of directors can elect 100% of
the directors if they choose to do so. In such event, 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. After they have been elected by
shareholders, the directors will continue to serve until their successors are
elected and have qualified or they are removed from office, in either case by a
shareholder vote, or until death, resignation, or retirement. Directors may
appoint their own successors, provided that always at least a majority of the
<PAGE>
directors have been elected by the Fund's shareholders. It is the intention
of the Fund not to hold annual meetings of shareholders. The directors will call
annual or special meetings of shareholders for action by shareholder vote as may
be required by the 1940 Act or the Fund's Articles of Incorporation, or at their
discretion.
Principal Shareholders. As of December 1, 1995, the following entities
held more than 5% of the Fund's and each Portfolio's outstanding equity
securities.
Amount and Nature Class and Percent
Name and Address of Ownership of Class
- ---------------- ----------------- -----------------
Charles Schwab & Co. Inc. 2,182,886.812 sh. Energy Portfolio
Reinvestment Account Record 37.206%
101 Montgomery Street
San Francisco, CA 94104 10,769,511.777 sh. Gold Portfolio
Record 35.119%
4,876,106.852 sh. Health Sciences
Record Portfolio
28.143%
3,119,129.681 sh. Leisure Portfolio
Record 28.180%
5,306,938.726 sh Technology
Record Portfolio
31.850%
7,265,543.057 sh. Financial Services
Record Portfolio
32.071%
5,201,075.480 sh. Utilities Portfolio
Record 40.554%
854,700.883 sh. Environmental
Record Services Portfolio
25.421%
Independent Accountants. Price Waterhouse LLP, 950 Seventeenth Street,
Denver, Colorado, has been selected as the independent accountants of the Fund.
The independent accountants are responsible for auditing the financial
statements of the Fund.
Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the Fund. The bank is also responsible for, among other things,
receipt and delivery of the Fund's investment securities in accordance with
procedures and conditions specified in the custody agreement. Under its contract
with the Fund, the custodian is authorized to establish separate accounts in
<PAGE>
foreign currencies and to cause foreign securities owned by the Fund 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 80237,
acts as registrar, dividend disbursing agent, and transfer agent for the Fund
pursuant to the Transfer Agency Agreement described in "The Fund and Its
Management." Such services include the issuance, cancellation and transfer of
shares of the Fund, and the maintenance of records regarding the ownership of
such shares.
Reports to Shareholders. The Fund's fiscal year ends on October 31. The
Fund distributes reports at least semiannually to its shareholders. Financial
statements regarding the Fund, audited by the independent accountants, are sent
to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart, Washington, D.C. is
legal counsel for the Fund. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel for the Fund.
Financial Statements. The Fund's audited financial statements and the
notes thereto for the fiscal year ended October 31, 1995, and the report of
Price Waterhouse LLP with respect to such financial statements, are incorporated
herein by reference from the Fund's Annual Report to Shareholders for the fiscal
year ended October 31, 1995.
Prospectuses. The Fund will furnish, without charge, a copy of the
applicable Prospectus upon request. There are two separate Prospectuses
available for the Portfolios of the Fund. Such requests should be made to the
Fund at the mailing address or telephone number set forth on the first page of
this Statement of Additional Information.
Registration Statement. This Statement of Additional Information and the
Prospectuses do not contain all of the information set forth in the Registration
Statement the Fund has filed with the Securities and Exchange Commission. The
complete Registration Statement may be obtained from the Securities and Exchange
Commission upon payment of the fee prescribed by the rules and regulations of
the Commission.
