INVESCO SPECIALTY FUNDS, INC.
Supplement to Prospectus of
INVESCO Worldwide Capital Goods Fund and
INVESCO Worldwide Communications Fund
dated February 15, 1995
The section of the Funds' Prospectus entitled "The Funds and Their Management"
is amended to delete the fourth paragraph of the section and add the following
new paragraph in its place:
Capital Goods Fund
Albert M. Grossi
Portfolio manager of the Fund since 1995; portfolio manager of
INVESCO Trust Company; formerly, portfolio manager/senior analyst of
Westinghouse Pension Investments Corp. (1988 to 1995); retail equity
marketing coordinator for E. F. Hutton (1981 to 1988); securities analyst
for Shearson American Express (1975 to 1981); securities analyst for
Mutual Benefit Life Insurance (1974 to 1975); M.B.A., Rutgers University;
B.A., Rutgers University.
The date of this Supplement is April 17, 1995.
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PROSPECTUS
February 15, 1995
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO WORLDWIDE COMMUNICATIONS FUND
INVESCO Worldwide Capital Goods Fund (the "Capital Goods Fund") seeks to
achieve capital appreciation by investing, under normal circumstances, at least
65% of its total assets in companies that are primarily engaged in the design,
development, manufacture, distribution, sale or service of capital goods, or in
the mining, processing, manufacture or distribution of raw materials and
intermediate goods used by industry and agriculture.
INVESCO Worldwide Communications Fund (the "Communications Fund") seeks to
achieve a high total return on investment through capital appreciation and
current income by investing, under normal circumstances, at least 65% of its
total assets in companies that are primarily engaged in the design, development,
manufacture, distribution or sale of communications services and equipment. Up
to 35% of the Communications Fund's assets will be invested, under normal
circumstances, in companies that are engaged in developing, constructing or
operating infrastructure projects throughout the world, or in supplying
equipment or services to such companies.
Under normal circumstances, each Fund will invest at least 65% of its
total assets in issuers domiciled in at least three countries, one of which may
be the United States, although the Funds' investment adviser expects each Fund's
investments to be allocated among a larger number of countries. The percentage
of each Fund's assets invested in United States securities normally will be
higher than that invested in securities issued by companies in any other single
country. However, it is possible that at times a Fund may have 65% or more of
its total assets invested in foreign securities. The Funds have adopted certain
investment policies which may expose the Funds to increased risks or costs. See
"Risk Factors" and "Investment Objectives and Polices-Portfolio Turnover."
Each Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, managed, no-load mutual fund consisting of four separate portfolios
of investments. Separate prospectuses are available upon request from INVESCO
Funds Group, Inc. for the Company's other funds, INVESCO European Small Company
Fund and INVESCO Latin American Growth Fund. Investors may purchase shares of
any or all of the Funds. Additional funds may be offered in the future.
This Prospectus provides you with the basic information you should know
before investing in the Capital Goods Fund or Communications Fund. You should
read it and keep it for future reference. A Statement of Additional Information
containing further information about the Funds has been filed with the
Securities and Exchange Commission. You can obtain a copy without
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charge by writing INVESCO Funds Group, Inc., Post Office Box 173706, Denver,
Colorado 80217-3706; or by calling 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 FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES OF
THE FUNDS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED FEBRUARY 15, 1995, IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
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TABLE OF CONTENTS
Page
ANNUAL FUND EXPENSES 7
FINANCIAL HIGHLIGHTS 9
PERFORMANCE DATA 10
INVESTMENT OBJECTIVES AND POLICIES 10
RISK FACTORS 16
THE FUNDS AND THEIR MANAGEMENT 18
HOW SHARES CAN BE PURCHASED 21
SERVICES PROVIDED BY THE FUNDS 23
HOW TO REDEEM SHARES 26
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES 27
ADDITIONAL INFORMATION 28
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ANNUAL FUND EXPENSES
The Funds are no-load; there are no fees to purchase, exchange or redeem
shares. The Funds, however, are 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 Funds' total return.
Capital Goods Communications
Fund Fund
Shareholder Transaction Expenses
Sales load "charge" on purchases None None
Sales load "charge" on reinvested dividends None None
Redemption fees None None
Exchange fees None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.65% 0.65%
12b-1 Fees 0.25% 0.25%
Other Expenses 1.10% 1.10%
(after voluntary expense limitation)(1)
Transfer Agency Fee(2) 0.40% 0.40%
General Services, Administrative 0.70% 0.70%
Services, Registration, Postage(3)
Total Fund Operating Expenses 2.00% 2.00%
(after voluntary expense limitation)(1)
(1) Based on estimated expenses for the current fiscal year. If necessary,
certain Fund expenses will be absorbed voluntarily for at least the first fiscal
year of the Funds' operations in order to ensure that expenses for each Fund
will not exceed 2.00% of each Fund's average net assets pursuant to an agreement
between each Fund, INVESCO Funds Group, Inc. and INVESCO Trust Company under
which all expenses of each Fund above that amount will be split evenly between
these two companies. If such voluntary expense limit were not in effect, each
Fund's Other Expenses and Total Fund Operating Expenses for the fiscal year
ending July 31, 1995 are estimated to be 1.37% and 2.27%, respectively, of each
Fund's average net assets. Actual expenses are not provided because the Funds
did not commence operations until August 1, 1994.
