-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NXOih2aAPu5ABYb/ZVGli2KocWRrdPeC6AzvLAzbkG2np7WLcX8Tjpvn8jwdSHAa BdUrRdaEoJ93g5XKSxYAvQ== 0000789940-97-000015.txt : 19971224 0000789940-97-000015.hdr.sgml : 19971224 ACCESSION NUMBER: 0000789940-97-000015 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19971223 EFFECTIVENESS DATE: 19980101 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESCO VALUE TRUST CENTRAL INDEX KEY: 0000789940 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-03429 FILM NUMBER: 97743674 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-04595 FILM NUMBER: 97743675 BUSINESS ADDRESS: STREET 1: 7800 EAST UNION AVE CITY: DENVER STATE: CO ZIP: 80237 BUSINESS PHONE: 8005541156 MAIL ADDRESS: STREET 1: P.O. BOX 173706 CITY: DENVER STATE: CO ZIP: 80217-3706 FORMER COMPANY: FORMER CONFORMED NAME: FINANCIAL SERIES TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: INVESCO INSTITUTIONAL SERIES TRUST DATE OF NAME CHANGE: 19910117 FORMER COMPANY: FORMER CONFORMED NAME: SHEARWATER EQUITY INC DATE OF NAME CHANGE: 19870810 485BPOS 1 File No. 33-3429 As filed on ^ December 23, 1997 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X -- Pre-Effective Amendment No. Post-Effective Amendment No. ^ 22 X -------- -- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X -- Amendment No. ^ 22 X ------------ -- INVESCO VALUE TRUST (Exact Name of Registrant as Specified in Charter) 7800 E. Union Avenue, Denver, Colorado 80237 (Address of Principal Executive Offices) P.O. Box 173706, Denver, Colorado 80217-3706 (Mailing Address) Registrant's Telephone Number, including Area Code: (303) 930-6300 Glen A. Payne, Esq. 7800 E. Union Avenue Denver, Colorado 80237 (Name and Address of Agent for Service) ------------------- Copies to: Ronald M. Feinman Gordon Altman Butowsky Weitzen Shalov & Wein 114 W. 47th St. New York, New York 10036 ------------------- Approximate Date of Proposed Public Offering: As soon as practicable after this post-effective amendment becomes effective. It is proposed that this filing will become effective (check appropriate box) ___ immediately upon filing pursuant to paragraph (b) X on ^ January 1, 1998, pursuant to paragraph (b) - --- ___ 60 days after filing pursuant to paragraph (a)(1) ___ ^ on _______________, pursuant to paragraph (a)(1) ___ 75 days after filing pursuant to paragraph (a)(2) ___ on (date) pursuant to paragraph (a)(2) of rule 485 If appropriate, check the following box: ___ This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Registrant has previously elected to register an indefinite number of shares of its common stock pursuant to Rule 24f-2 under the Investment Company Act. Registrant's Rule 24f-2 Notice for the fiscal year ended August 31, 1997, was filed on or about October 24, 1997. Page 1 of 203 Exhibit index is located at page 132 INVESCO VALUE TRUST ------------------------------------ CROSS-REFERENCE SHEET Form N-1A Item Caption - --------- ------- Part A Prospectus 1....................... Cover Page 2....................... Annual Fund Expenses 3....................... Financial Highlights; Performance Data 4....................... Investment Objectives and Policies; The Trust and Its Management 5....................... The Trust and Its Management; Additional Information 5A...................... Not Applicable 6....................... Services Provided by the Trust; Taxes, Dividends and Other Distributions; Additional Information 7....................... How Shares Can Be Purchased; Services Provided by the Trust 8....................... Services Provided by the Trust; How to Redeem Shares 9....................... Not Applicable Part B Statement of Additional Information 10....................... Cover Page 11....................... Table of Contents -i- Form N-1A Item Caption - --------- ------- 12....................... The Trust and Its Management 13....................... Investment Practices; Investment Policies and Restrictions 14....................... The Trust and Its Management 15....................... The Trust and Its Management 16....................... The Trust and Its Management 17....................... Investment Practices; Investment Policies and Restrictions 18....................... Additional Information 19....................... How Shares Can Be Purchased; How Shares Are Valued; Services Provided by the Trust; Tax-Deferred Retirement Plans; How to Redeem Shares 20....................... Dividends, Other Distributions, and Taxes 21....................... How Shares Can Be Purchased 22....................... Performance Data 23....................... Additional Information Part C Other Information Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C to this Registration Statement. -ii- PROSPECTUS January 1, 1998 INVESCO VALUE TRUST INVESCO Intermediate Government Bond Fund INVESCO Intermediate Government Bond Fund (the "Fund") seeks to achieve a high total return on investments through capital appreciation and current income by investing primarily in obligations of the U.S. government and its agencies and instrumentalities maturing in three to five years. The Fund is a series of INVESCO Value Trust (the "Trust"), an open-end management investment company consisting of three separate portfolios of investments. This Prospectus relates to shares of INVESCO Intermediate Government Bond Fund. Separate prospectuses are available upon request from INVESCO Distributors, Inc. for the Trust's other two funds, INVESCO Value Equity Fund and INVESCO Total Return Fund. Investors may purchase shares of any or all funds. Additional funds may be offered in the future. 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, dated January 1, 1998, has been filed with the Securities and Exchange Commission and is incorporated by reference into this Prospectus. To obtain a free copy, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado 80217-3706; call 1-800-525-8085; or visit our web site at http://www.invesco.com. 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. ---------- TABLE OF CONTENTS Page ---- ANNUAL FUND EXPENSES......................................................6 FINANCIAL HIGHLIGHTS......................................................8 PERFORMANCE DATA.........................................................10 INVESTMENT OBJECTIVE AND POLICIES........................................11 RISK FACTORS.............................................................12 THE TRUST AND ITS MANAGEMENT.............................................14 HOW SHARES CAN BE PURCHASED..............................................17 SERVICES PROVIDED BY THE TRUST...........................................20 HOW TO REDEEM SHARES.....................................................23 TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS.................................25 ADDITIONAL INFORMATION...................................................26 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 Rule 12b-1 distribution fee of up to one quarter of one percent of the Fund's average net assets each year. The 12b-1 fee is assessed ^ against all shares, but only with respect to new sales of shares, exchanges into the Fund and reinvestments of dividends and capital gain distributions ("New Assets") occurring on or after November 1, 1997. 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 0.60% 12b-1 Fees^(1) 0.25%^ Other Expenses (after absorbed expenses)(2) ^ 0.17%^ Transfer Agency Fee(3) ^ 0.56%^ General Services, Administrative Services, Registration, Postage (after voluntary expense limitation)(2)(4)^ ^-0.39%^ Total Fund Operating Expenses (after absorbed ^ expenses)(1)(2)(5) 1.02% ^(1) 12b-1 fees for the period ending August 31, 1998 may be less than 0.25% of average net New Assets. (2) Certain Fund expenses are being voluntarily absorbed by INVESCO Funds Group, Inc. ("IFG") to ensure that the Fund's annualized total operating expenses do not exceed 1.00% of the Fund's average net assets. Ratio reflects total expenses less absorbed expenses by IFG, before any expense offset arrangements. In the absence of such voluntary expense limitation, the Fund's "Other Expenses" and "Total Fund Operating Expenses" would have been 0.77% and 1.62%, respectively, based on the Fund's actual expenses for the fiscal year ended August 31, 1997. (3) Consists of the transfer agency fee described under "Additional Information - Transfer and Dividend Disbursing Agent." (4) Includes, but is not limited to, fees and expenses of trustees, custodian bank, legal counsel and independent accountants, securities pricing services, 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. (5) It should be noted that the Fund's actual total operating expenses were lower than the figures shown because the Fund's custodian fees were reduced under an expense offset arrangement. However, as a result of an SEC requirement for mutual funds to state their total operating expenses without crediting any such expense offset arrangement, the figures shown above do not reflect these reductions. In comparing expenses for different years, please note that the ratios of Expenses to Average Net Assets shown under "Financial Highlights" do reflect reductions for periods prior to the fiscal year ended August 31, 1996. (See "The Trust ^ and Its ^ Management.") 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 ------ ------- ------- -------- $10 $33 $57 $125 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 Trust ^ and Its Management.") The above figures for INVESCO Intermediate Government Bond Fund are based on fiscal year-end information. The Fund charges no sales load, redemption fee or exchange fee. 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. Because the Fund pays a distribution fee, 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 Each Period) The following information for each of the four years ended August 31, 1997, the eight-month fiscal period ended August 31, 1993, and each of the ^ four years ended December 31, 1992, has been audited by Price Waterhouse LLP, independent accountants. Prior years' information was audited by another independent accounting firm. This information should be read in conjunction with the audited financial statements and the report of independent accountants thereon appearing in the Trust's 1997 Annual Report to Shareholders which is incorporated by reference into the Statement of Additional Information. Both are available without charge by contacting INVESCO Distributors, Inc., at the address or telephone number on the cover of this Prospectus. All per share data has been adjusted to reflect an 80 to 1 stock split which was effected on January 2, 1991.
Period Ended Year Ended August 31 August 31 Year Ended December 31 ---------------------------------- --------- --------------------------------------------------- 1997 1996 1995 1994 1993^ 1992 1991 1990 1989 1988 1987 PER SHARE DATA Net Asset Value - Beginning of Period $12.30 $12.64 $12.16 $13.25 $12.68 $12.89 $12.13 $12.07 $11.90 $12.19 $12.88 ---------------------------------- -------- --------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.66 0.73 0.73 0.70 0.48 0.90 0.89 1.00 1.03 0.81 0.66 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 0.14 (0.34) 0.48 (0.75) 0.57 (0.16) 0.77 0.05 0.17 (0.28) (0.52) ---------------------------------- -------- --------------------------------------------------- Total from Investment Operations 0.80 0.39 1.21 (0.05) 1.05 0.74 1.66 1.05 1.20 0.53 0.14 ---------------------------------- -------- --------------------------------------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income+ 0.66 0.73 0.73 0.70 0.48 0.90 0.90 0.99 1.03 0.82 0.83 Distributions from Capital Gains 0.00 0.00 0.00 0.34 0.00 0.05 0.00 0.00 0.00 0.00 0.00 ---------------------------------- -------- --------------------------------------------------- Total Distributions 0.66 0.73 0.73 1.04 0.48 0.95 0.90 0.99 1.03 0.82 0.83 ---------------------------------- -------- --------------------------------------------------- Net Asset Value - End of Period $12.44 $12.30 $12.64 $12.16 $13.25 $12.68 $12.89 $12.13 $12.07 $11.90 $12.19 ================================== ======== =================================================== TOTAL RETURN 6.64% 3.12% 10.36% (0.37%) 8.38%* 6.03% 14.16% 9.08% 10.52% 5.48% 1.20% RATIOS Net Assets - End of Period ($000 Omitted) $44,441 $39,949 $37,339 $31,861 $39,384 $29,649 $24,385 $18,380 $19,805 $18,042 $15,049 Ratio of Expenses to Average Net Assets# 1.02%@ 1.15%@ 1.20% 1.07% 0.96%~ 0.97% 0.93% 0.85% 0.85% 0.85% 0.94% Ratio of Net Investment Income to Average Net Assets# 5.32% 5.81% 6.04% 5.58% 5.48%~ 6.38% 7.28% 8.16% 8.45% 7.92% 7.31% Portfolio Turnover Rate 37% 63% 92% 49% 34%* 93% 51% 31% 52% 6% 28%
