INVESCO EMERGING GROWTH FUND, INC.
Supplement to Prospectus
dated September 30, 1994
The section of the Fund's Prospectus entitled "The Fund and Its Management" is
amended to (1) delete the fourth paragraph and (2) substitute the following new
paragraph in its place:
JOHN SCHROER
Portfolio manager of the Fund since 1995; co-portfolio manager of
the Health Sciences Portfolio of INVESCO Strategic Portfolios, Inc.; vice
president (since 1995) and portfolio manager (1993 to present) of INVESCO
Trust Company. Formerly (1990 to 1993), assistant vice president with
Trust Company of the West; began investment career in 1990; B.S. and
M.B.A., University of Wisconsin- Madison.
The section of the Fund's Prospectus entitled "How Shares Can Be Purchased" is
amended to (1) delete the fifth paragraph and (2) substitute the following new
paragraph in its place:
Orders to purchase Fund shares can be placed by telephone. Shares of the
Fund will be issued at the net asset value next determined after receipt
of telephone instructions. Generally, payments for telephone orders must
be received by the Fund within three business days or the transaction may
be cancelled. In the event of such cancellation, the purchaser will be
held responsible for any loss resulting from a decline in the value of the
shares. In order to avoid such losses, purchasers should send payments for
telephone purchases by overnight courier or bank wire. INVESCO has agreed
to indemnify the Fund for any losses resulting from the cancellation of
telephone purchases.
The date of this Supplement is May 15, 1995.
<PAGE>
PROSPECTUS
September 30, 1994
INVESCO EMERGING GROWTH FUND, INC.
INVESCO EMERGING GROWTH FUND, Inc. (the "Fund") is an open-end,
diversified management investment company ("mutual fund") that seeks long-term
capital growth. It pursues this objective by investing its assets principally in
a diversified group of equity securities of emerging growth companies with
market capitalizations of less than $500 million at the time of initial purchase
("small cap companies"). In managing the Fund's investments, the Fund's
investment adviser or sub-adviser seeks to identify securities which are
undervalued in the marketplace, and/or have earnings that may be expected to
grow faster than the U.S. economy in general. Except for short-term investments
and investments in U. S. government securities, the Fund invests all of its
assets in the equity securities of small cap companies. Under normal
circumstances, the Fund invests at least 65% of its total assets in the equity
securities of such companies (including common and preferred stocks, convertible
debt securities, and other securities having equity features). The Fund is
designed for investors seeking long-term capital appreciation with little or no
current income. The Fund cannot guarantee it will achieve its investment
objective.
Investors should carefully consider the relative risks involved in
investing in the Fund and should be advised that such investment is not meant to
be a complete investment program and may not be suitable for all investors (see
"Risk Factors" section of this Prospectus).
This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund has been filed with the Securities and Exchange Commission. You
can obtain a copy without charge by writing INVESCO Funds Group, Inc., P.O. Box
173706, Denver, Colorado, 80217-3706; or by calling 1-800-525-8085.
<PAGE>
TABLE OF CONTENTS Page
ANNUAL FUND EXPENSES 6
FINANCIAL HIGHLIGHTS 7
PERFORMANCE DATA 8
INVESTMENT OBJECTIVE AND POLICIES 8
RISK FACTORS 13
THE FUND AND ITS MANAGEMENT 14
HOW SHARES CAN BE PURCHASED 16
SERVICES PROVIDED BY THE FUND 19
HOW TO REDEEM SHARES 21
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES 23
ADDITIONAL INFORMATION 24
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.
- ----------
THE STATEMENT OF ADDITIONAL INFORMATION, DATED SEPTEMBER 30, 1994, IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
<PAGE>
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund, however, is authorized to pay a distribution fee, pursuant to
Rule 12b-1 under the Investment Company Act of 1940. (See "How Shares Can Be
Purchased -- Distribution Expenses.") Lower expenses benefit Fund shareholders
by increasing the Fund's total return.
Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees None
Exchange fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.75%
12b-1 Fees 0.25%
Other Expenses 0.37%
Transfer Agency Fee 0.20%
General Services, Administrative
Services, Registration, Postage(1) 0.17%
Total Fund Operating Expenses(2) 1.37%
(1) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and auditors, costs of administrative services
furnished under an Administrative Services Agreement, costs of registration of
Fund shares under applicable laws, and costs of printing and distributing
reports to shareholders.
(2) If necessary, certain Fund expenses will be absorbed voluntarily by
the Fund's investment adviser and sub-adviser in order to ensure that the Fund's
total operating expenses will not exceed 1.50% of the Fund's average net assets.
This policy is applicable to Fund expenses incurred on or after July 1, 1994.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years 5 Years 10 Years
$14 $44 $75 $165
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. Such expenses are paid from the Fund's assets. (See "The Fund and
Its Management.") The Fund charges no sales load, redemption fee or exchange
fee. The Example should not be considered a representation of future expenses,
and actual expenses may be greater or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a representation of
past or future annual returns, which may be greater or less than the assumed
amount.
As a result of the 0.25% Rule 12b-1 fee paid by the Fund, investors who
own Fund shares for a long period of time may pay more than the economic
equivalent of the maximum front-end sales charge permitted for mutual funds by
the National Association of Securities Dealers, Inc., which currently ranges
from 6.25% to 8.5% of the amount invested.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding throughout each Period)
The following information has been audited by Price Waterhouse,
independent accountants. This information should be read in conjunction with the
audited financial statements and the auditor's report thereon appearing in the
Fund's 1994 Annual Report to Shareholders and in the Statement of Additional
Information, both of which are available without charge by contacting INVESCO
Funds Group, Inc., at the address or telephone number shown on the cover of this
Prospectus.