(2) Consists of the transfer agency fee described under
"Additional Information - Transfer and Dividend Disbursing Agent."
(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and auditors, a securities pricing service, 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.
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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
Capital Goods Fund $21 $63
Communications Fund $21 $63
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly. Such expenses are paid from the respective Fund's assets. (See
"The Funds and Their Management.") The above figures are estimates, since the
Funds did not commence a public offering of securities until August 1, 1994. The
Funds charge no sales loads, redemption fees, or exchange fees. The Example
should not be considered a representation of past or 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 each 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.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding throughout the Period)
The following information is unaudited. This information should be read in
conjunction with unaudited financial statements appearing in the Funds'
Statement of Additional Information, which is available without charge by
contacting INVESCO Funds Group, Inc. at the address or telephone number shown
below.
Worldwide Worldwide
Capital Goods Communications
Fund Fund
PER SHARE DATA
Net Asset Value-- Beginning of Period $10.00 $10.00
--------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.01) 0.03
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (0.46) 0.54
Total from Investment Operations (0.47) 0.57
--------- ---------
Net Asset Value-- End of Period $9.53 $10.57
========= =========
TOTAL RETURN (4.70%)* 5.70%*
RATIOS
Net Assets-- End of Period ($000 Omitted) $3,992 $15,104
Ratio of Expenses to Average Net Assets# 0.67%* 0.67%*
Ratio of Net Investment Income (Loss) to
Average Net Assets# (0.08%)* 0.55%*
Portfolio Turnover Rate 25%* 48%*
* These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
# Various expenses of Worldwide Capital Goods and Worldwide Communications Funds
were voluntarily absorbed by IFG for the period ended November 30, 1994. If such
expenses had not been voluntarily absorbed, unannualized ratio of expenses to
average net assets would have been 1.28% and 0.79%, respectively, and
unannualized ratio of net investment income (loss) to average net assets would
have been (0.69%) and 0.43%, respectively.
Further information about the performance of the Funds will be contained
in the Company's Annual Report to Shareholders, which may be obtained without
charge by writing INVESCO Funds Group, Inc., P.O. Box 173706, Denver, Colorado
80217-3706; or by calling 1-800- 525-8085. Copies of the 1995 annual report will
be available on or about September 30, 1995.
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PERFORMANCE DATA
From time to time, the Funds advertise their total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of a 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. Thus, any given report of total
return performance should not be considered as representative of future
performance. The Funds charge no sales loads, redemption fees, or exchange fees
which would affect the total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Funds, comparative data between the Funds' 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 the 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 appearing in publications such as Money,
Forbes, Kiplinger's Personal Finance, Morningstar, 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 Funds in performance reports, will be
drawn from the "Global Funds" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.
INVESTMENT OBJECTIVES AND POLICIES
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO Worldwide Capital Goods Fund seeks to achieve capital appreciation
by investing, under normal circumstances, at least 65% of its total assets in
companies that are primarily engaged in the design, development, manufacture,
distribution, sale or service of capital goods, or in the mining, processing,
manufacture, or distribution of raw materials and intermediate goods used by
industry and agriculture. The foregoing investment objective is fundamental and
may not be changed in any material respect without the approval of the Capital
Goods Fund's shareholders. Capital goods include finished products and equipment
used by industrial
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and agricultural firms, such as industrial machinery, construction equipment,
computers, software, farm equipment, office equipment, and electrical and
telecommunications equipment, as well as components and sub-assemblies of such
products. Raw materials and intermediate goods include chemicals, timber, paper,
metals, textiles, cement, gypsum and other commodities.
INVESCO WORLDWIDE COMMUNICATIONS FUND
INVESCO Worldwide Communications Fund seeks to achieve a high total return
on investment through capital appreciation and current income by investing,
under normal circumstances, at least 65% of its total assets in companies that
are primarily engaged in the design, development, manufacture, distribution or
sale of communications services and equipment. The foregoing investment
objective is fundamental and may not be changed in any material respect without
the approval of the Communications Fund's shareholders. The Communications Fund
may invest in companies involved in services and products such as long distance,
local and
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cellular telephone service; wireless communications systems such as personal
communications networks, paging and special mobile radio; local and wide area
networks; fiber optic transmission; satellite communication; microwave
transmission; television and movie programming; broadcasting; and cable
television.