^ From January 1, 1993 to August 31, 1993. + Distributions in excess of net investment income for the year ended August 31, 1994^ aggregated less than $0.01 on a per share basis. * Based on operations for the period shown and, accordingly, are not representative of a full year. # Various expenses of the Fund were voluntarily absorbed by IFG for the years ended August 31, 1997 and 1996, and the years ended December 31, 1990, 1989, 1988 and 1987. If such expenses had not been voluntarily absorbed, ratio of expenses to average net assets would have been 1.37%, 1.24%, 0.96%, 1.00%, 1.08% and 1.30%, respectively, and ratio of net investment income to average net assets would have been 4.97%, 5.72%, 8.05%, 8.30%, 7.69% and 6.95%, respectively. @ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by Investment Adviser, which is before any expense offset arrangements. ~ Annualized Further information about the performance of the Fund is contained in the Trust's Annual Report to Shareholders, which may be obtained without charge by writing INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado 80217-3706; or by calling 1-800-525-8085. PERFORMANCE DATA From time to time, the Fund advertises its total return performance. These figures are based upon historical investment results and are not intended to indicate future performance. Total return is computed by calculating the percentage change in value of an investment, assuming reinvestment of all income dividends and capital gain distributions, to the end of a specified period. Cumulative total return reflects actual performance over a stated period of time. Average annual total return is a hypothetical rate of return that, if achieved annually, would have produced the same cumulative total return if performance had been constant over the entire period. Thus, a 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 total return computations. The yield of the Fund is calculated by utilizing the Fund's calculated income, expenses and average outstanding shares for the most recent 30-day or one-month period, dividing it by the month-end net asset value and annualizing the resulting number. Unlike "total return" quotations, quotations of "yield" do not include the effect of capital changes. The Fund charges no sales load, redemption fee or exchange fee. Accordingly, both purchase price and redemption price equal net asset value per share, and no adjustments are made in either yield or total return performance calculations to reflect nonrecurring charges. In conjunction with performance reports and/or analyses of shareholder service for the Fund, comparative data between the Fund's performance or yield for a given period and the performance of recognized bond indices and 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 ^, a division of The McGraw-Hill Companies, Inc., 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 Fund in performance reports, will be drawn from the "Intermediate U.S. Government Funds" Lipper mutual fund groupings, in addition to the broad-based Lipper general fund grouping. INVESTMENT OBJECTIVE AND POLICIES The Trust consists of three separate portfolios of investments (referred to as the "Funds"), each represented by a different series of the Trust's shares. This Prospectus relates to INVESCO Intermediate Government Bond Fund; separate prospectuses for INVESCO Value Equity Fund and INVESCO Total Return Fund are available. The investment objective of the Fund is to seek a high total return on investment through capital appreciation and current income. Funds having an investment objective of seeking a high total return may be limited in their ability to obtain their objective by the limitations on the types of securities in which they may invest. ^ No assurance can be given that the Fund will be able to achieve its investment objective. The Fund invests primarily in obligations of the U.S. government and its agencies and instrumentalities maturing in three to five years. Under normal circumstances, at least 65% of the Fund's total assets will be invested in government obligations consisting of direct obligations of the U.S. government (U.S. Treasury Bills, Notes and Bonds), obligations guaranteed by the U.S. government, such as Government National Mortgage Association obligations, and obligations of U.S. government authorities, agencies and instrumentalities, which are supported only by the assets of the issuer, such as Fannie Mae (formerly, Federal National Mortgage Association), Federal Home Loan Banks, Federal Financing Bank and Federal Farm Credit Bank. The remaining 35% of the Fund's total assets may be invested under normal circumstances in corporate debt obligations which are rated by Moody's Investors Service, Inc. ("Moody's") in its four highest ratings of corporate obligations (Aaa, Aa, A and Baa) or by Standard & Poor's ^, a division of The McGraw-Hill Companies, Inc. ("S&P") in its four highest ratings of corporate obligations (AAA, AA, A and BBB) or, if not rated, ^ in the opinion of the Fund's investment adviser or sub-adviser (collectively, "Fund Management") have investment characteristics similar to those described in such ratings. A bond rating of Baa by Moody's indicates that the bond issue is of "medium grade," neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present, but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and have speculative characteristics as well. A bond rating of BBB by S&P indicates that the bond issue is in the lowest "investment grade" security rating. Bonds rated BBB are regarded as having an adequate capacity to pay principal and interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this category than for bonds in the A category, and they may have speculative characteristics. (See Appendix A to the Statement of Additional Information for specific descriptions of these corporate bond rating categories.) The dollar weighted average maturity of the Fund's investments will normally be from three to ten years.^ Obligations of certain U.S. government agencies and instrumentalities may not be supported by the full faith and credit of the United States. Some are backed by the right of the issuer to borrow from the U.S. Treasury; others, such as the obligations of Fannie Mae (formerly, Federal National Mortgage Association), by discretionary authority of the U.S. government to purchase the agencies' obligations; while still others, such as obligations of the Student Loan Marketing Association, are supported only by the credit of the instrumentality. In the case of securities not backed by the full faith and credit of the United States, the Fund must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitments. The Fund will invest in securities of such instrumentalities only when Fund Management is satisfied that the credit risk with respect to any such instrumentality is minimal. The investment objective of the Fund and its investment policies, where indicated, are deemed to be fundamental policies and thus may not be changed without prior approval by the holders of a majority of its outstanding voting securities of the Fund, as defined in the Investment Company Act of 1940 (the "1940 Act"). In addition, the Trust and this Fund are subject to certain investment restrictions which are set forth in the Statement of Additional Information and which also may not be altered without approval of the Fund's shareholders. One of those restrictions limits the Fund's borrowing of money to borrowings from banks for temporary or emergency purposes (but not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of the Fund's total assets. RISK FACTORS Investors should consider the special factors associated with the policies discussed below in determining the appropriateness of an investment in the INVESCO Intermediate Government Bond Fund. The Fund's policies regarding investments in foreign securities and foreign currencies are not fundamental and may be changed by vote of the Trust's board of trustees. Interest Rate Risk. The obligations in which the Fund invests are subject to interest rate risk, which means that their values and, therefore, the net asset value of the Fund, can be expected to fall when interest rates rise. The Fund attempts to reduce this risk through diversification, credit analysis and attention to interest rate trends and other factors. Foreign Securities. The Fund may invest up to 25% of its total assets in foreign securities, although it currently does not intend to invest more than 5% of its total assets in foreign securities. Investments in securities of foreign companies and in foreign debt or equity markets involve certain additional risks not associated with investments in domestic companies and markets, including the risks of fluctuations in foreign currency exchange rates and of political or economic instability, the difficulty of predicting international trade patterns, and the possibility of imposition of exchange controls or currency blockage. In addition, there may be less information publicly available about a foreign company than about a domestic company, and there is generally less government regulation of stock exchanges, brokers and listed companies abroad than in the United States. Moreover, with respect to certain foreign countries, there may be a possibility of expropriation or confiscatory taxation. Further, economies of particular countries or areas of the world may differ favorably or unfavorably from the economy of the United States. As one way of managing exchange rate risk, the Fund may enter into forward foreign currency exchange contracts (i.e., purchasing or selling foreign currencies at a future date). For additional information regarding forward foreign currency exchange contracts, see the Trust's Statement of Additional Information. Repurchase Agreements. The Fund may engage in repurchase agreements with banks, registered broker-dealers and registered government securities dealers, which are deemed creditworthy by Fund Management under guidelines established by the board of trustees. A repurchase agreement is a transaction in which the Fund purchases a security and simultaneously commits to sell the security to the seller at an agreed upon price and date (usually not more than seven days) after the date of purchase. The resale price reflects the purchase price plus an agreed upon market rate of interest which is unrelated to the coupon rate or maturity of the purchased security. The Fund's risk is limited to the ability of the seller to pay the agreed upon amount on the delivery date. However, in the event the seller should default, the underlying security constitutes collateral for the seller's obligations to pay. This collateral will be held by the custodian for the Fund's assets. ^ In the event of the insolvency of a counterparty to a repurchase agreement, the Fund could experience delays and incur costs in realizing on the collateral. To the extent that the proceeds from a sale upon a default in the obligation to repurchase are less than the repurchase price, the Fund would suffer a loss. Although the Fund has not adopted any limit on the amount of its total assets that may be invested in repurchase agreements, the Fund intends that at no time will the market value of the Fund's securities subject to repurchase agreements exceed 20% of the total assets of the Fund. Illiquid Securities. The Fund may invest from time to time in securities subject to restrictions on disposition under the Securities Act of 1933 ("restricted securities"), securities without readily available market quotations or illiquid securities (those which cannot be sold in the ordinary course of business within seven days at approximately the valuation given to them by the Fund). However, on the date of purchase, no such investment may increase the Fund's holdings of restricted securities to more than 2% of the value of the Fund's total assets or its holdings of illiquid securities or those without readily available market quotations to more than 5% of the value of the Fund's total assets. The Fund is not required to receive registration rights in connection with the purchase of restricted securities and, in the absence of such rights, marketability and value can be adversely affected because the Fund may be unable to dispose of such securities 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 registrations. ^ Securities Lending. The Fund may make loans of its portfolio securities (not to exceed 10% of the Fund's total assets) to broker-dealers or other institutional investors under contracts requiring such loans to be callable at any time and to be secured continuously by collateral in cash, cash equivalents, high quality short-term government securities or irrevocable letters of credit maintained on a current basis at an amount at least equal to the market value of the securities loaned, including accrued interest and dividends. The Fund will continue to collect the equivalent of the interest or dividends paid by the issuer on the securities loaned and will also receive either interest (through investment of cash collateral) or a fee (if the collateral is government securities). The Fund may pay finder's and other fees in connection with securities loans. Portfolio Turnover. There are no fixed limitations regarding portfolio turnover for the Fund. Although the Fund does not trade for short-term profits, securities may be sold without regard to the time they have been held in the Fund when, in the opinion of Fund Management, market considerations warrant such action. As a result, while it is anticipated that the Fund's annual portfolio turnover rate generally will not exceed 100%, under certain market conditions the portfolio turnover rate for the Fund may exceed 100%. Increased portfolio turnover would cause the Fund to incur greater brokerage costs than would otherwise be the case. The Fund's portfolio turnover rates are set forth under "Financial Highlights" and, along with the Trust's brokerage allocation policies, are discussed in the Statement of Additional Information. THE TRUST AND ITS MANAGEMENT The Trust is a no-load mutual fund, registered with the Securities and Exchange Commission as an open-end, diversified management investment company. The Trust was organized on July 15, 1987, under the laws of the Commonwealth of Massachusetts as "Financial Series Trust." On July 1, 1993, the Trust changed its name to "INVESCO Value Trust." The overall supervision of the ^ Fund is the responsibility of ^ the Trust's