Year Year Period
Ended Ended Ended
May 31 May 31 May 31
-------- -------- --------
1994 1993 1992~
PER SHARE DATA
Net Asset Value <179>
Beginning of Period $9.89 $7.55 $7.50
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (0.01) (0.04) (0.02)
Net Gains on Securities
(Both Realized and Unrealized) 1.53 2.38 0.07
-------- -------- --------
Total From Investment Operations 1.52 2.34 0.05
-------- -------- --------
LESS DISTRIBUTIONS
Distributions (from Capital Gains) 0.01 0.00 0.00%
-------- -------- --------
Net Asset Value - End of Period $11.40 $9.89 $7.55
======== ======== ========
TOTAL RETURN 15.34% 30.95% 0.68%+
RATIOS
Net Assets - End of Period
($000 Omitted) $176,510 $103,029 $25,579
Ratio of Expenses to Average
Net Assets 1.37% 1.54% 1.93%#
Ratio of Net Investment Loss
to Average Net Assets (0.26%) (0.70%) (0.95%)#
Portfolio Turnover Rate 196% 153% 50%+
~ From December 27, 1991, commencement of operations, to May 31, 1992.
+ Not Annualized
# Annualized
Further information about the performance of the Fund is contained in the
Fund's annual report to shareholders, which may be obtained without charge by
writing INVESCO Funds Group, Inc., P.O. Box 172706, Denver, CO 80217-3706; or by
calling 1-800-525-8085.
<PAGE>
PERFORMANCE DATA
From time to time, the Fund advertises its total return performance.
Performance figures are based upon historical earnings and are not intended to
indicate future performance. The "total return" of the Fund refers to the
average annual rate of return of an investment in the Fund. This figure is
computed by calculating the percentage change in value of an investment of
$1,000, assuming reinvestment of all income dividends and capital gain
distributions to the end of a specified period. Periods of one year and life of
the Fund are used.
Statements of the Fund's total return performance are based upon
investment results during a specified period and assume reinvestment of all
dividends and capital gains, if any, paid during that period. Thus, any given
report of total return performance should not be considered as representative of
future performance. The Fund charges no sales load, redemption fee, or exchange
fee which would affect the total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times-Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and Deutcher Aktienindex,
all of which are unmanaged market indicators. In addition, rankings, ratings and
comparisons of investment performance and assessments of the quality of
shareholder service appearing in publications such as Money, Forbes, Kiplinger's
Personal Finance, Financial World, and similar sources which utilize information
compiled (i) internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by
other recognized analytical services, may be used in advertising. The Lipper
Analytical Services, Inc. mutual fund rankings and comparisons, which may be
used by the Fund in performance reports will be drawn from the Small Company
Growth Funds mutual fund grouping, in addition to the broad-based Lipper general
fund groupings.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund, which may be changed only by a vote
of its shareholders, is to seek long-term capital growth. The Fund pursues this
objective by investing its assets principally in a diversified group of equity
securities of emerging growth companies with market capitalizations (i.e., the
market value of all equity securities issued by a company) of less than $500
million at the time of initial purchase ("small cap companies"). In selecting
investments for the Fund, the Fund's investment adviser or sub-adviser
(collectively, "Fund Management") seeks to identify small cap companies that are
undervalued in the marketplace, have earnings that may be expected to grow
faster than the U.S. economy in general, and/or offer the possibility of
accelerating earnings growth because of management changes, rapid growth of
sales, new products or structural changes in the economy. These companies
typically pay no or only minimal dividends and possess a relatively high rate of
return on invested capital so that future growth can be financed from internal
sources.
Except for its short-term investments and investments in U. S. government
securities, the Fund invests all of its assets in the equity securities of such
companies. Under normal circumstances, the Fund invests at least 65% of its
total assets in equity securities of such companies, consisting of common and
preferred stocks, convertible debt securities, and other securities having
equity features (consisting of warrants and rights). The balance of the Fund's
assets may be invested in U.S. government securities and short-term investments,
as described
<PAGE>
below. This Fund entails an element of risk that may not be appropriate for all
investors; this Fund is also not intended to be a complete investment program.
(See the "Risk Factors" section of this Prospectus).
In selecting the equity securities in which the Fund invests, Fund
Management attempts to purchase securities of companies in any industry that are
thought to have the best opportunity for capital appreciation with their
industry groupings, subject to the additional requirement, applicable to all
investments other than investments in U.S. government securities and short-term
investments, that the companies are determined to be companies that are still in
the developing stages of their life cycle, and have demonstrated, or are
expected to achieve, long-term earnings growth which reaches new highs per share
during each major business cycle. If Fund Management cannot determine that a
particular company is a small growth company, that company will not be an
eligible investment for the Fund. The equity securities purchased for the Fund
will be principally traded in the over-the-counter ("OTC") market (that is,
stocks not listed on any national, regional or foreign stock exchange).
Investments in U.S.government securities may consist of securities issued
or guaranteed by the U.S. government and any agency or instrumentality of the
United States government. In some cases, these securities are direct obligations
of the U.S. government, such as U.S. Treasury Bills, Notes and Bonds. In other
cases, these securities are obligations guaranteed by the U.S. government,
consisting of Government National Mortgage Association obligations, or
obligations of U.S. government authorities, agencies or instrumentalities,
consisting of the Federal National Mortgage Association, Federal Home Loan Bank,
Federal Financing Bank and Federal Farm Credit Bank, which are supported only by
the assets of the issuer. In purchasing U.S. government securities, the Fund
invests primarily in obligations issued by agencies, authorities and
instrumentalities of the U.S. government whose purposes further the Fund's
purposes.