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Up to 35% of the Communications Fund's assets will be invested, under
normal circumstances, in companies that are engaged in developing, constructing
or operating infrastructure projects throughout the world, or in supplying
equipment or services to such companies. Infrastructure projects include
communications systems such as those described above, as well as electric
utilities, water and sewer projects, natural gas and oil pipelines,
environmental projects, housing, and transportation projects such as airports,
railroads, highways, bridges and ports.
Investment Policies Applicable to Both Funds
Each Fund has a policy regarding concentration of its investments which is
fundamental and may not be changed without the approval of the respective Fund's
shareholders. The Capital Goods Fund will concentrate its investments (i.e.,
invest more than 25% of its total assets) in the capital goods, raw materials
and intermediate goods industries described above. The Communications Fund will
concentrate its investments (i.e., invest more than 25% of its total assets) in
the communications industries described above. A particular company will be
deemed to be primarily engaged in the group of industries designated for
investment by a Fund if, in the determination of the Funds' investment adviser
and sub- adviser (collectively, "Fund Management"), more than 50% of its gross
income or net sales are derived from activities in such industries or more than
50% of its assets are dedicated to the production of revenues from such
industries. In circumstances where, based on available financial information, a
question exists whether a company meets one of these standards, the Fund may
invest
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in equity securities of such company only if Fund Management determines, after
review of information describing the company and its business activities, that
the company's primary business is within the group of industries designated for
investment by that Fund, as such industries are described above.
Under normal circumstances, each Fund will invest at least 65% of its
total assets in issuers domiciled in at least three countries, one of which may
be the United States, although Fund Management expects each Fund's investments
to be allocated among a larger number of countries. The percentage of each
Fund's assets invested in United States securities normally will be higher than
that invested in securities issued by companies in any other single country.
However, it is possible that at times a Fund may have 65% or more of its total
assets invested in foreign securities. Investments in foreign securities involve
certain risks which are discussed below under "Risk Factors."
Under normal conditions, each Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, preferred stocks and
securities convertible into common stocks, such as rights, warrants and
convertible debt securities). In selecting the equity securities in which the
Funds invest, Fund Management attempts to identify companies that have
demonstrated or, in Fund Management's opinion, are likely to demonstrate in the
future, strong earnings growth relative to other companies in the same industry.
The dividend payment records of companies are also considered. Equity securities
may be issued by either established, well-capitalized companies or newly-formed,
small-cap companies, and may trade on regional or national stock exchanges or in
the over-the-counter market. The risks of investing in small capitalization
companies are discussed below under "Risk Factors."
Consistent with their investment objectives, the Funds also may invest in
fixed-income securities (corporate bonds, commercial paper, debt securities
issued by the U.S. government, its agencies and instrumentalities, or foreign
governments and, to a lesser extent, municipal bonds, asset-backed securities
and zero coupon bonds). Each Fund may invest no more than 15% of its total
assets in debt securities that are rated below BBB by Standard & Poor's Ratings
Group ("Standard & Poor's) or Baa by Moody's Investors Service, Inc. ("Moody's")
or, if unrated, they are judged by Fund Management to be equivalent in quality
to debt securities having such ratings (commonly referred to as "junk bonds").
In no event will a Fund ever invest in a debt security rated below CCC by
Standard & Poor's or Caa by Moody's. The risks of investing in lower rated debt
securities are discussed below under "Risk Factors."
Each Fund may invest up to 35% of its total assets in securities of
companies that are engaged in businesses outside the field of business activity
in which at least 65% of the Fund's total assets is invested. These investments
may include equity securities or fixed-income securities selected to meet the
Capital
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Goods Fund's investment objective of capital appreciation or the Communications
Fund's objective of achieving a high total return on investment through capital
appreciation and current income, as the case may be. Such equity securities may
be issued by either established, well-capitalized companies or newly-formed,
small-cap companies, and may trade on regional or national stock exchanges or in
the over-the-counter market. Such fixed-income securities must meet the quality
standards described above. These equity and fixed-income securities may be
issued by either U.S. or foreign companies or governments. The risks of
investing in lower rated debt securities and in foreign securities are discussed
below under "Risk Factors." In addition, the Funds may hold certain cash and
cash equivalent securities as cash reserves ("cash securities").