board of trustees. INVESCO Funds Group, Inc. ("IFG"), 7800 E. Union Avenue, Denver, Colorado, serves as the Trust's investment adviser pursuant to an investment advisory agreement. Under this agreement, IFG provides the Fund with various management services and supervises the Fund's daily business affairs. Specifically, IFG performs all administrative, clerical, statistical, secretarial and all other services necessary or incidental to the administration of the affairs of the Trust, excluding, however, those services that are the subject of a separate agreement between the Trust and IFG or any affiliate thereof. Services provided pursuant to separate agreement include the distribution and sale of Trust shares and provision of transfer agency, dividend disbursing agency and registrar services, and services furnished under an Administrative Services Agreement with IFG dated as of February 28, 1997. ^ IFG has contracted with INVESCO Capital Management, Inc. ("ICM"), the Trust's investment adviser prior to 1991, for investment sub-advisory and research services on behalf of the Fund. ICM currently manages in excess of ^ $40 billion of assets on behalf of tax-exempt accounts (such as pension and profit-sharing funds for corporations and state and local governments) and investment companies. ICM, subject to the supervision of IFG, is primarily responsible for selecting and managing the Fund's investments. Although the Trust is not a party to the sub-advisory agreement, the agreement has been approved by the shareholders of the Trust. Services provided by IFG and ICM are subject to review by the Trust's board of trustees. Pursuant to an agreement with the Trust, effective September 30, 1997, INVESCO Distributors, Inc. ("IDI") became the Fund's distributor. IDI, established in 1997, is a registered broker-dealer that acts as distributor for all retail mutual funds advised by IFG. Prior to September 30, 1997, IFG served as the Fund's distributor. IFG, ICM and IDI are indirect wholly-owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC is a publicly-traded holding company that, through its subsidiaries, engages in the business of investment management on an international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3, 1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of the largest independent investment management businesses in the world. IFG and ICM ^ continue to operate under their existing names. Together, IFG and ICM constitute "Fund Management." AMVESCAP PLC has approximately $177.5 billion in assets under management. IFG was established in 1932 and, as of August 31, 1997, managed 14 mutual funds, consisting of ^ 45 separate portfolios, with combined assets of approximately $15.9 billion on behalf of over 854,448 shareholders. ^ The following individuals serve as portfolio managers for the Fund and are primarily responsible for the day-to-day management of the Fund's portfolio of securities: James O. Baker Portfolio manager of the Fund since 1993; portfolio manager of the INVESCO Total Return Fund since 1997; portfolio manager of INVESCO Capital Management, Inc. (1992 to present); portfolio manager, Willis Investment Counsel (1990 to 1992); broker, Morgan Keegan (1989 to 1990); broker, Drexel Burnham Lambert (1985 to 1990); began investment career in 1977; B.A., Mercer University; Chartered Financial Analyst. Ralph H. Jenkins, Jr. Assistant portfolio manager of the Fund since 1993; vice president (1991 to present) and portfolio manager (1988 to present) of INVESCO Capital Management, Inc.; began investment career in 1969; B.B.C., Auburn University; M.A., University of Alabama; Chartered Financial Analyst; Chartered Investment Counselor. Under the investment advisory agreement, the Fund pays IFG a monthly fee at the following annual rates, based on the average net assets of the Fund: 0.60% on the first $500 million of the Fund's average net assets; 0.50% on the next $500 million of the Fund's average net assets; and 0.40% on the average net assets of the Fund in excess of $1 billion. For the fiscal year ended August 31, 1997, the advisory fees paid to IFG amounted to 0.60% of the average net assets of the Fund. Out of its advisory fee which it receives from the Fund, IFG pays ICM, as the Fund's sub-adviser, a monthly fee, which is computed at the following annual rates: prior to January 1, 1998, 0.16% on the first $500 million of the Fund's average net assets, 0.13% on the next $500 million of the Fund's average net assets and 0.11% on the Fund's average net assets in excess of $1 billion and effective January 1, 1998, 0.20% on the first $500 million of the Fund's average net assets, 0.1667% on the next $500 million of the Fund's average net assets, and 0.1333% on the Fund's average net assets in excess of $1 billion. No fee is paid by the Fund to ICM. The Fund bears those Trust expenses which are accrued daily that are incurred on its behalf and, in addition, bears a portion of general Trust expenses, allocated based upon the relative net assets of the three Funds of the Trust. Such expenses are generally deducted from the Fund's total income before dividends are paid. Total expenses of the Fund for the fiscal year ended August 31, 1997, including investment advisory fees (but excluding brokerage commissions), amounted to 1.02% (prior to expense offset arrangements) of the Fund's average net assets. Certain Fund expenses are being absorbed voluntarily by IFG pursuant to a commitment to the Fund in order to ensure that the Fund's total expenses do not exceed 1.00% of the Fund's average net assets. This commitment may be changed following consultation with the Trust's board of trustees. The Trust also has entered into an Administrative Services Agreement (the "Administrative Agreement") with IFG. Pursuant to the Administrative Agreement, IFG performs certain administrative and internal accounting services, including, without limitation, maintaining general ledger and capital stock accounts, preparing a daily trial balance, calculating net asset value daily and providing selected general ledger reports and providing sub- accounting and recordkeeping services for the shareholder accounts maintained by certain retirement and employee benefit plans for the benefit of participants in such plans. For such services, the Fund pays IFG a fee consisting of a base fee of $10,000 per year, plus an additional incremental fee computed at an annual rate not to exceed a maximum of 0.015% per annum of the average net assets of the ^ Fund. The Declaration of Trust pursuant to which the Trust is organized contains an express disclaimer of shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each instrument entered into or executed by the Trust. The Declaration of Trust also provides for indemnification out of the Trust's property for any shareholder held personally liable for any Trust obligation. Thus, the risk of a shareholder being personally liable for obligations of the Trust is limited to the unlikely circumstance in which the Trust itself would be unable to meet its obligations. Fund Management places orders for the purchase and sale of portfolio securities with brokers and dealers based upon their evaluation of such broker-^ dealers' financial responsibility coupled with the broker-^ dealers' ability to effect transactions at the best available prices. The Trust may place orders for portfolio transactions with qualified broker-dealers that recommend the various funds of the Trust to clients, or act as agent in the purchase of fund shares for clients, if Fund Management believes that the quality of the execution of the transaction and level of commission are comparable to those available from other qualified brokerage firms. For further information, see "Investment Practices -- Placement of Portfolio Brokerage" in the Statement of Additional Information. Fund Management permits investment and other personnel to purchase and sell securities for their own accounts, subject to a compliance policy governing personal investing. This policy requires Fund Management's personnel to conduct their personal investment activities in a manner that Fund Management believes is not detrimental to the Fund or Fund Management's other advisory clients. See the Statement of Additional Information for more detailed information. HOW SHARES CAN BE PURCHASED Shares of the Fund are sold on a continuous basis by IDI, as the Fund's 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 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 section entitled "Services Provided by the Trust," may open an account without making any initial investment if they agree to make regular, minimum purchases of at least $50; (2) 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; (3) Fund Management may permit a lesser amount to be invested in the Fund under a federal income tax-deferred retirement plan (other than an IRA), or under a group investment plan qualifying as a sophisticated investor; and (4) Fund Management reserves the right to increase, 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 shares in the Fund can be expedited by placing bank wire, overnight courier or telephone orders. For further information, the purchaser may call the Trust'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., 7800 E. Union Avenue, Denver, Colorado 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. Generally, payments for telephone orders must be received by the Trust 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. IFG has agreed to indemnify the Trust for any losses resulting from the cancellation of telephone purchases. 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 IFG 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 also may be prohibited or restricted from making future purchases in any of the INVESCO funds. ^ The Fund shares you order will not begin earning dividends or other distributions until your payment can be converted into available federal funds under regular banking procedures or, if you are acquiring shares in an exchange from another INVESCO fund, the Fund receives the proceeds of the exchange. Checks normally are converted into federal funds (moneys held on deposit within the Federal Reserve System) within two or three business days after they have been received by IFG, although this period may be longer for checks drawn on banks that are not members of the Federal Reserve System. 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 if the broker so elects. Any investor may deal directly with the Fund in any transaction. In that event, there is no such charge. IFG or IDI may from time to time make payments from its revenues to securities dealers and other financial institutions that provide distribution-related and/or administrative services for the Fund. 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 Fund Management, such rejection is in the best interest of the Fund. 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 the 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 the Fund. If market quotations are not readily available, a security will be valued at fair value as determined in good faith by the board of trustees. Debt securities with remaining maturities of 60 days or less at the time of purchase will be valued at amortized cost, absent unusual circumstances, so long as the Trust's board of trustees believes that such value represents fair value. Under certain circumstances, the Fund may offer its shares, in lieu of cash payment, for securities to be purchased by the Fund. Such a transaction can benefit the Fund by allowing it to acquire securities for its portfolio without paying brokerage commissions. For the same reason, the transaction also may be beneficial to the party exchanging the securities. The Fund shall not enter into such transactions, however, unless the securities to be exchanged for Fund shares are readily marketable and not restricted as to transfer either by law or liquidity of the market, comply with the investment policies and objectives of the Fund, are of the type and quality which would normally be purchased for the Fund's portfolio, are acquired for investment and not for resale, have a value which is readily ascertainable as evidenced by a listing on the American Stock Exchange, the New York Stock Exchange or NASDAQ, and are securities which the Fund would otherwise purchase on the open market. The value of Fund shares used to purchase portfolio securities as stated herein will be the net asset value as of the effective time and date of the exchange. The securities to be received by the Fund will be valued in accordance with the same procedure used in valuing the Fund's portfolio securities. Any investor wishing to acquire shares of the Fund in exchange for securities should contact either the president or the secretary of the Trust at the address or telephone number shown on the cover page of this Prospectus. Distribution Expenses. The 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. The Plan applies to New Assets (new sales of shares, exchanges into the Fund and reinvestments of dividends and capital gain distributions) of the Fund after November 1, 1997. Under the Plan, monthly payments may be made by the Fund to IDI to permit IDI, at its discretion, to engage in certain activities, and provide certain services approved by the board of trustees in connection with the distribution of the Fund's shares to investors. These activities and services 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, which may include IDI-affiliated companies, 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 permissible activities and services include advertising, the preparation, printing and distribution of sales literature, printing and distribution of prospectuses to prospective investors, and such other services and promotional activities for the Fund as may from time to time be agreed upon by the Trust and the board of trustees, including public relations efforts and marketing programs to communicate with investors and prospective investors. These services and activities may be conducted by the staff of IDI or its affiliates or by third parties. Under the Plan, the Trust's payments to IDI on behalf of the Fund are limited to an amount computed at an annual rate of 0.25% of the Fund's ^ average net New Assets. IDI is not entitled to payment for overhead expenses under the Plan, but may be paid for all or a portion of the compensation paid for salaries and other employee benefits for the personnel of IFG or IDI whose primary responsibilities involve marketing shares of the INVESCO Mutual Funds, including the Fund. Payment amounts by the Fund under the Plan, for any month, may be made to compensate IDI for permissible activities engaged in and services provided by IDI during the rolling 12-month period in which that month falls. Therefore, any obligations incurred by IDI in excess of the limitations described above will not be paid by the Fund under the Plan, and will be borne by IDI. In addition, IDI and its affiliates may from time to time make additional payments from its revenues to securities dealers and other financial institutions that provide distribution-related and/or administrative services for the Fund. 