The short-term investments of the Fund may consist of U.S. government and
agency securities, domestic bank certificates of deposit and bankers'
acceptances, and commercial paper rated A-1 by Standard and Poor's Corporation,
or P-1 by Moody's Investors Service, Inc., as well as repurchase agreements with
banks and registered broker-dealers and registered government securities dealers
with respect to the foregoing securities. The Fund's assets invested in U.S.
government securities and short-term investments will be used to meet current
cash requirements, such as to satisfy requests to redeem shares of the Fund and
to preserve investment flexibility. A commercial paper rating of A-1 by Standard
& Poor's or P-1 by Moody's is the highest rating category assigned by such
rating organizations and indicates that the issuer has a very strong capacity to
make timely payments of principal and interest on its commercial paper
obligations. All bank certificates of deposit and bankers' acceptances at the
time of purchase by the Fund must be issued by domestic banks (i) which are
members of the Federal Reserve System having total assets in excess of $5
billion, (ii) which have received at least a B ranking from Thomson Bank Watch
Credit Rating Service or International Bank Credit Analysis, and (iii) which
either directly or through parent holding companies have securities outstanding
which have been rated Aaa, Aa or P-1 by Moody's or AAA, AA or A-1 by Standard &
Poor's. A repurchase agreement is a means of investing monies for a short
period. In a repurchase agreement, a seller -- a U.S. commercial bank,
registered government securities dealer or broker dealer which is deemed
creditworthy -- sells securities to the Fund and agrees to repurchase the
securities at the Fund's cost plus interest within a specified period (normally
one day). In the event that the original seller defaults on its obligation to
repurchase the security, the Fund could incur costs or delays in seeking to sell
such security. To minimize risk, the securities underlying each 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),
and such agreements will be effected only with parties that meet certain
creditworthiness standards established by the Fund's board of directors.
<PAGE>
In addition, when Fund Management believes that market conditions warrant
such action, the Fund may assume a defensive position and invest all or a
portion of its assets in high grade (defined as a rating of A or higher by
Standard & Poor's or Moody's) corporate bonds or notes, U. S. government
securities, those types of short-term investments described above, or equity
securities (as defined above) of larger, more established companies, or hold its
assets in cash or cash equivalents. While the Fund is in a temporary defensive
position, the opportunity to achieve capital growth will be limited, and, to the
extent that this assessment of market conditions is incorrect, the Fund will be
foregoing the opportunity to benefit from capital growth resulting from
increases in the value of equity investments; however, the ability to maintain a
temporary defensive investment position provides the flexibility for the Fund to
seek to avoid capital loss during market downturns.
Foreign Securities
The Fund's investments in equity securities and corporate debt obligations
may consist of securities issued by foreign issuers. Up to 25% of the Fund's
total assets, measured at the time of purchase, may be invested 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. Investments in foreign securities involve certain risks. For U.S.
investors, the returns on foreign securities are influenced not only by the
returns on the foreign investments themselves, but also by currency risk (i.e.,
changes in the value of the currencies in which the securities are denominated
relative to the U.S. dollar). In a period when the U.S. dollar generally rises
against foreign currencies, the returns on foreign securities for a U.S.
investor are diminished. By contrast, in a period when the U.S. dollar generally
declines, the returns on foreign securities generally are enhanced.
Other risks and considerations of international investing include the
following: differences in accounting, auditing and financial reporting standards
which may result in less publicly available information than is generally
available with respect to U.S. issuers; generally higher commission rates on
foreign portfolio transactions and longer settlement periods; the smaller
trading volumes and generally lower liquidity of foreign stock markets, which
may result in greater price volatility; foreign withholding taxes payable on the
Fund's foreign securities, which may reduce dividend income payable to
shareholders; the possibility of expropriation or confiscatory taxation; adverse
changes in investment or exchange control regulations; political instability
which could affect U.S. investment in foreign countries; potential restrictions
on the flow of international capital; and the possibility of the Fund
experiencing difficulties in pursuing legal remedies and collecting judgments.
Certain of these risks, as well as currency risks, also apply to Canadian
securities, which are not subject to the 25% limitation even though they are
foreign securities. The Fund's investments in foreign securities may include
investments in developing countries. Many of these securities are speculative
and their prices may be more volatile than those of securities issued by
companies located in more developed countries.
ADRs are receipts, typically issued by a U.S. bank or trust company,
evidencing ownership of the underlying foreign securities. 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. ADRs are subject to certain of the same risks as direct investments in
foreign securities, including the risk that changes in the value of the currency
in which the security underlying an ADR is denominated relative to the U.S.
dollar may adversely affect the value of the ADR.
<PAGE>
Other Investment Practices
When-Issued Securities. The Fund may make commitments in an amount of up
to 10% of the value of its total assets at the time any commitment is made to
purchase or sell securities on a when-issued or delayed delivery basis (i.e.,
securities may be purchased or sold by the Fund with settlement taking place in
the future, often a month or more later). The securities purchased or sold on a
when-issued or delayed delivery basis will consist principally of common stocks
and common stock equivalents. The payment obligation and the interest rate that
will be received on the securities are fixed at the time the Fund enters into
the commitment. As is described in the "Risk Factors" section of this
Prospectus, purchasing or selling securities on such a basis involves risks. The
Fund attempts to limit these risks when it purchases securities on a when-issued
basis by maintaining in a segregated account with its custodian cash, U.S.
Government securities or other high-grade debt obligations readily convertible
into cash having an aggregate value equal to the amount of such purchase
commitments, until payment is made.