The amount invested in stocks, bonds and cash securities may be varied
from time to time, depending upon Fund Management's assessment of business,
economic and market conditions. In periods of abnormal economic and market
conditions, as determined by Fund Management, either Fund may depart from its
basic investment objective and assume a temporary defensive position, with a
larger portion of its assets invested in U.S. government and agency securities,
investment grade corporate bonds or cash securities such as domestic
certificates of deposit and banker's acceptances, repurchase agreements and
commercial paper. The Funds reserve the right to hold equity, fixed income and
cash securities in whatever proportion is deemed desirable at any time for
defensive purposes. While a Fund is in a defensive position, the opportunity to
achieve capital appreciation will be limited; however, the ability to maintain a
defensive position enables the Funds to seek to avoid capital losses during
market downturns. Under normal market conditions, the Funds do not expect to
have a substantial portion of their assets invested in cash securities.
In order to hedge their portfolios, the Funds may purchase and write
options on securities (including index options and options on foreign
securities), and may invest in futures contracts for the purchase or sale of
foreign currencies, fixed-income securities and instruments based on financial
indices (collectively, "futures contracts"), options on futures contracts,
forward contracts and interest rate swaps and swap-related products. Interest
rate swaps involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. These practices and securities, some of which
are known as derivatives, and their risks are discussed below under "Risk
Factors" and in the Statement of Additional Information.
Additional information on certain of the types of securities in which the
Funds may invest is set forth below:
U.S. Government and Agency Securities
Investments in U.S. government securities may consist of
securities issued or guaranteed by the United States government and
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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, such as Government National
Mortgage Association obligations, or obligations of U.S. government authorities,
agencies or instrumentalities, such as 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.
When-Issued Securities
Each 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 equity
or debt 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 payment obligation and, in the case of debt
securities, the interest rate that will be received on the securities generally
are fixed at the time the Fund enters into the 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. Each Fund maintains 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, in a
segregated account with its custodian until payment is made.
Illiquid and Rule 144A Securities
The Funds are 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. However, a Fund will not purchase
any such security if the purchase would cause the Fund to invest more than 15%
of its net assets, measured at the time of purchase, in illiquid securities.
Repurchase agreements maturing in more than seven days will be considered as
illiquid for purposes of this restriction. Investments in illiquid securities
involve certain risks to the extent that a 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, a Fund might have to bear the expense and incur
the delays associated with effecting registration.
Certain restricted securities that are not registered for sale to the
general public, but that can be resold to institutional investors ("Rule 144A
Securities"), may be purchased without regard to the foregoing 15% limitation if
a liquid institutional trading market exists. The liquidity of the Fund's
investments in Rule
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144A Securities could be impaired if dealers or institutional investors become
uninterested in purchasing these securities. The Company's board of directors
has delegated to the adviser the authority to determine the liquidity of Rule
144A Securities pursuant to guidelines approved by the board. For more
information concerning Rule 144A Securities, see the Statement of Additional
Information.
Repurchase Agreements
The Funds may enter into repurchase agreements with respect to debt
instruments eligible for investment by the Funds. These agreements are entered
into with member banks of the Federal Reserve System, registered broker-dealers,
and registered government securities dealers, which are deemed creditworthy. A
repurchase agreement, which may be considered a "loan" under the Investment
Company Act of 1940, is a means of investing monies for a short period. In a
repurchase agreement, a Fund acquires a debt instrument (generally a security
issued by the U.S. government or an agency thereof, a banker's acceptance, or a
certificate of deposit) subject to resale to the seller at an agreed upon price
and date (normally, the next business 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 Company's board of directors. A Fund will not enter into a repurchase
agreement maturing in more than seven days if as a result more than 15% of its
net assets would be invested in such repurchase agreements and other illiquid
securities. The Funds have not adopted any limit on the amount of their net
assets that may be invested in repurchase agreements maturing in seven days or
less.
Securities Lending
The Funds also may lend their securities to qualified brokers, dealers,
banks, or other financial institutions. This practice permits the Funds to earn
income, which, in turn, can be invested in additional securities of the type
described in this Prospectus in pursuit of the Funds' investment objectives.
Loans of securities by a Fund 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. Cash collateral will be invested only in high
quality short-term investments offering maximum liquidity. Lending securities
involves certain risks, the most significant of which is the risk that a
borrower may fail to return a portfolio security. The Funds monitor the
creditworthiness of borrowers in order to minimize such risks. A Fund will not
lend any security if, as a result of the
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loan, the aggregate value of securities then on loan would exceed 33-1/3% of the
Fund's total assets (taken at market value).
Portfolio Turnover
There are no fixed limitations regarding portfolio turnover for the Funds'
portfolios. Although the Funds do not trade for short-term profits, securities
may be sold without regard to the time they have been held in a Fund when, in
the opinion of Fund Management, investment considerations warrant such action.