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 directly the distribution of shares of any other Fund of the Trust or other mutual fund advised by IFG. 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. IDI will bear any distribution- and service-related expenses in excess of the amounts which are compensated pursuant to the Plan. The Plan also authorizes any financing of distribution which may result from IDI's use of its own resources, including profits from investment advisory fees received from the Fund, provided that such fees are legitimate and not excessive. For more information see see "How Shares Can Be Purchased" in the Statement of Additional Information. SERVICES PROVIDED BY THE TRUST Shareholder Accounts. IFG maintains a share account that reflects the current holdings of each shareholder. A separate account will be maintained for a shareholder for each fund in which the shareholder invests. As a business trust, the Trust does not issue share certificates. Each shareholder is sent a detailed confirmation of each transaction in shares of the Trust. 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 IFG by using the telephone number on the cover of this Prospectus. Reinvestment of Distributions. Dividends and other distributions are automatically reinvested in additional shares of the Fund at the net asset value per share of the Fund in effect on the ex-dividend or ex-distribution date. A shareholder may, however, elect to reinvest dividends and other distributions in certain of the other no-load mutual funds advised by IFG and distributed by IDI, or to receive payment of all dividends and other distributions in excess of $10.00 by check by giving written notice to IFG 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 IFG. Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to shareholders who own or purchase shares of any mutual funds advised by IFG 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, IFG, 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 IFG 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 IFG. Exchange Policy. Shares of the Fund may be exchanged for shares of any other fund of the Trust, as well as for shares of any of the following other no-load mutual funds, which are also advised by IFG, on the basis of their respective net asset values at the time of the exchange: INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios, Inc. and INVESCO Tax-Free Income Funds, Inc. An exchange involves the redemption of shares in the Fund and investment of the redemption proceeds in shares of another fund of the Trust 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 IFG, using the telephone number or address on the cover of this Prospectus. Exchanges made by telephone must be in the 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 option to exchange Fund shares by telephone is available to shareholders automatically unless expressly declined. By signing the new account Application or a Telephone Transaction Authorization Form or otherwise utilizing the telephone exchange option, 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 transactions 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 policy to the disadvantage of other shareholders, the Fund reserves the right to terminate the exchange option of any shareholder who requests more than four exchanges in 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 policy 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 1940 Act, 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 policy 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. Shareholders interested in exercising the exchange option may contact IFG for information concerning their particular exchanges. Automatic Monthly Exchange. Shareholders who have accounts in any one or more of the mutual funds distributed by IDI 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 Policy" on a monthly basis, subject to the Fund's minimum initial investment or subsequent investment requirements. This automatic exchange program can be changed by the shareholder at any time by notifying IFG at least two weeks prior to the date the change is to be made. Further information regarding this service can be obtained by contacting IFG. 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 notifying IFG at least two weeks prior to the date the change is to be made. Further information regarding this service can be obtained by contacting IFG. 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 IFG. Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for self-employed individual retirement plans, various 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 IFG. INVESCO Trust Company, a subsidiary of IFG, 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 ^ IFG 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 next determined after a request in proper form is received at the Trust's office. (See "How Shares Can Be Purchased.") Net asset value per share of the Fund at the time of the redemption may be more or less than the price originally paid to purchase shares. In order to redeem shares, a written redemption request signed by each registered owner of the account may be submitted to IFG at the address noted above. 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 shares are held in the name of a corporation, additional documentation may be necessary. Call or write for ^ specific information. 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 or when an emergency as defined by the Securities and Exchange Commission exists. If the shares to be redeemed were purchased by check and that check has not yet cleared, payment will be made promptly upon clearance of the purchase check (which will take up to 15 days). If a shareholder participates in EasiVest, the Fund's automatic monthly investment program, and redeems all of the shares in a Fund account, IFG will terminate any further EasiVest purchases unless otherwise instructed by the shareholder. 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 Trust 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 IFG, using the telephone number on the cover of this Prospectus. For INVESCO Trust Company-sponsored federal income tax-deferred 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. 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. The redemption proceeds, at the shareholder's option, either will be mailed to the address listed for the shareholder on its Fund account, or wired (minimum $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. The telephone redemption policy may be modified or terminated in the future at the discretion of Fund Management. 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 will require up to seven days following receipt of the redemption request, or additional time because of the unusual circumstances set forth above. The ^ option to redeem Fund shares by telephone is available to shareholders automatically unless expressly declined. By signing a new account Application or a Telephone Transaction Authorization Form or otherwise utilizing the telephone redemption ^ option, 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 its established procedures, the Fund may be liable. TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS Taxes. The Fund intends to distribute to shareholders all of its net investment income, net capital gains and net gains from foreign currency transactions, if any, in order to continue to qualify for tax treatment as a regulated investment company. Thus, the Fund does not expect to pay any federal income or excise taxes. Unless shareholders are exempt from income taxes, they must include all dividends and other distributions in taxable income for federal, state and local income tax purposes. Dividends and other distributions are taxable whether they are received in cash or automatically reinvested in shares of the Fund or another fund in the INVESCO group. Net realized capital gains of the Fund are classified as short-term and long-term gains depending upon how long the Fund held the security that gave rise to the gains. Short-term capital gains are included in income from dividends and interest as ordinary income and are taxed at the taxpayer's marginal tax rate. The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in August 1997, changed the taxation of long-term capital gains by applying different capital gains rates depending on the taxpayer's holding period and marginal rate of federal income tax. Long-term gains realized on the sale of securities held for more than one year but not for more than 18 months are taxable at a rate of 28%. This category of long-term gains is often referred to as "mid-term" gains but is technically termed "28% rate gains". Long-term gains realized on the sale of securities held for more than 18 months are taxable at a rate of 20%.^ At the end of each year, information regarding the tax status of dividends and other distributions is provided to shareholders. Shareholders should consult their tax advisers as to the effect of the Tax Act on distributions by the Fund of net capital gain. Shareholders also may realize capital gains or losses when they sell their Fund shares at more or less than the price originally paid. Capital gain on shares held for more than one year will be long-term capital gain, in which event it will be subject to federal income tax at the rates indicated above. The Fund may be subject to withholding of foreign taxes on dividends or interest received on foreign securities. Foreign taxes withheld will be treated as an expense of the Fund. Individuals and certain other non-corporate shareholders may be subject to backup withholding of 31% on dividends, capital gain and other distributions and redemption proceeds. Unless you are subject to backup withholding for other reasons, you can avoid backup withholding on your Fund account by ensuring that we have a correct, certified tax identification number. We encourage you to consult a tax adviser with respect to these matters. For further information see "Dividends, Other Distributions and Taxes" in the Statement of Additional Information. Dividends and Other Distributions. The Fund earns ordinary or net investment income in the form of interest on its investments. Dividends paid by the Fund will be based solely on the income earned by it. The Fund's policy is to distribute substantially all of this income, less Fund expenses, to shareholders. Dividends from net investment income are declared daily and paid monthly at the discretion of the Trust's Board of Trustees. Dividends are automatically reinvested in additional shares of the Fund at the net asset value on the ^ payable date unless otherwise requested. In addition, the Fund realizes capital gains and losses when it sells securities for more or less than it paid. If total gains on sales exceed total losses (including losses carried forward from previous years), the Fund has a net realized capital gain. Net realized capital gains, if any, together with gains, if any, realized on foreign currency transactions, are distributed 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 on the ^ payable date unless otherwise requested. Dividends and other distributions are paid to holders of shares on the record date of distribution regardless of how long the Fund shares have been held by the shareholder. The Fund's share price will then drop by the amount of the distribution on the ex- dividend or ex-distribution date. If a shareholder purchases shares immediately prior to the distribution, the shareholder will, in effect, have "bought" the distribution by paying the full purchase price, a portion of which is then returned in the form of a taxable distribution. ADDITIONAL INFORMATION Voting Rights. All shares of the Trust's funds have equal voting rights. When shareholders are entitled to vote upon a matter, each shareholder is entitled to one vote for each share owned and a corresponding fractional vote for each fractional share owned. Voting with respect to certain matters, such as ratification of independent accountants and the election of trustees, will be by all funds of the Trust voting together. In other cases, such as voting upon the investment advisory contract for the individual funds, voting is on a fund-by-fund basis. To the extent permitted by law, 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 Trust is not generally required, and does not expect, to hold regular annual meetings of shareholders. However, the board of trustees will call such special meetings of shareholders for the purpose, among other reasons, of voting the question of removal of a trustee or trustees when requested to do so in writing by the holders of 10% or more of the outstanding shares of the Trust or as may be required by applicable law or the Trust's Declaration of Trust, and the Trust will assist shareholders in communicating with other shareholders as required by the 1940 Act. Trustees may be removed by action of the holders of two-thirds of the outstanding shares of the Trust. Shareholder Inquiries. All inquiries regarding the Fund should be directed to the Trust 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 an annual fee of $26.00 per shareholder account or where applicable, per participant in an omnibus account. 