Warrants. The Fund also may invest up to 5% of its total assets in
warrants, valued at the lower of cost or market, but not more than 2% of its
total assets in warrants which are not listed on the New York or American Stock
Exchange or another U.S. securities exchange. Warrants acquired in units or
attached to securities are not included in these percentage restrictions.
Illiquid Securities. The Fund is authorized to invest in securities which
are illiquid because they are subject to restrictions on their resale
("restricted securities") or because, based upon their nature or the market for
such securities, they are not readily marketable. The Fund will not purchase any
such security if the purchase would cause the Fund to invest more than 10% of
its total assets, measured at the time of purchase, in illiquid securities.
Repurchase agreements maturing in more than seven days will be considered as
illiquid for purposes of this restriction. The Fund has not adopted any limit on
the amount of its total assets that may be invested in repurchase agreements
maturing in seven days or less. Also, until such time as the Fund's board of
directors adopts procedures for determining whether securities issued in
offerings made pursuant to SEC Rule 144A under the Securities Act of 1933 should
be treated as illiquid investments, all such securities purchased under that
Rule will be regarded as illiquid. The Fund has agreed with certain states that,
of the 10% of its total assets that may be invested in illiquid securities, no
more than 5% of its total assets may be invested in illiquid securities which
are not eligible for resale pursuant to Rule 144A. Investments in illiquid
securities involve certain risks to the extent that the Fund may be unable to
dispose of such a security at the time desired or at a reasonable price. In
addition, in order to resell a restricted security, the Fund might have to bear
the expense and incur the delays associated with effecting registration.
Securities Lending. Another practice in which the Fund may engage is to
lend its securities to qualified institutional investors. This practice permits
the Fund to earn income, which, in turn, can be invested in additional
securities to pursue the Fund's investment objective. Loans of securities by the
Fund will be collateralized by cash, letters of credit, or securities issued or
guaranteed by the U.S. Government or its agencies. The collateral will equal at
least 100% of the current market value of the loaned securities,
marked-to-market 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. The Fund will not lend any security if, as a result of
such loan, the aggregate value of securities then on loan would exceed 33-1/3%
of the Fund's total assets.
<PAGE>
Portfolio Characteristics
While the Fund purchases portfolio securities with the view of retaining
them on a long-term basis, and does not intend to purchase securities with the
intent to engage in short-term securities trading, based on market conditions it
may sell any security without regard to the period of time it has been held.
This trading policy may cause the Fund's portfolio turnover rate to exceed that
of other investment companies which seek capital growth. Increased portfolio
turnover may cause the Fund to incur greater brokerage commissions than would
otherwise be the case, and may result in the acceleration of capital gains. The
Fund's portfolio turnover rate is set forth under "Financial Highlights." See
the section of this Prospectus entitled, "Dividends, Capital Gain Distributions,
and Taxes" for a discussion of the potential tax consequences of the Fund's sale
of securities.
Investment Restrictions
The Fund is subject to a variety of restrictions regarding its investments
that are set forth in this Prospectus and in the Statement of Additional
Information. Certain of the Fund's investment restrictions are fundamental, and
may not be altered without the approval of the Fund's shareholders. Such
fundamental investment restrictions include the restrictions which limit the
percentage of Fund assets subject to securities loans and the restrictions
described in the Statement of Additional Information which limit the percentages
of the value of the Fund's total assets which may be invested in any one company
or in any one industry, under which the Fund is required to operate as a
diversified investment company which does not concentrate its investments in any
one particular industry, and limitations on the Fund's borrowing of money.
However, unless otherwise noted, the Fund's investment restrictions and its
investment policies are not fundamental and may be changed by action of the
Fund's board of directors. Unless otherwise noted, all percentage limitations
contained in the Fund's investment policies and restrictions apply at the time
an investment is made. Thus, subsequent changes in the value of an investment
after purchase or in the value of the Fund's total assets will not cause any
such limitation to have been violated or to require the disposition of any
investment, except as otherwise required by law. If the credit ratings of an
issuer are lowered below those specified for investment by the Fund, the Fund is
not required to dispose of the obligations of that issuer. The determination of
whether to sell such an obligation will be made by the investment adviser or
sub-adviser based upon an assessment of credit risk and the prevailing market
price of the investment.
RISK FACTORS
The investment performance of the Fund will be primarily dependent upon
the investment return of the securities in which the Fund invests. The ability
of the investment adviser or sub-adviser to select equity securities for
investment which increase in market value will determine whether the Fund will
be able to achieve its objective of long-term capital growth. In this regard, it
should be noted that companies in which the Fund is likely to invest may have
limited product lines, markets or financial resources, may be in the early
stages of development, and may lack management depth. The securities of these
companies in some cases may have limited marketability and may be subject to
more abrupt or erratic market movements than securities of larger, more
established companies or the market averages in general. In addition, the
securities of many such companies are traded in the over-the-counter ("OTC")
market, and will not be listed on any national, regional or foreign stock
exchange. While the OTC market has grown rapidly in recent years, many OTC
securities trade less frequently and in smaller volume than exchange-listed
securities. The values of these securities may fluctuate more sharply than
exchange-listed securities, and the Fund may experience some difficulty in
acquiring or disposing of positions in these securities at prevailing market
prices. There is no assurance that the Fund will attain its investment
objective.
<PAGE>
In addition to these investment performance risks, it should be recognized
that certain of the Fund's investment practices involve various risks. These
include the risks of investing in foreign securities and illiquid securities and
the risks involved in purchasing or selling securities on a when-issued or
delayed delivery basis. When purchasing or selling securities on a when-issued
or delayed delivery basis, the price and yield are normally fixed on the date of
the purchase commitment. During the period between purchase and settlement, no
payment is made by the Fund and no interest accrues to the Fund. At the time of
settlement, the market value of the security may be more or less than the
purchase price, and the Fund bears the risk of such market value fluctuations.