In addition, portfolio turnover rates may increase as a result of large amounts
of purchases or redemptions of Fund shares due to economic, market or other
factors that are not within the control of Fund Management. As a result, while
it is anticipated that the portfolio turnover rates for the Funds' portfolios
generally will not exceed 200%, under certain market conditions these portfolio
turnover rates may exceed 200%. Increased portfolio turnover would cause a Fund
to incur greater brokerage costs than would otherwise be the case, and may
result in the acceleration of capital gains which are taxable when distributed
to shareholders. The Funds' portfolio turnover rates are set forth under
"Financial Highlights" and, along with the Funds' brokerage allocation policies,
are discussed in the Statement of Additional Information.
Investment Restrictions
The Funds are subject to a variety of restrictions regarding their
investments that are set forth in this Prospectus and in the Statement of
Additional Information. Certain of the Funds' investment restrictions are
fundamental, and may not be altered without the approval of the respective
Fund's shareholders. Such fundamental investment restrictions include the
restrictions which prohibit a Fund from: lending more than 33-1/3% of its total
assets to other parties (excluding purchases of commercial paper, debt
securities and repurchase agreements); with respect to 75% of its total assets,
purchasing the securities of any one issuer (other than cash items and
government securities) if the purchase would cause the Fund to have more than 5%
of its total assets invested in the issuer or to own more than 10% of the
outstanding voting securities of the issuer; and borrowing money or issuing
senior securities except that a Fund may borrow money for temporary or emergency
purposes (not for leveraging or investment) and may enter into reverse
repurchase agreements in an aggregate amount not exceeding 33-1/3% of its total
assets. However, unless otherwise noted, the Funds' investment restrictions and
their investment policies are not fundamental and may be changed by action of
the Company's board of directors. Unless otherwise noted, all percentage
limitations contained in the Funds' 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 Funds' 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
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investment by the Funds, the Funds are not required to dispose of the
obligations of that issuer. The determination of whether to sell such an
obligation will be made by Fund Management based upon an assessment of credit
risk and the prevailing market price of the investment. If a Fund borrows money,
its share price may be subject to greater fluctuation until the borrowing is
repaid. Each Fund attempts to minimize such fluctuations by not purchasing
additional securities when borrowings, including reverse repurchase agreements,
are greater than 5% of the value of the Fund's total assets. As a fundamental
policy in addition to the above, each Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental), invest all of its
assets in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as the Fund. See "Additional Information- Master/Feeder Option."
RISK FACTORS
There can be no assurance that the Funds will achieve their investment
objectives. The Funds' investments in common stocks and other equity securities
may, of course, decline in value. The Funds' investments in fixed-income
securities generally are subject to both credit risk and market risk. Credit
risk relates to the ability of the issuer to meet interest or principal
payments, or both, as they come due. Market risk relates to the fact that the
market values of the debt securities in which the Fund invests generally will be
affected by changes in the level of interest rates. An increase in interest
rates will tend to reduce the market values of debt securities, whereas a
decline in interest rates will tend to increase their values. Although the
Funds' investment adviser limits the Funds' investments in fixed-income
securities to securities it believes are not highly speculative, both kinds of
risk are increased by investing in debt securities rated below the top three
grades by Standard & Poor's or Moody's or, if unrated, securities determined by
the Funds' adviser to be of equivalent quality. Although bonds in the lowest
investment grade debt category (those rated BBB by Standard & Poor's or Baa by
Moody's) are regarded as having adequate capability to pay principal and
interest, they have speculative characteristics. Adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case for higher rated bonds. Lower
rated bonds by Moody's (categories Ba, B, Caa) are of poorer quality and also
have speculative characteristics. Bonds rated Caa may be in default or there may
be present elements of danger with respect to principal or interest. Lower rated
bonds by Standard & Poor's (categories BB, B, CCC) include those which are
regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with their terms; BB
indicates the lowest degree of speculation and CCC a high degree of speculation.
While such bonds likely will have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
<PAGE>
conditions. For a specific description of each corporate bond rating category,
please refer to Appendix B to the Statement of Additional Information.
Industry Concentration
While the Funds diversify their investments by investing, with respect to
75% of their total assets, not more than 5% of their total assets in the
securities of any one issuer, Fund Management normally will invest each Fund's
assets primarily in companies engaged in the particular fields of business
activity designated for investment by that Fund. As a result of this investment
policy, an investment in a Fund may be subject to greater fluctuations in value
than generally would be the case if an investment were made in an investment
company that did not concentrate its investments in a similar manner. Certain
economic factors or specific events may exert a disproportionate impact upon the
prices of equity securities of companies within a particular industry relative
to their impact on the prices of securities of companies engaged in other
industries. For example, the success of the companies in which the Capital Goods
Fund may invest is closely related to overall capital spending levels. Capital
spending is influenced by broad factors such as economic cycles, interest rates,
technological obsolescence, foreign competition and governmental regulation, as
well as individual company factors such as profitability. The Communications
Fund may invest in companies that are developing new technologies and,
accordingly, are subject to the risks of intense competition, failure to obtain
adequate financing or necessary regulatory approvals and rapid product
obsolescence. In addition, the types of companies in which the Communications
Fund may invest generally are subject to substantial government regulation.