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. Registered broker-dealers, third party administrators of tax-qualified retirement plans and other entities, including affiliates of IFG, 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 IFG. In such cases, IFG may pay the third party an annual sub-transfer agency or recordkeeping fee out of the transfer agency fee which is paid to IFG by the Fund. ^ PROSPECTUS January 1, 1998 INVESCO Intermediate Government Bond Fund INVESCO Distributors, Inc., Distributor Post Office Box 173706 Denver, Colorado 80217-3706 1-800-525-8085 PAL(R): 1-800-424-8085 http://www.invesco.com In Denver, visit one of our convenient Investor Centers: Cherry Creek 155-B Fillmore Street Denver Tech Center 7800 East Union Avenue Lobby Level In addition, all documents filed by the Trust with the Securities and Exchange Commission can be located on a web site maintained by the Commission at http://www.sec.gov. PROSPECTUS January 1, 1998 INVESCO VALUE TRUST INVESCO Value Equity Fund INVESCO Value Equity Fund (the "Fund") seeks to achieve a high total return on investment through capital appreciation and current income by investing substantially all of its assets in common stocks and, to a lesser degree, securities convertible into common stock. Such securities generally will be issued by companies that are listed on a national securities exchange and which usually pay regular dividends. This Fund's investments may consist in part of securities which may be deemed to be speculative. (See "Investment Objective and Policies.") The Fund is a series of INVESCO Value Trust (the "Trust"), an open-end management investment company consisting of three separate portfolios of investments. This Prospectus relates to shares of INVESCO Value Equity Fund. Separate prospectuses are available upon request from INVESCO Distributors, Inc. for the Trust's other two funds, INVESCO Intermediate Government Bond Fund and INVESCO Total Return Fund. Investors may purchase shares of any or all funds. Additional funds may be offered in the future. 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, dated January 1, 1998, has been filed with the Securities and Exchange Commission and is incorporated by reference into this Prospectus. To obtain a free copy, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado 80217-3706; call 1-800-525-8085; or visit our web site at http://www.invesco.com. 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. ---------- TABLE OF CONTENTS Page ---- ANNUAL FUND EXPENSES 31 FINANCIAL HIGHLIGHTS 33 PERFORMANCE DATA 35 INVESTMENT OBJECTIVE AND POLICIES 35 RISK FACTORS 36 THE TRUST AND ITS MANAGEMENT 40 HOW SHARES CAN BE PURCHASED 42 SERVICES PROVIDED BY THE TRUST 46 HOW TO REDEEM SHARES 48 TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS 50 ADDITIONAL INFORMATION 51 ANNUAL FUND EXPENSES The Fund is 100% no-load; there are no fees to purchase, exchange or redeem shares. The Fund, however, is authorized to pay a Rule 12b-1 distribution fee of up to one quarter of one percent of the Fund's average net assets each year. The 12b-1 fee is assessed ^ against all shares, but only with respect to new sales of shares, exchanges into the Fund and reinvestments of dividends and capital gain distributions ^ occurring on or after November 1, 1997 ("New Assets"). 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^(1) 0.25%^ Other Expenses ^ 0.29%^ Transfer Agency Fee(2) ^ 0.20%^ General Services, Administrative Services, Registration, Postage(3) ^ 0.09%^ Total Fund Operating ^ Expenses(1)(4) 1.29% ^(1) 12b-1 fees for the period ending August 31, 1998 may be less than 0.25% of average net New Assets. (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 trustees, custodian bank, legal counsel and independent accountants, securities pricing services, 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. (4) It should be noted that the Fund's actual total operating expenses were lower than the figures shown because the Fund's custodian fees and transfer agent fees were reduced under expense offset arrangements. However, as a result of an SEC requirement for mutual funds to state their total operating expenses without crediting any such expense offset arrangement, the figures shown above do not reflect these reductions. In comparing expenses for different years, please note that the ratios of Expenses to Average Net Assets shown under "Financial Highlights" do reflect reductions for periods prior to the fiscal year ended August 31, 1996. (See "The Trust ^ and Its ^ Management.") 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 ------ ------- ------- -------- $11 $33 $58 $128 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 Trust and Its Management.") The above figures for INVESCO Value Equity Fund are based on fiscal year-end information. The Fund charges no sales load, redemption fee or exchange fee. 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. Because the Fund pays a distribution fee, 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 Each Period) The following information for each of the four years ended August 31, 1997, the eight-month fiscal period ended August 31, 1993, and each of the ^ four years ended December 31, 1992, has been audited by Price Waterhouse LLP, independent accountants. Prior years' information was audited by another independent accounting firm. This information should be read in conjunction with the audited financial statements and the report of independent accountants thereon appearing in the Trust's 1997 Annual Report to Shareholders which is incorporated by reference into the Statement of Additional Information. Both are available without charge by contacting INVESCO Distributors, Inc., at the address or telephone number on the cover of this Prospectus. All per share data has been adjusted to reflect an 80 to 1 stock split which was effected on January 2, 1991.
Period Ended Year Ended August 31 August 31 Year Ended December 31 --------------------------------- -------- --------------------------------------------------- 1997 1996 1995 1994 1993^ 1992 1991 1990 1989 1988 1987 PER SHARE DATA Net Asset Value - Beginning of Period $22.24 $19.53 $18.12 $17.79 $16.91 $16.57 $13.88 $15.30 $13.72 $12.40 $12.75 --------------------------------- -------- --------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.35 0.35 0.39 0.36 0.24 0.36 0.40 0.44 0.48 0.37 0.40 Net Gains (or Losses) on Securities (Both Realized and Unrealized) 6.62 3.09 2.58 1.20 0.88 0.45 4.54 (1.33) 2.42 1.62 0.39 --------------------------------- -------- --------------------------------------------------- Total from Investment Operations 6.97 3.44 2.97 1.56 1.12 0.81 4.94 (0.89) 2.90 1.99 0.79 --------------------------------- -------- --------------------------------------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.35 0.35 0.39 0.31 0.24 0.34 0.40 0.47 0.49 0.36 0.50 In Excess of Net Investment Income 0.00 0.00 0.00 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Distributions from Capital Gains 0.56 0.38 1.17 0.88 0.00 0.13 1.85 0.06 0.83 0.31 0.64 --------------------------------- -------- --------------------------------------------------- Total Distributions 0.91 0.73 1.56 1.23 0.24 0.47 2.25 0.53 1.32 0.67 1.14 --------------------------------- -------- --------------------------------------------------- Net Asset Value - End of Period $28.30 $22.24 $19.53 $18.12 $17.79 $16.91 $16.57 $13.88 $15.30 $13.72 $12.40 ================================= ======== =================================================== TOTAL RETURN 32.04% 17.77% 17.84% 9.09% 6.65%* 4.98% 35.84% (5.80%) 21.34% 16.89% 5.98% RATIOS Net Assets - End of Period ($000 Omitted) $369,766 $200,046 $153,171 $111,850 $81,914 $78,609 $39,741 $29,825 $36,592 $27,434 $14,933 Ratio of Expenses to Average Net Assets# 1.04%@ 1.01%@ 0.97% 1.01% 1.00%~ 0.91% 0.98% 1.00% 1.00% 1.00% 1.00% Ratio of Net Investment Income to Average Net Assets# 1.35% 1.64% 2.17% 1.80% 2.07%~ 2.19% 2.39% 3.00% 3.29% 3.48% 2.95% Portfolio Turnover Rate 37% 27% 34% 53% 35%* 37% 64% 23% 30% 16% 20% Average Commission Rate Paid^^ $0.0538 $0.0589 - - - - - - - -
^ From January 1, 1993 to August 31, 1993. * Based on operations for the period shown and, accordingly, are not representative of a full year. # Various expenses of the Fund were voluntarily absorbed by IFG for the years ended December 31, 1990, 1989, 1988 and 1987. If such expenses had not been voluntarily absorbed, ratio of expenses to average net assets would have been 1.04%, 1.09%, 1.19% and 1.42% respectively, and ratio of net investment income to average net assets would have been 2.96%, 3.20%, 3.29% and 2.53%, respectively. @ Ratio is based on Total Expenses of the Fund, which is before any expense offset arrangements. ~ Annualized ^^ The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased or sold which is required to be disclosed effective for fiscal years beginning September 1, 1995 and thereafter. Further information about the performance of the Fund is contained in the Trust's Annual Report to Shareholders, which may be obtained without charge by writing INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado 80217-3706; or by calling 1-800- 525-8085. PERFORMANCE DATA From time to time, the Fund advertises its total return performance. These figures are based upon historical investment results and are not intended to indicate future performance. Total return is computed by calculating the percentage change in value of an investment, assuming reinvestment of all income dividends and capital gain distributions, to the end of a specified period. Cumulative total return reflects actual performance over a stated period of time. Average annual total return is a hypothetical rate of return that, if achieved annually, would have produced the same cumulative total return if performance had been constant over the entire period. Thus, a 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 total return computations. 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 the performance of recognized bond indices and 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 ^, a division of The McGraw-Hill Companies, Inc. ("S&P"), 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 Fund in performance reports, will be drawn from the "Growth and Income Funds" Lipper mutual fund groupings, in addition to the broad-based Lipper general fund grouping. INVESTMENT OBJECTIVE AND POLICIES The Trust consists of three separate portfolios of investments (referred to as the "Funds"), each represented by a different series of the Trust's shares. This Prospectus relates to INVESCO Value Equity Fund; separate prospectuses for INVESCO Intermediate Government Bond Fund and INVESCO Total Return Fund are available. The investment objective of the Fund is to seek a high total return on investment through capital appreciation and current income. Funds having an investment objective of seeking a high total return may be limited in their ability to obtain their objective by the limitations on the types of securities in which they may invest. ^ No assurance can be given that the Fund will be able to achieve its investment objective. Substantially all of the Fund's assets will be invested in common stocks and, to a lesser extent, securities convertible into common stocks (collectively, "equity securities"). Such securities generally will be issued by companies which are listed on a national securities exchange, such as the New York Stock Exchange, and which usually pay regular dividends, although the Fund also may invest in securities traded on regional stock exchanges or on the over-the-counter market. During normal market conditions, at least 65% of the Fund's investments will consist of equity securities. The Trust has not established any minimum investment standards such as an issuer's asset level, earnings history, type of industry, dividend payment history, etc. with respect to the Fund's investments in common stocks, although in selecting common stocks for the Fund, the investment adviser and sub-adviser (collectively, "Fund Management") generally apply an investment discipline which seeks to achieve a yield higher than the overall equity market. Therefore, because smaller companies may be subject to more significant losses as well as have the potential