An additional risk is that, when the Fund enters into a repurchase agreement or
makes a securities loan, the other party to the transaction may default on its
obligation to repurchase or return the security involved in such transaction.
See "Foreign Securities" and "Other Investment Practices." The Fund's practice
of obtaining appropriate collateral in these transactions provides protection
against this risk, but the Fund could suffer a loss in the event its ability to
promptly dispose of the collateral is delayed or restricted.
THE FUND AND ITS MANAGEMENT
The Fund is a no-load mutual fund, registered with the Securities and
Exchange Commission as an open-end, diversified, management investment company.
It was incorporated on December 6, 1990, under the laws of Maryland. The overall
supervision of the Fund is the responsibility of its board of directors.
Pursuant to an agreement with the Fund, INVESCO Funds Group, Inc.
("INVESCO"), 7800 E. Union Avenue, Denver, Colorado, serves as the Fund's
investment adviser. INVESCO is primarily responsible for providing the Fund with
various administrative services and supervising the Fund's daily business
affairs. These services are subject to review by the Fund's board of directors.
The following individual serves as the portfolio manager for the Fund and
is primarily responsible for the day-to-day management of the Fund's portfolio
of securities:
Douglas Pratt, C.F.A. Portfolio manager of the Fund since 1993; portfolio
manager of the Financial Services Portfolio of
INVESCO Strategic Portfolios, Inc.; vice president
(1993 to present) and portfolio manager (1992 to
present) of INVESCO Trust Company. Formerly (1987
to 1992) equity analyst with Loomis, Sayles &
Company; began financial and analytical research
career in 1982; A.B., Brown University; M.B.A.,
Columbia University; Chartered Financial Analyst.
INVESCO is an indirect wholly-owned subsidiary of INVESCO PLC. INVESCO PLC
is a financial holding company which, through its subsidiaries, engages in the
business of investment management on an international basis. INVESCO was
established in 1932 and, as of May 31, 1994, managed thirteen mutual funds,
consisting of 34 separate portfolios, with combined assets of approximately $9.6
billion on behalf of over 863,000 shareholders.
Pursuant to an agreement with INVESCO, INVESCO Trust Company ("INVESCO
Trust"), 7800 E. Union Avenue, Denver, Colorado, serves as the Fund's
sub-adviser. INVESCO Trust, a trust company founded in 1969, is a wholly-owned
subsidiary of INVESCO that served as adviser or sub-adviser to 31 investment
portfolios as of May 31, 1994, including 25 portfolios in the INVESCO group.
These 31 portfolios had aggregate assets of approximately $9.6 billion as of May
31, 1994. 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. INVESCO Trust, subject to the
<PAGE>
supervision of INVESCO, is primarily responsible for selecting and managing the
Fund's investments. Although the Fund is not a party to the sub-advisory
agreement, the agreement has been approved by the shareholders of the Fund.
The Fund pays INVESCO a monthly fee which is based upon a percentage of
the Fund's average net assets determined daily. The fee is computed at the
annual rate of 0.75% on the first $350 million of the Fund's average net assets,
0.65% of the next $350 million of the Fund's average net assets, and 0.55% of
the Fund's average net assets over $700 million. For the fiscal year ended May
31, 1994, investment advisory fees paid by the Fund amounted to 0.75% of the
Fund's average net assets. Out of its advisory fee which it receives from the
Fund, INVESCO pays INVESCO Trust, as the Fund's sub-adviser, a monthly fee,
which is computed at the annual rate of 0.25% on the first $200 million of the
average net assets of the Fund, and 0.20% of the Fund's average net assets in
excess of $200 million. No fee is paid by the Fund to INVESCO Trust. While the
portions of INVESCO's fees which are equal to or higher than 0.75% of the Fund's
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 of comparable asset levels to the Fund, or funds that invest
primarily in equity securities of emerging growth companies.
The Fund also has entered into an Administrative Services Agreement, dated
December 31, 1991 (the "Administrative Agreement"), with INVESCO. Pursuant to
the Administrative Agreement, INVESCO performs certain administrative,
recordkeeping and internal sub-accounting services, including without
limitation, maintaining general ledger and capital stock accounts, preparing a
daily trial balance, calculating net asset value daily, providing selected
general ledger reports and providing sub-accounting and recordkeeping services
for shareholder accounts maintained by certain retirement and employee benefit
plans for the benefit of participants in such plans. For such services, the Fund
pays INVESCO a fee consisting of a base fee of $10,000 per year, plus an
additional incremental fee computed at the annual rate of 0.015% per year of the
average net assets of the Fund. INVESCO also is paid a fee by the Fund for
providing transfer agent services. See "Additional Information."
The Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of the Fund for the fiscal year
ended May 31, 1994, including investment advisory fees (but excluding brokerage
commissions, which are a cost of acquiring securities), amounted to 1.37% of the
Fund's average net assets. If necessary, certain Fund expenses will be absorbed
voluntarily by INVESCO and INVESCO Trust in order to ensure that the Fund's
total operating expenses will not exceed 1.50% of the Fund's average net assets.
This policy is applicable to Fund expenses incurred on or after July 1, 1994.