Companies engaged in infrastructure projects are subject to various risks,
including difficulties in securing financing for large projects and costs and
delays resulting from environmental considerations. In addition, changes in the
market price of the equity securities of a particular company which occupies a
dominant position in an industry may tend to influence the market prices of
other companies within the same industry. As a result of the foregoing factors,
an investment in one or both of the Funds may not constitute a complete,
balanced investment program.
Foreign Securities
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.
<PAGE>
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 a
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 a Fund experiencing
difficulties in pursuing legal remedies and collecting judgments. 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.
Small Capitalization Companies
The Funds may invest in equity securities issued by small-cap companies.
The Funds' investments in small capitalization stocks may include companies that
have limited operating histories, product lines, and financial and managerial
resources. These companies may be subject to intense competition from larger
companies, and their stock may be subject to more abrupt or erratic market
movements than the stocks of larger, more established companies. Due to these
and other factors, small cap companies may suffer significant losses as well as
realize substantial growth.
Futures, Options and Other Derivative Instruments
The use of futures, options, forward contracts and swaps exposes the Funds
to additional investment risks and transaction costs. If Fund Management seeks
to protect the Funds against potential adverse movements in the securities,
foreign currency or interest rate markets using these instruments, and such
markets do not move in a direction adverse to the Funds, the Funds could be left
in a less favorable position than if such strategies had not been used. Risks
inherent in the use of futures, options, forward contracts and swaps include (1)
the risk that interest rates, securities prices and currency markets will not
move in the directions anticipated; (2) imperfect correlation between the price
of futures, options and forward contracts and movements in the prices of the
securities or currencies being hedged; (3) the fact that skills needed to use
these strategies are different from those needed to select portfolio securities;
(4) the possible absence of a liquid secondary market for any particular
instrument at any time; and (5) the possible need to defer closing out certain
hedged positions to avoid adverse tax consequences. Further information on the
use of futures, options, forward foreign currency contracts
<PAGE>
and swaps and swap-related products, and the associated risks, is
contained in the Statement of Additional Information.
THE FUNDS AND THEIR MANAGEMENT
The Company 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 April 12, 1994, under the laws of Maryland. The overall
supervision of each Fund is the responsibility of the Company's board of
directors.
Pursuant to an agreement with the Company, INVESCO Funds Group, Inc.
("INVESCO"), 7800 E. Union Avenue, Denver, Colorado, serves as the Funds'
investment adviser. INVESCO is primarily responsible for providing the Funds
with various administrative services and supervising the Funds' daily business
affairs. These services are subject to review by the Company's board of
directors.
The following individuals serve as portfolio managers for the Funds and
are primarily responsible for the day-to-day management of the Funds' portfolios
of securities:
Capital Goods Fund
Jerry W. Mill, C.F.A. Portfolio manager of the Fund since 1994;
vice president (1993 to present),
portfolio manager (1990 to present) and
research analyst (1985 to 1990) of
INVESCO Trust Company; began investment
career in 1985; B.A., University of
California, Berkeley; M.B.A., University
of Denver; Chartered Financial Analyst.
Communications Fund
Brian F. Kelly Portfolio manager of the Fund since 1994;
portfolio manager of INVESCO Strategic
Utilities Portfolio and INVESCO VIF-
Utilities Portfolio, and co-portfolio
manager of INVESCO Balanced Fund;
portfolio manager (1993 to present) and
vice president (1994 to present) of
INVESCO Trust Company; formerly (1986 to
1993), senior equity investment analyst
with Sears Investment Management Company;
B.A., University of Notre Dame; M.B.A.
and J.D., University of Iowa; Certified
Public Accountant.
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 November 30, 1994, managed 14 mutual funds,
consisting of 36
<PAGE>
separate portfolios, with combined assets of approximately $9.1 billion on
behalf of over 830,000 shareholders.