for more substantial growth than larger, more established companies, investors in the Fund should consider that the Fund's investments may consist in part of securities which may be deemed to be speculative. When market or economic conditions indicate, in the judgment of Fund Management, that a defensive investment stance should be assumed, all or part of the assets of the Fund may be invested temporarily in other securities consisting of high quality (rated AA or above by ^ S&P or Aa by Moody's Investors Service, Inc.) corporate preferred stocks, bonds, debentures or other evidences of indebtedness, and in obligations issued or guaranteed by the United States or any instrumentality thereof, or held in cash. The investment objective of the Fund and its investment policies, where indicated, are fundamental policies and thus may not be changed without prior approval by the holders of a majority of the outstanding voting securities of the Fund, as defined in the Investment Company Act of 1940 (the "1940 Act"). In addition, the Trust and this Fund are subject to certain investment restrictions which are set forth in the Statement of Additional Information and which also may not be altered without approval of the Fund's shareholders. One of those restrictions limits the Fund's borrowing of money to borrowings from banks for temporary or emergency purposes (but not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of the Fund's total assets. RISK FACTORS Investors should consider the special factors associated with the policies discussed below in determining the appropriateness of an investment in the INVESCO Value Equity Fund. The Fund's policies regarding investments in foreign securities and foreign currencies are not fundamental and may be changed by vote of the Trust's board of trustees. Foreign Securities. The Fund may invest up to 25% of its total assets in foreign equity or debt securities. Investments in securities of foreign companies and in foreign markets involve certain additional risks not associated with investments in domestic companies and markets, including the risks of fluctuations in foreign currency exchange rates and of political or economic instability, the difficulty of predicting international trade patterns and the possibility of imposition of exchange controls or currency blockage. In addition, there may be less information publicly available about a foreign company than about a domestic company, and there is generally less government regulation of stock exchanges, brokers and listed companies abroad than in the United States. Moreover, with respect to certain foreign countries, there may be a possibility of expropriation or confiscatory taxation. Further, economies of particular countries or areas of the world may differ favorably or unfavorably from the economy of the United States. Forward Foreign Currency Contracts. The Fund may enter into contracts to purchase or sell foreign currencies at a future date ("forward contracts") as a hedge against fluctuations in foreign exchange rates pending the settlement of transactions in foreign securities or during the time the Fund holds foreign securities. A forward contract is an agreement between contracting parties to exchange an amount of currency at some future time at an agreed upon rate. Although the Fund has not adopted any limitations on its ability to use forward contracts as a hedge against fluctuations in foreign exchange rates, it does not attempt to hedge all of its foreign investment positions and will enter into forward contracts only to the extent, if any, deemed appropriate by Fund Management. The Fund will not enter into a forward contract for a term of more than one year or for purposes of speculation. Investors should be aware that hedging against a decline in the value of a currency in the foregoing manner does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. Furthermore, such hedging transactions may preclude the opportunity for gain if the value of the hedged currency should rise. No predictions can be made with respect to whether the total of such transactions will result in a better or a worse position than had the Fund not entered into any forward contracts. Forward contracts may from time to time be considered illiquid, in which case they would be subject to the Fund's limitation on investing in illiquid securities, discussed below. For additional information regarding forward foreign currency contracts, see the Trust's Statement of Additional Information. Repurchase Agreements. The Fund may engage in repurchase agreements with banks, registered broker-dealers and registered government securities dealers which are deemed creditworthy by Fund Management, under guidelines established by the board of trustees. A repurchase agreement is a transaction in which the Fund purchases a security and simultaneously commits to sell the security to the seller at an agreed upon price and date (usually not more than seven days) after the date of purchase. The resale price reflects the purchase price plus an agreed upon market rate of interest which is unrelated to the coupon rate or maturity of the purchased security. The Fund's risk is limited to the ability of the seller to pay the agreed upon amount on the delivery date. However, in the event the seller should default, the underlying security constitutes collateral for the seller's obligations to pay. This collateral will be held by the custodian for the Fund's assets. ^ In the event of the insolvency of a counterparty to a repurchase agreement, the Fund could experience delays and incur costs in realizing on the collateral. To the extent that the proceeds from a sale upon a default in the obligation to repurchase are less than the repurchase price, the Fund would suffer a loss. Although the Fund has not adopted any limit on the amount of its total assets that may be invested in repurchase agreements, the Fund intends that at no time will the market value of its securities subject to repurchase agreements exceed 20% of the total assets of the Fund. Illiquid Securities. The Fund may invest from time to time in securities subject to restrictions on disposition under the Securities Act of 1933 ("restricted securities"), securities without readily available market quotations or illiquid securities (those which cannot be sold in the ordinary course of business within seven days at approximately the valuation given to them by the Fund). However, on the date of purchase, no such investment may increase the Fund's holdings of restricted securities to more than 2% of the value of the Fund's total assets or its holdings of illiquid securities or those without readily available market quotations to more than 5% of the Fund's total assets. The Fund is not required to receive registration rights in connection with the purchase of restricted securities and, in the absence of such rights, marketability and value can be adversely affected because the Fund may be unable to dispose of such securities 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. Futures and Options. A futures contract is an agreement to buy or sell a specific amount of a financial instrument or commodity at a particular price on a particular date. The Fund will use futures contracts only to hedge against price changes in the value of its current or intended investments in securities. In the event that an anticipated decrease in the value of portfolio securities occurs as a result of a general decrease in prices, the adverse effects of such changes may be offset, at least in part, by gains on the sale of futures contracts. Conversely, the increased cost of portfolio securities to be acquired, caused by a general increase in prices, may be offset, at least in part, by gains on futures contracts purchased by the Fund. Brokerage fees are paid to trade futures contracts, and the Fund is required to maintain margin deposits. Put and call options on futures contracts or securities may be traded by the Fund in order to protect against declines in the value of portfolio securities or against increases in the cost of securities to be acquired. The purchaser of an option purchases the right to effect a transaction in the underlying future or security at a specified price (the "strike price") before a specified date (the "expiration date"). In exchange for the right, the purchaser pays a "premium" to the seller, which represents the price of the right to buy or to sell the underlying instrument. In exchange for the premium, the seller of the option becomes obligated to effect a transaction in the underlying future or security, at the strike price, at any time prior to the expiration date, should the buyer choose to exercise the option. A call option contract grants the purchaser the right to buy the underlying future or security, at the strike price, before the expiration date. A put option contract grants the purchaser the right to sell the underlying future or security, at the strike price, before the expiration date. Purchases of options on futures contracts may present less dollar risk in hedging the Fund's portfolio than the purchase and sale of the underlying futures contracts, since the potential loss is limited to the amount of the premium plus related transaction costs. The premium paid for such a put or call option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise or liquidation of the option, and, unless the price of the underlying futures contract or security changes sufficiently, the option may expire without value to the Fund. Although the Fund will enter into futures contracts and options on futures contracts and securities solely for hedging or other nonspeculative purposes, their use does involve certain risks. For example, a lack of correlation between the value of an instrument underlying an option or futures contract and the assets being hedged, or unexpected adverse price movements, could render a Fund's hedging strategy unsuccessful and could result in losses. In addition, there can be no assurance that a liquid secondary market will exist for any contract purchased or sold, and the Fund may be required to maintain a position until exercise or expiration, which could result in losses. Transactions in futures contracts and options are subject to other risks as well, which are set forth in greater detail in the Statement of Additional Information and Appendix B therein. Securities Lending. The Fund may make loans of its portfolio securities (not to exceed 10% of the Fund's total assets) to broker-dealers or other institutional investors under contracts requiring such loans to be callable at any time and to be secured continuously by collateral in cash, cash equivalents, high quality short-term government securities or irrevocable letters of credit maintained on a current basis at an amount at least equal to the market value of the securities loaned, including accrued interest and dividends. The Fund will continue to collect the equivalent of the interest or dividends paid by the issuer on the securities loaned and will also receive either interest (through investment of cash collateral) or a fee (if the collateral is government securities). The Fund may pay finder's and other fees in connection with securities loans. Portfolio Turnover. There are no fixed limitations regarding portfolio turnover for the Fund. Although the Fund does not trade for short-term profits, securities may be sold without regard to the time they have been held in the Fund when, in the opinion of Fund Management, market considerations warrant such action. As a result, while it is anticipated that the Fund's annual portfolio turnover rate generally will not exceed 100%, under certain market conditions the portfolio turnover rate for the Fund may exceed 100%. Increased portfolio turnover would cause the Fund to incur greater brokerage costs than would otherwise be the case. The Fund's portfolio turnover rates are set forth under "Financial Highlights" and, along with the Trust's brokerage allocation policies, are discussed in the Statement of Additional Information. THE TRUST AND ITS MANAGEMENT The Trust is a no-load mutual fund, registered with the Securities and Exchange Commission as an open-end, diversified management investment company. The Trust was organized on July 15, 1987, under the laws of the Commonwealth of Massachusetts as "Financial Series Trust." On July 1, 1993, the Trust changed its name to "INVESCO Value Trust." The overall supervision of the ^ Fund is the responsibility of ^ the Trust's board of trustees. INVESCO Funds Group, Inc. ("IFG"), 7800 E. Union Avenue, Denver, Colorado, serves as the Trust's investment adviser pursuant to an investment advisory agreement. Under this agreement, IFG provides the Fund with various management services and supervises the Fund's daily business affairs. Specifically, IFG performs all administrative, clerical, statistical, secretarial and all other services necessary or incidental to the administration of the affairs of the Trust excluding, however, those services that are the subject of a separate agreement between the Trust and IFG or any affiliate thereof. Services provided pursuant to separate agreement include the distribution and sale of Trust shares and provision of transfer agency, dividend disbursing agency and registrar services, and services furnished under an Administrative Services Agreement with IFG dated as of February 28, 1997. ^ IFG has contracted with INVESCO Capital Management, Inc. ("ICM"), the Trust's investment adviser prior to 1991, for investment sub-advisory and research services on behalf of the Fund. ICM currently