INVESCO, as the Fund's investment adviser, or INVESCO Trust, as the Fund's
sub-adviser, under the supervision of INVESCO, places orders for the purchase
and sale of portfolio securities with brokers and dealers based upon INVESCO's
evaluation of their financial responsibility coupled with their ability to
effect transactions at the best available prices. The Fund may market its shares
through intermediary brokers or dealers that have entered into Dealer Agreements
with INVESCO, as the Fund's Distributor, under which such intermediary brokers
or dealers generally are compensated through the payment of continuing quarterly
fees at the annual rate of up to 0.25% of the average aggregate net asset value
of outstanding Fund shares sold by such entities, measured on each business day
during a calendar quarter. The Fund may place orders for portfolio transactions
with qualified broker/dealers which recommend the Fund, or sell shares of the
Fund, to clients, or act as agent in the purchase of Fund shares for clients, if
management of the Fund believes that the quality of the transaction and the
commission rate are comparable to those available from other qualified brokerage
firms.
<PAGE>
HOW SHARES CAN BE PURCHASED
The Fund's shares are sold on a continuous basis by INVESCO, as the Fund's
Distributor, at the net asset value per share next calculated after receipt of a
purchase order. No sales charge is imposed upon the sale of shares of the Fund.
To purchase shares of the Fund, send a check made payable to INVESCO Funds
Group, Inc., together with a completed application form, to:
INVESCO FUNDS GROUP, INC.
Post Office Box 173706
Denver, Colorado 80217-3706
Purchase orders must specify the Fund in which the investment is to be
made.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the Prospectus section entitled "Services Provided by the Fund," may open an
account without making any initial investment if they agree to make regular,
minimum purchases of at least $50; (2) Fund management may permit a lesser
amount to be invested in the Fund under a federal income tax-sheltered
retirement plan (other than an IRA Account), or under a group investment plan
qualifying as a sophisticated investor; (3) those shareholders investing in an
Individual Retirement Account (IRA), or through omnibus accounts where
individual shareholder recordkeeping and sub-accounting are not required, may
make initial minimum purchases of $250; and (4) Fund management reserves the
right to reduce or waive the minimum purchase requirements in its sole
discretion where it determines such action is in the best interests of the Fund.
The minimum initial purchase requirement of $1,000, as described above, does not
apply to shareholder account(s) in any of the INVESCO funds opened prior to
January 1, 1993, and, thus, is not a minimum balance requirement for those
existing accounts. However, for shareholders already having accounts in any of
the INVESCO funds, all initial share purchases in a new Fund account, including
those made using the exchange privilege, must meet the Fund's applicable minimum
investment requirement.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum investment requirements. In no case can a bank wire order or a
telephone order be in an amount less than $1,000. For further information, the
purchaser may call the Fund's office by using the telephone number on the cover
of this Prospectus. Orders sent by overnight courier, including Express Mail,
should be sent to the street address, not Post Office Box, of INVESCO Funds
Group, Inc., at 7800 E. Union Avenue, Suite 800, Denver, CO 80237.
Orders to purchase Fund shares can be placed by telephone. Shares of the
Fund will be issued at the net asset value next determined after receipt of
telephone instructions. Payments for telephone orders must be received by the
Fund within seven business days or the transaction will be cancelled. In the
event of such cancellation, the purchaser will be held responsible for any loss
resulting from a decline in the value of the shares. INVESCO has agreed to
indemnify the Fund for any losses resulting from such cancellations.
If your check does not clear, or if a telephone purchase must be cancelled
due to nonpayment, you will be responsible for any related loss the Fund or
INVESCO incurs. If you are already a shareholder in the INVESCO funds, the Fund
has the option to redeem shares from any identically registered account in the
Fund or any other INVESCO fund as reimbursement for any loss incurred. You may
also be prohibited or restricted from making future purchases in any of the
INVESCO funds.
Persons who invest in the Fund through a securities broker may be charged
a commission or transaction fee by the broker for the handling of the
transaction,
<PAGE>
if the broker so elects. Any investor may deal directly with the Fund in any
transaction. In that event, there is no such charge.
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of management, such rejection is in the best interest of the Fund.
Net asset value per share of the Fund is computed once each day that the
New York Stock Exchange is open as of the close of trading on that Exchange
(presently 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share is calculated by dividing
the market value of all of the Fund's securities plus the value of its other
assets (including dividends, and interest accrued but not collected), less all
liabilities (including accrued expenses), by the number of outstanding shares of
the Fund. If market quotations are not readily available, a security or other
asset will be valued at fair value as determined in good faith by the board of
directors. Debt securities with remaining maturities of 60 days or less will
generally be valued at amortized cost, absent unusual circumstances, so long as
the Fund's board of directors believes that such value represents fair value.
Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the "Plan") to use its assets to finance certain activities relating to
the distribution of its shares to investors. Under the Plan, monthly payments
may be made by the Fund to INVESCO to reimburse it for particular expenditures
incurred by INVESCO during the rolling 12-month period in which that month falls
in connection with the distribution of the Fund's shares to investors. These
expenditures may include the payment of compensation (including incentive
compensation and/or continuing compensation based on the amount of customer
assets maintained in the Fund) to securities dealers and other financial
institutions and organizations to obtain various distribution-related and/or
administrative services for the Fund. Such services may include, among other
things, processing new shareholder account applications, preparing and
transmitting to the Fund's Transfer Agent computer processable tapes of all
transactions by customers, and serving as the primary source of information to
customers in answering questions concerning the Fund, and their transactions
with the Fund.
In addition, other reimbursable expenditures include those incurred for
advertising, the preparation and distribution of sales literature, the cost of
printing and distributing prospectuses to prospective investors, and such other
services and promotional activities as may from time to time be agreed upon by
the Fund and its board of directors, including public relations efforts and
marketing programs to communicate with investors and prospective investors.