Pursuant to an agreement with INVESCO, INVESCO Trust Company ("INVESCO
Trust"), 7800 E. Union Avenue, Denver, Colorado, serves as the sub-adviser to
each Fund. INVESCO Trust, a trust company founded in 1969, is a wholly-owned
subsidiary of INVESCO that served as adviser or sub-adviser to 35 investment
portfolios as of November 30, 1994, including 27 portfolios in the INVESCO
group. These 35 portfolios had aggregate assets of approximately $8.4 billion as
of November 30, 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 supervision of INVESCO, is primarily responsible for selecting
and managing the Funds' investments. Although the Company is not a party to the
sub-advisory agreement, the agreement has been approved by INVESCO as the then
sole shareholder of the Company.
Each Fund pays INVESCO a monthly advisory fee which is based upon a
percentage of the average net assets of each Fund, determined daily. The maximum
advisory fee is computed at the annual rate of 0.65% of the first $500 million
of each Fund's average net assets, 0.55% of the next $500 million of each Fund's
average net assets and 0.45% of each Fund's average net assets over $1 billion.
Out of its advisory fee which it receives from the Funds, INVESCO pays
INVESCO Trust, as sub-adviser to the Funds, a monthly fee, which is computed at
the annual rate of 0.325% of the first $500 million of each Fund's average net
assets, 0.275% of the next $500 million of each Fund's average net assets and
0.225% of each Fund's average net assets in excess of $1 billion. No fee is paid
by the Funds to INVESCO Trust.
The Company also has entered into an Administrative Services Agreement
(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 Fund shareholder accounts
maintained by certain retirement and employee benefit plans for the benefit of
participants in such plans. For such services, each 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 each Fund for providing transfer agent
services. See "Additional Information."
Each Fund's expenses, which are accrued daily, are generally deducted from
the Fund's total income before dividends are paid.
<PAGE>
These expenses include the fees of the investment adviser, distribution fees,
legal, transfer agent, custodian and auditor's fees, commissions, taxes,
compensation of independent directors, insurance premiums, printing and other
expenses relating to the Fund's operations which are not expressly assumed by
INVESCO under its agreements with the Company. If necessary, certain expenses
for each Fund will be absorbed by INVESCO voluntarily for at least the first
fiscal year of each Fund's operations in order to ensure that each Fund's total
expenses do not exceed 2.00%.
INVESCO, as the Company's investment adviser, or INVESCO Trust, as the
Company's sub-adviser, 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 Company may market shares of the Funds through
intermediary brokers or dealers that have entered into Dealer Agreements with
INVESCO, as the Company's Distributor, under which such intermediary brokers or
dealers generally are compensated through the payment of continuing quarterly
fees at an 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 Funds may place orders for portfolio transactions
with qualified broker/dealers which recommend the Funds, or sell shares of the
Funds to clients, or act as agent in the purchase of Fund shares for clients, if
management of the Funds believes that the quality of execution of the
transaction and level of commission are comparable to those available from other
qualified brokerage firms.
HOW SHARES CAN BE PURCHASED
Shares of each Fund are sold on a continuous basis by INVESCO, as the
Funds' Distributor, at the net asset value per share next calculated after
receipt of a purchase order in good form. No sales charge is imposed upon the
sale of shares of the Funds. To purchase shares of either or both Funds, 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 Funds," 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
<PAGE>
a lesser amount to be invested in a 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 purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire order or telephone order
be in an amount less than $1,000. For further information, the purchaser may
call the Funds' 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 shares of either Fund can be placed by telephone.
Shares of the Funds will be issued at the net asset value per share next
determined after receipt of telephone instructions. Payments for telephone
orders must be received by the respective Fund within seven business days of the
transaction. Beginning in June 1995, this period will be reduced to five
business days. In the event payment is not received, the shares will be redeemed
by INVESCO and 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
Funds 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 a Fund or
INVESCO incurs. If you are already a shareholder in the INVESCO funds, the Funds
have the option to redeem shares from any identically registered account in the
Funds or any other INVESCO fund as reimbursement for any loss incurred. You also
may be prohibited or restricted from making future purchases in any of the
INVESCO funds.
Persons who invest in the Funds through a securities broker may be charged
a commission or transaction fee for the handling of the transaction if the
broker so elects. Any investor may deal directly with a Fund in any transaction.
In that event, there is no such charge.
Each 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.
<PAGE>
Net asset value per share 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 also may be computed on other days
under certain circumstances. Net asset value per share for each Fund is
calculated by dividing the market value 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 that 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 be valued at amortized cost, absent unusual circumstances, so
long as the Company's board of directors believes that such value represents
fair value.
Distribution Expenses. Each Fund is authorized under a Plan and Agreement
of Distribution 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 for the Funds as may from time to time be
agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors.
Under the Plan, the Company's reimbursement to INVESCO on behalf of each
Fund is limited to an amount computed at an annual rate of 0.25 of 1% of each
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 Funds.