manages in excess of ^ $40 billion of assets on behalf of tax-exempt accounts (such as pension and profit-sharing funds for corporations and state and local governments) and investment companies. ICM, subject to the supervision of IFG, is primarily responsible for selecting and managing the Fund's investments. Although the Trust is not a party to the sub-advisory agreement, the agreement has been approved by the shareholders of the Trust. Services provided by IFG and ICM are subject to review by the Trust's board of trustees. Pursuant to an agreement with the Trust, effective September 30, 1997, INVESCO Distributors, Inc. ("IDI") became the Fund's distributor. IDI, established in 1997, is a registered broker-dealer that acts as distributor for all retail mutual funds advised by IFG. Prior to September 30, 1997, IFG served as the Fund's distributor. IFG, ICM and IDI are indirect wholly-owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC is a publicly-traded holding company that, through its subsidiaries, engages in the business of investment management on an international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3, 1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of the largest independent investment management businesses in the world. IFG and ICM ^ continue to operate under their existing names. Together, IFG and ICM constitute "Fund Management." AMVESCAP PLC has approximately $177.5 billion in assets under management. IFG was established in 1932 and, as of August 31, 1997, managed 14 mutual funds, consisting of ^ 45 separate portfolios, with combined assets of approximately $15.9 billion on behalf of over 854,448 shareholders. ^ The following individuals serve as portfolio managers for the Fund and are primarily responsible for the day-to-day management of the Fund's portfolio of securities: Michael C. Harhai Portfolio manager of the Fund since 1993; portfolio manager for INVESCO Capital Management, Inc. (1993 to present); senior vice president and manager, Sovran Capital Management Corp. (1992 to 1993); senior vice president and portfolio manager, C&S/Sovran Capital Management (1991 to 1992); senior vice president and portfolio manager, Citizens & Southern Investment Advisors, Inc. (1984 to 1991); began investment career in 1972; B.A., University of South Florida; M.B.A., University of Central Florida; Chartered Financial Analyst; trustee, Atlanta Society of Financial Analysts. Terrence Irrgang Assistant portfolio manager of the Fund since 1993; portfolio manager for INVESCO Capital Management, Inc. (1992 to present); consultant, Towers, Perrin & Forster & Crosby (1988 to 1992); began investment career in 1981; B.A., Gettysburg College; M.B.A., Temple University; Chartered Financial Analyst. Under the investment advisory agreement, the Fund pays IFG a monthly fee at the following annual rates based on the average net assets of the Fund: 0.75% on the first $500 million of the Fund's average net assets; 0.65% on the next $500 million of the Fund's average net assets; and 0.50% on the average net assets of the Fund in excess of $1 billion. For the fiscal year ended August 31, 1997, the advisory fees paid to IFG amounted to 0.75% of the average net assets of the Fund. Out of its advisory fee which it receives from the Fund, IFG pays ICM, as the Fund's sub-adviser, a monthly fee which is computed at the following annual rates: prior to January 1, 1998, 0.20% on the first $500 million of the Fund's average net assets, 0.17% on the next $500 million of the Fund's average net assets and 0.13% on the Fund's average net assets in excess of $1 billion and effective January 1, 1998, 0.25% on the first $500 million of the Fund's average net assets, 0.2167% on the next $500 million of the Fund's average net assets and 0.1667% on the Fund's average net assets in excess of $1 billion. No fee is paid by the Fund to ICM. The Fund bears those Trust expenses which are accrued daily that are incurred on its behalf and, in addition, bears a portion of general Trust expenses allocated based upon the relative net assets of the three Funds of the Trust. Such expenses are generally deducted from the Fund's total income before dividends are paid. Total expenses of the Fund, including investment advisory fees (but excluding brokerage commissions), as a percentage of its average net assets for the fiscal year ended August 31, 1997, were 1.04% (1.00%, after expense offset arrangements). The Trust also has entered into an Administrative Services Agreement (the "Administrative Agreement") with IFG. Pursuant to the Administrative Agreement, IFG performs certain administrative and internal accounting services, including without limitation, maintaining general ledger and capital stock accounts, preparing a daily trial balance, calculating net asset value daily and 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 IFG a fee consisting of a base fee of $10,000 per year, plus an additional incremental fee computed at an annual rate not to exceed a maximum of 0.015% per annum of the average net assets of the Fund. The Declaration of Trust pursuant to which the Trust is organized contains an express disclaimer of shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each instrument entered into or executed by the Trust. The Declaration of Trust also provides for indemnification out of the Trust's property for any shareholder held personally liable for any Trust obligation. Thus, the risk of a shareholder being personally liable for obligations of the Trust is limited to the unlikely circumstance in which the Trust itself would be unable to meet its obligations. Fund Management places orders for the purchase and sale of portfolio securities with brokers and dealers based upon Fund Management's evaluation of the broker-^ dealers' financial responsibility coupled with such broker-^ dealers' ability to effect transactions at the best available prices. The Trust may place orders for portfolio transactions with qualified broker-dealers that recommend the various funds of the Trust to clients, or act as agent in the purchase of fund shares for clients, if Fund Management believes that the quality of the execution of the transaction and level of commission are comparable to those available from other qualified brokerage firms. For further information, see "Investment Practices -- Placement of Portfolio Brokerage" in the Statement of Additional Information. Fund Management permits investment and other personnel to purchase and sell securities for their own accounts, subject to a compliance policy governing personal investing. This policy requires Fund Management's personnel to conduct their personal investment activities in a manner that Fund Management believes is not detrimental to the Fund or Fund Management's other advisory clients. See the Statement of Additional Information for more detailed information. HOW SHARES CAN BE PURCHASED Shares of the Fund are sold on a continuous basis by IDI, as the Fund's 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 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 section entitled "Services Provided by the Trust," may open an account without making any initial investment if they agree to make regular, minimum purchases of at least $50; (2) 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; (3) Fund Management may permit a lesser amount to be invested in the Fund under a federal income tax-deferred retirement plan (other than an IRA), or under a group investment plan qualifying as a sophisticated investor; and (4) Fund Management reserves the right to increase, 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 shares in the Fund can be expedited by placing bank wire, overnight courier or telephone orders. For further information, the purchaser may call the Trust'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., 7800 E. Union Avenue, Denver, Colorado 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. Generally, payments for telephone orders must be received by the Trust 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. IFG has agreed to indemnify the Trust for any losses resulting from the cancellation of telephone purchases. 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 IFG 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 also may 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 if the broker so elects. Any investor may deal directly with the Fund in any transaction. In that event, there is no such charge. IFG or IDI may from time to time make payments from its revenues to securities dealers and other financial institutions that provide distribution-related and/or administrative services for the Fund. 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 Fund Management, such rejection is in the best interest of the Fund. 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 the 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 the Fund. If market quotations are not readily available, a security will be valued at fair value as determined in good faith by the board of trustees. Debt securities with remaining maturities of 60 days or less at the time of purchase will be valued at amortized cost, absent unusual circumstances, so long as the Trust's board of trustees believes that such value represents fair value. Under certain circumstances, the Fund may offer its shares, in lieu of cash payment, for securities to be purchased by the Fund. Such a transaction can benefit the Fund by allowing it to acquire securities for its portfolio without paying brokerage commissions. For the same reason, the transaction also may be beneficial to the party exchanging the securities. The Fund shall not enter into such transactions, however, unless the securities to be exchanged for Fund shares are readily marketable and not restricted as to transfer either by law or liquidity of the market, comply with the investment policies and objectives of the Fund, are of the type and quality which would normally be purchased for the Fund's portfolio, are acquired for investment and not for resale, have a value which is readily ascertainable as evidenced by a listing on the American Stock Exchange, the New York Stock Exchange or NASDAQ, and are securities which the Fund would otherwise purchase on the open market. The value of Fund shares used to purchase portfolio securities as stated herein will be the net asset value as of the effective time and date of the exchange. The securities to be received by the Fund will be valued in accordance with the same procedure used in valuing the Fund's portfolio securities. Any investor wishing to acquire shares of the Fund in exchange for securities should contact either the president or the secretary of the Trust at the address or telephone number shown on the cover page of this Prospectus. Distribution Expenses. The 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. The Plan applies to New Assets (new sales of shares, exchanges into the Fund and reinvestments of dividends and capital gain distributions) of the Fund after November 1, 1997. Under the Plan, monthly payments may be made by the Fund to IDI to permit IDI, at its discretion, to engage in certain activities, and provide certain services approved by the board of trustees in connection with the distribution of the Fund's shares to investors. These activities and services 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, which may include IDI-affiliated companies, 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 permissible activities and services include advertising, the preparation, printing and distribution of sales literature, printing and distribution of prospectuses to prospective investors, and such other services and promotional activities for the Fund as may from time to time be agreed upon by the Trust and the board of trustees, including public relations efforts and marketing programs to communicate with investors and prospective investors. These services and activities may be conducted by the staff of ^ IDI or its affiliates or by third parties. Under the Plan, the Trust's payments to IDI on behalf of the Fund are limited to an amount computed at an annual rate of 0.25% of the Fund's ^ average net New Assets. IDI is not entitled to payment for overhead expenses under the Plan, but may be paid for all or a portion of the compensation paid for salaries and other employee benefits for the personnel of IFG or IDI whose primary responsibilities involve marketing shares of the INVESCO Mutual Funds, including the Fund. Payment amounts by the Fund under the Plan, for any month, may be made to compensate IDI for permissible activities engaged in and services provided by IDI during the rolling 12-month period in which that month falls. Therefore, any obligations incurred by IDI in excess of the limitations described above will not be paid by the Fund under the Plan, and will be borne by IDI. In addition, IDI and its affiliates may from time to time make additional payments from its revenues to securities dealers, financial advisers and financial institutions that provide distribution-related and/or administrative services for the Fund. 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 directly the distribution of shares of any other Fund of the Trust or other mutual fund advised by IFG. 