Under the Plan, the Fund's reimbursement to INVESCO is limited to an
amount computed at the annual rate of 0.25 of 1% of the Fund's average net
assets during the month. INVESCO is not entitled to reimbursement for overhead
expenses under the Plan, but may be reimbursed for all or a portion of the
compensation paid for salaries and other employee benefits for the personnel of
INVESCO, whose primary responsibilities involve marketing shares of the INVESCO
funds, including the Fund. Payment amounts by the Fund under the Plan, for any
month, may only be made to reimburse or pay expenditures incurred during the
rolling 12-month period in which that month falls; therefore, any reimbursable
expenses incurred by INVESCO in excess of the limitation described above are not
reimbursable and will be borne by INVESCO. No further payments will be made by
the Fund under the Plan in the event of its termination. Also, any payments made
by the Fund may not be used to finance the distribution of shares of any other
mutual fund advised by INVESCO. Payments made by the Fund under the Plan for
compensation of marketing personnel, as noted above, are based on an allocation
formula designed to ensure that all such payments are appropriate.
<PAGE>
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Since certificates must be carefully safeguarded, and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to faciliate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Fund. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another Fund, will receive confirmations of those transactions on
their quarterly statements. For information regarding a shareholder's account
and transactions, the shareholder may call the Fund's office by using the
telephone number on the cover of this Prospectus.
Reinvestment of Distributions. Income dividends and capital gain
distributions are automatically reinvested in additional shares of the Fund at
the net asset value per share in effect on the ex-dividend date. A shareholder
may, however, elect to reinvest dividends and capital gain distributions in
certain of the other no-load mutual funds advised and distributed by INVESCO, or
to receive payment of all dividends and distributions in excess of $10.00 by
check by giving written notice to INVESCO at least two weeks prior to the record
date on which the change is to take effect. Further information concerning these
options can be obtained by contacting INVESCO.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which withdrawals will be made. Under the Periodic
Withdrawal Plan, INVESCO, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by INVESCO at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting INVESCO.
Exchange Privilege. Shares of the Fund may be exchanged for shares of any
of the following other no-load mutual funds, which are also advised and
distributed by INVESCO, on the basis of their respective net asset values at the
time of the exchange: INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund,
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, INVESCO Specialty Funds, Inc.,
INVESCO Strategic Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and
INVESCO Value Trust.
An exchange involves the redemption of shares in the Fund and investment
of the redemption proceeds in shares of one of the funds listed above. Exchanges
will be made at the net asset value per share next determined after receipt of
an exchange request in proper order. Any gain or loss realized on an exchange is
recognizable for federal income tax purposes by the shareholder. 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
Prospectus. 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.
<PAGE>
The privilege of exchanging Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the new account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone exchange privileges, the investor has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that exchange instructions are genuine. These
may include recording telephone instructions and providing written confirmations
of exchange transactions. As a result of this policy, the investor may bear the
risk of any loss due to unauthorized or fraudulent instructions; provided,
however, that if the Fund fails to follow these or other reasonable procedures,
the Fund may be liable.
In order to prevent abuse of this privilege to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange privilege of
any shareholder who requests more than four exchanges a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange privilege also may be modified or terminated at
any time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the Investment Company Act of
1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange privilege will be given at least 60 days prior to the date of
termination or the effective date of the modification.
Before making an exchange, the shareholder should review the prospectuses
of the funds involved and consider their differences, and should be aware that
the exchange privilege may only be available in those states where exchanges may
be legally made, which will require that the shares being acquired are
registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange privilege may contact INVESCO for
information concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in any one or
more of the mutual funds distributed by INVESCO may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange Privilege" on a monthly basis.
The minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying INVESCO at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting INVESCO.
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by writing to
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.
Direct Payroll Purchase. Shareholders may elect to have their employers
make automatic purchases of Fund shares for them by deducting a specified amount
from their regular paychecks. This automatic investment program can be modified
or terminated at any time by the shareholder by notifying the employer. Further
information regarding this service can be obtained by contacting INVESCO.
Tax-Sheltered Retirement Plans. Shares of the Fund may be purchased for
self-employed retirement plans, individual retirement accounts (IRAs),
simplified employee pension plans, and corporate retirement plans. In addition,
shares can be used to fund tax qualified plans established under Section 403(b)
of the
<PAGE>
Internal Revenue Code by educational institutions, including public school
systems and private schools, and certain types of non-profit organizations,
which provide deferred compensation arrangements for their employees.
Prototype forms for the establishment of these various plans, including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from INVESCO. INVESCO Trust Company, a subsidiary of
INVESCO, is qualified to serve as trustee or custodian under these plans and
provides the required services at competitive rates. Retirement plans (other
than IRAs) receive monthly statements reflecting all transactions in their Fund
accounts. IRAs receive the confirmations and quarterly statements described
under "Shareholder Accounts." For complete information, including prototype
forms and service charges, call INVESCO at the telephone number listed on the
cover of this Prospectus or send a written request to: Retirement Services,
INVESCO Funds Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net asset
value per share next determined after a request in proper form is received at
the Fund's office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of the redemption may be more or less than the price you paid
to purchase your shares, depending primarily upon the Fund's investment
performance.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Suite 800,
Denver, CO 80237. If no certificates have been issued, a written redemption
request signed by each registered owner of the account may be submitted to
INVESCO at the address noted above. If shares are held in the name of a
corporation, additional documentation may be necessary. Call or write for
specifics. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), the signature(s) must be guaranteed by a financial
institution which qualifies as an eligible guarantor institution. Redemption
procedures with respect to accounts registered in the names of broker-dealers
may differ from those applicable to other shareholders.
Be careful to specify the account from which the redemption is to be made.
Shareholders have a separate account for each fund in which they invest.
Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange, an emergency as defined by the Securities and Exchange
Commission exists, or the shares to be redeemed were purchased by check and that
check has not yet cleared; provided, however, that all redemption proceeds will
be paid out promptly upon clearance of the purchase check (which may take up to
15 days).
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 Fund reserves the right to effect the involuntary redemption of 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.
Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
<PAGE>
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to
INVESCO, using the telephone number on the cover of this Prospectus. The
redemption proceeds, at the shareholder's option, either will be mailed to the
address listed for the shareholder's Fund account, or wired (minimum of $1,000)
or mailed to the bank which the shareholder has designated to receive the
proceeds of telephone redemptions. The Fund charges no fee for effecting such
telephone redemptions. Unless the Fund's management permits a larger redemption
request to be placed by telephone, a shareholder may not place a redemption
request by telephone in excess of $25,000. The Fund charges no fee for effecting
such telephone redemptions. These telephone redemption privileges may be
modified or terminated in the future at the discretion of the Fund's management.
For INVESCO Trust Company-sponsored federal income tax-sheltered
retirement plans, the term "shareholders" is defined to mean plan trustees that
file a written request to be able to redeem Fund shares by telephone.
Shareholders should understand that while the Fund will attempt to process all
telephone redemption requests on an expedited basis, there may be times,
particularly in periods of severe economic or market disruption, when (a) they
may encounter difficulty in placing a telephone redemption request, and (b)
processing telephone redemptions may require up to seven days following receipt
of the telephone redemption request, or additional time because of postponements
resulting from the unusual circumstances set forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a new account
Application, a Telephone Redemption Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine. The Fund employs procedures, which it
believes are reasonable, designed to confirm that telephone instructions are
genuine. These may include recording telephone instructions and providing
written confirmation of transactions initiated by telephone. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions; provided, however, that if the Fund fails to follow
these or other reasonable procedures, the Fund may be liable.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES
Dividends. In addition to any increase in the value of your shares which
may occur from increases in the values of the Fund's investments, the Fund may
earn income in the form of dividends and interest on its investments. The Fund's
policy is to distribute substantially all of this income, less expenses, to
shareholders on an annual basis at the discretion of the Fund's board of
directors. Dividends are automatically reinvested in additional Fund shares at
the net asset value on the ex-dividend date, unless otherwise requested. See
"Services Provided by the Fund - Reinvestment of Distributions."
Capital Gains. Capital gains or losses are the result of the Fund's sale
of its portfolio securities at prices that are higher or lower than the prices
paid by the Fund to purchase such securities. Total gains from such sales, less
any losses from such sales (including losses carried forward from prior years)
represent net realized capital gains. The Fund distributes its net realized
capital gains, if any, to shareholders at least annually, usually in December.
Capital gain distributions are automatically reinvested in additional shares of
the Fund at the net asset value per share on the ex-dividend date, unless
otherwise requested. See "Services Provided by the Fund - Reinvestment of
Distributions."
Taxes. The Fund intends to distribute substantially all of its net
investment income and capital gains, if any, to shareholders, and to qualify for
tax treatment under Subchapter M of the Internal Revenue Code as a regulated
<PAGE>
investment company. Thus, it is not expected that the Fund will be required to
pay any federal income taxes. Shareholders (other than those exempt from income
tax) normally will have to pay federal income taxes and any state and local
income taxes on the dividends and distributions they receive from the Fund,
whether such dividends and distributions are received in cash or reinvested in
additional shares of the same or another fund. Shareholders of the Fund are
advised to consult their own tax advisers with respect to these matters.
Dividends paid by the Fund from net investment income, as well as
distributions of net realized short-term capital gains, are, for federal income
tax purposes, taxable as ordinary income to shareholders. At the end of each
calendar year, shareholders are sent full information on dividends and capital
gain distributions, including information as to the portions taxable as ordinary
income and long-term capital gains, and the amount of dividends eligible for the
dividends-received deduction available for corporations. The Fund declared no
dividends during the fiscal year ended May 31, 1994.
The Fund is required to withhold and remit to the U.S. Treasury 31% of
dividend payments, capital gain distributions, and redemption proceeds for any
account on which the owner provides an incorrect taxpayer identification number,
no number, or no certified number for a new account.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund have equal voting rights based on
one vote for each share owned. The Fund is not generally required and does not
expect to hold regular annual meetings of shareholders; however, the board of
directors will call special meetings of shareholders for the purpose, among
other reasons, of voting upon the question of removal of a director or directors
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 Fund will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940. Directors may be removed by action of the holders of a majority or more
of the outstanding shares of the Fund.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the cover
page of this Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800 E.
Union Avenue, Denver, Colorado 80237, acts as registrar, transfer agent, and
dividend disbursing agent for the Fund pursuant to a Transfer Agency Agreement
which provides that the Fund will pay a fee of $14.00 per shareholder account or
omnibus account participant per year. The transfer agency fee is not charged to
each shareholder's or participant's account but is an expense of the Fund to be
paid from the Fund's assets. In addition, registered broker-dealers, third party
administrators of tax-qualified retirement plans and other entities may provide
sub-transfer agency services to the Fund which reduce or eliminate the need for
identical services to be provided on behalf of the Fund by INVESCO. In such
cases, INVESCO is authorized to pay the third party an annual sub-transfer
agency fee of up to $14 per participant in the third party's omnibus account out
of the transfer agency fee which is paid to INVESCO by the Fund.
<PAGE>
INVESCO EMERGING GROWTH FUND, INC.
A no-load mutual fund seeking long-
term capital growth
PROSPECTUS
SEPTEMBER 30, 1994
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information, call toll-
free:
1-800/525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800/424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
7800 E. Union Avenue, Suite 800
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, visit one of our convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue
Lobby Level