<PAGE>
Payment amounts by each 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 a Fund under the Plan in
the event of its termination. Also, any payments made by a Fund may not be used
to finance the distribution of shares of any other fund of the Company or other
mutual fund advised by INVESCO. Payments made by each 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.
SERVICES PROVIDED BY THE FUNDS
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 facilitate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Funds. 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. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Funds' 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
making the distribution at the net asset value per share of that Fund 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 ex- dividend 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 the 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
<PAGE>
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 either Fund may be exchanged for shares of
any other Fund of the Company, as well as 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 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 Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.
An exchange involves the redemption of shares in a Fund and investment of
the redemption proceeds in shares of another Fund of the Company or 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 such 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.
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 Funds will not
be liable for following instructions communicated by telephone that they
reasonably believe to be genuine. The Funds employ procedures, which they
believe 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 a 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, each Fund reserves the right to
<PAGE>
terminate the exchange privilege of any shareholder who requests more than four
exchanges in a year. A 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
legally may be 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 employer
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.
<PAGE>
Tax-Sheltered Retirement Plans. Shares of either 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 Internal Revenue Code by educational institutions, including public
school systems and private schools, and certain kinds 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 either 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 Funds' office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of 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, 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.
<PAGE>
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, each 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
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 Funds charge no fee for effecting such
telephone redemptions. Unless Fund 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. 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 Funds 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 will require up to seven days following receipt
of the redemption request, or additional time because of the unusual
circumstances set forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined.
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By signing a New Account Application, a Telephone Transaction Authorization Form
or otherwise utilizing telephone redemption privileges, the shareholder has
agreed that the Funds will not be liable for following instructions communicated
by telephone that they reasonably believe to be genuine. The Funds employ
procedures, which they believe 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
a 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 a Fund's investments, each Fund may
earn income in the form of dividends and interest on its investments. Dividends
paid by a Fund will be based solely on the income earned by it. Each Fund's
policy is to distribute substantially all of this income, less expenses, to
shareholders on an annual basis at the direction of the Company's board of
directors. Dividends are automatically reinvested in additional shares of the
Fund making the dividend distribution at the net asset value on the ex-dividend
date, unless otherwise requested. See "Services Provided by the Funds -
Reinvestment of Distributions."
Capital Gains. Capital gains or losses are the result of a Fund's sale of
its 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. Each Fund distributes its net realized capital
gains, if any, to its shareholders at least annually, usually in December.
Capital gain distributions are automatically reinvested in additional shares of
the Fund making the distribution at the net asset value per share on the
ex-dividend date, unless otherwise requested. See "Services Provided by the
Funds - Reinvestment of Distributions."
Taxes. Each of the Funds 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
investment company. Thus, it is not expected that the Funds 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 Funds are
<PAGE>
advised to consult their own tax advisers with respect to these
matters.
Dividends paid by the Funds 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 information on foreign source income and
foreign taxes. Information concerning the amount of dividends eligible for the
dividends-received deduction available for corporations is contained in the
Company's Annual Report to Shareholders or may be obtained upon request by
calling INVESCO.
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.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Funds 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 Funds of the Company voting together. In other cases, such as voting upon
an investment advisory contract, voting is on a Fund-by-Fund basis. When not all
Funds are affected by a matter to be voted upon, only shareholders of the Fund
or Funds affected by the matter will be entitled to vote thereon. The Company 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 Company or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company 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
Company.
Master/Feeder Option. The Company may in the future seek to achieve each
Fund's investment objective by investing all of the Fund's assets in another
investment company having the same investment objective and substantially the
same investment policies and restrictions as those applicable to the Fund. It is
expected that any such investment company would be managed by INVESCO in
substantially the same manner as the existing Fund. If permitted by applicable
laws and policies then in effect, any such investment may be made in the sole
discretion of the Company's board of directors without further approval of the
shareholders of the
<PAGE>
respective Fund. However, Fund shareholders will be given at least 30 days prior
notice of any such investment. Such investment would be made only if the
Company's board of directors determines it to be in the best interests of the
respective Fund and its shareholders. In making that determination, the board
will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. No assurance
can be given that costs will be materially reduced if this option is
implemented.
Shareholder Inquiries. All inquiries regarding the Funds should be
directed to the Funds 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 Ave., Denver, Colorado 80237, acts as registrar, transfer agent, and
dividend disbursing agent for the Funds pursuant to a Transfer Agency Agreement
which provides that each 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 a 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 $14.00 per participant in the third party's omnibus account
out of the transfer agency fee which is paid to INVESCO by the Fund.
INVESCO SPECIALTY FUNDS, INC.
Two no-load mutual funds
investing globally in
designated market sectors.
PROSPECTUS
February 15, 1995
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
Post Office Box 173706
Denver, Colorado 80217-3706
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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