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. IDI will bear any distribution- and service-related expenses in excess of the amounts which are compensated pursuant to the Plan. The Plan also authorizes any financing of distribution which may result from IDI's use of its own resources, including profits from investment advisory fees received from the Fund, provided that such fees are legitimate and not excessive. For more information see see "How Shares Can Be Purchased" in the Statement of Additional information. SERVICES PROVIDED BY THE TRUST Shareholder Accounts. IFG maintains a share account that reflects the current holdings of each shareholder. A separate account will be maintained for a shareholder for each fund in which the shareholder invests. As a business trust, the Trust does not issue share certificates. Each shareholder is sent a detailed confirmation of each transaction in shares of the Trust. 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 IFG by using the telephone number on the cover of this Prospectus. Reinvestment of Distributions. Dividends and other distributions are automatically reinvested in additional shares of the Fund at the net asset value per share of the Fund in effect on the ex-dividend or ex-distribution date. A shareholder may, however, elect to reinvest dividends and other distributions in certain of the other no-load mutual funds advised by IFG and distributed by IDI, or to receive payment of all dividends and other distributions in excess of $10.00 by check by giving written notice to IFG 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 IFG. Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to shareholders who own or purchase shares of any mutual funds advised by IFG 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, IFG, 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 IFG 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 IFG. Exchange Policy. Shares of the Fund may be exchanged for shares of any other fund of the Trust, as well as for shares of any of the following other no-load mutual funds, which are also advised by IFG, on the basis of their respective net asset values at the time of the exchange: INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios, Inc. and INVESCO Tax-Free Income Funds, Inc. An exchange involves the redemption of shares in the Fund and investment of the redemption proceeds in shares of another fund of the Trust 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 IFG, using the telephone number or address on the cover of this Prospectus. Exchanges made by telephone must be in the 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 option to exchange Fund shares by telephone is available to shareholders automatically unless expressly declined. By signing the new account Application or a Telephone Transaction Authorization Form or otherwise utilizing the telephone exchange option, 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 transactions 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 policy to the disadvantage of other shareholders, the Fund reserves the right to terminate the exchange option of any shareholder who requests more than four exchanges in 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 policy 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 1940 Act, 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 policy 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. Shareholders interested in exercising the exchange option may contact IFG for information concerning their particular exchanges. Automatic Monthly Exchange. Shareholders who have accounts in any one or more of the mutual funds distributed by IDI 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 Policy" on a monthly basis, subject to the Fund's minimum initial investment or subsequent investment requirements. This automatic exchange program can be changed by the shareholder at any time by notifying IFG at least two weeks prior to the date the change is to be made. Further information regarding this service can be obtained by contacting IFG. 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 notifying IFG at least two weeks prior to the date the change is to be made. Further information regarding this service can be obtained by contacting IFG. 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 IFG. Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for self-employed individual retirement plans, ^ various 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 IFG. INVESCO Trust Company, a subsidiary of IFG, 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 ^ IFG 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 next determined after a request in proper form is received at the Trust's office. (See "How Shares Can Be Purchased.") Net asset value per share of the Fund at the time of the redemption may be more or less than the price originally paid to purchase shares. In order to redeem shares, a written redemption request signed by each registered owner of the account may be submitted to IFG at the address noted above. 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 shares are held in the name of a corporation, additional documentation may be necessary. Call or write for ^ specific information. 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 or when an emergency as defined by the Securities and Exchange Commission exists. If the shares to be redeemed were purchased by check and that check has not yet cleared, payment will be made promptly upon clearance of the purchase check (which will take up to 15 days). If a shareholder participates in EasiVest, the Fund's automatic monthly investment program, and redeems all of the shares in a Fund account, IFG will terminate any further EasiVest purchases unless otherwise instructed by the shareholder. 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 Trust 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 IFG, using the telephone number on the cover of this Prospectus. For INVESCO Trust Company sponsored federal income tax-deferred 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. 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. The redemption proceeds, at the shareholder's option, either will be mailed to the address listed for the shareholder on its Fund account, or wired (minimum $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. The telephone redemption policy may be modified or terminated in the future at the discretion of Fund Management. 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 will require up to seven days following receipt of the redemption request, or additional time because of the unusual circumstances set forth above. The ^ option to redeem Fund shares by telephone is available to shareholders automatically unless expressly declined. By signing a new account Application or a Telephone Transaction Authorization Form or otherwise utilizing the telephone redemption ^ option, 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 inititated 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. TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS Taxes. The Fund intends to distribute to shareholders all of its net investment income, net capital gains and net gains from foreign currency transactions, if any, in order to continue to qualify for tax treatment as a regulated investment company. Thus, the Fund does not expect to pay any federal income or excise taxes. Unless shareholders are exempt from income taxes, they must include all dividends and other distributions in taxable income for federal, state and local income tax purposes. Dividends and other distributions are taxable whether they are received in cash or automatically reinvested in shares of the Fund or another fund in the INVESCO group. Net realized capital gains of the Fund are classified as short-term and long-term gains depending upon how long the Fund held the security that gave rise to the gains. Short-term capital gains are included in income from dividends and interest as ordinary income and are taxed at the taxpayer's marginal tax rate. The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in August 1997, changed the taxation of long-term capital gains by applying different capital gains rates depending on the taxpayer's holding period and marginal rate of federal income tax. Long-term gains realized on the sale of securities held for more than one year but not for more than 18 months are taxable at a rate of 28%. This category of long-term gains is often referred to as "mid-term" gains but is technically termed "28% rate gains". Long-term gains realized on the sale of securities held for more than 18 months are taxable at a rate of 20%.^ At the end of each year, information regarding the tax status of dividends and other distributions is provided to shareholders. Shareholders should consult their tax advisers as to the effect of the Tax Act on distributions by the Fund of net capital gain. Shareholders also may realize capital gains or losses when they sell their Fund shares at more or less than the price originally paid. Capital gain on shares held for more than one year will be long-term capital gain, in which event it will be subject to federal income tax at the rates indicated above. The Fund may be subject to withholding of foreign taxes on dividends or interest received on foreign securities. Foreign taxes withheld will be treated as an expense of the Fund. Individuals and certain other non-corporate shareholders may be subject to backup withholding of 31% on dividends, capital gain and other distributions and redemption proceeds. Unless you are subject to backup withholding for other reasons, you can avoid backup withholding on your Fund account by ensuring that we have a correct, certified tax identification number. We encourage you to consult a tax adviser with respect to these matters. For further information see "Dividends, Other Distributions and Taxes" in the Statement of Additional Information. Dividends and Other Distributions. The Fund earns ordinary or net investment income in the form of dividends and interest on its investments. Dividends paid by the Fund will be based solely on the income earned by it. The Fund's policy is to distribute substantially all of this income, less Fund expenses, to shareholders. Dividends from net investment income are paid on a quarterly basis, at the end of November, February, May and August, at the discretion of the Trust's Board of Trustees. Dividends are automatically reinvested in additional shares of the Fund at the net asset value on the ^ payable date unless otherwise requested. In addition, the Fund realizes capital gains and losses when it sells securities for more or less than it paid. If total gains on sales exceed total losses (including losses carried forward from previous years), the Fund has a net realized capital gain. Net realized capital gains, if any, together with gains, if any, realized on foreign currency transactions, are distributed 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 on the ^ payable date unless otherwise requested. Dividends and other distributions are paid to holders of shares on the record date of distribution regardless of how long the Fund shares have been held by the shareholder. The Fund's share price will then drop by the amount of the distribution on the ex- dividend ^ or ex-distribution date. If a shareholder purchases shares immediately prior to the distribution, the shareholder will, in effect, have "bought" the distribution by paying the full purchase price, a portion of which is then returned in the form of a taxable distribution. ADDITIONAL INFORMATION Voting Rights. All shares of the Trust's funds have equal voting rights. When shareholders are entitled to vote upon a matter, each shareholder is entitled to one vote for each share owned and a corresponding fractional vote for each fractional share owned. Voting with respect to certain matters, such as ratification of independent accountants and the election of trustees, will be by all funds of the Trust voting together. In other cases, such as voting upon the investment advisory contract for the individual funds, voting is on a fund-by-fund basis. To the extent permitted by law, 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 Trust is not generally required, and does not expect, to hold regular annual meetings of shareholders. However, the board of trustees will call such special meetings of shareholders for the purpose, among other reasons, of voting the question of removal of a trustee or trustees when requested to do so in writing by the holders of 10% or more of the outstanding shares of the Trust or as may be required by applicable law or the Trust's Declaration of Trust. The Trust will assist shareholders in communicating with other shareholders as required by the 1940 Act. Trustees may be removed by action of the holders of two-thirds of the outstanding shares of the Trust. Shareholder Inquiries. All inquiries regarding the Fund should be directed to the Trust 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 an annual fee of $20.00 per shareholder account or, where applicable, per participant in an omnibus account. 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. Registered broker-dealers, third party administrators of tax-qualified retirement plans and other entities, including affiliates of IFG, 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 IFG. In such cases, IFG may pay the third party an annual sub-transfer agency or recordkeeping fee out of the transfer agency fee which is paid to IFG by the Fund. ^ PROSPECTUS January 1, 1998 INVESCO Value Equity Fund INVESCO Distributors, Inc., Distributor Post Office Box 173706 Denver, Colorado 80217-3706 1-800-525-8085 PAL(R): 1-800-424-8085 http://www.invesco.com In Denver, visit one of our convenient Investor Centers: Cherry Creek 155-B Fillmore Street Denver Tech Center 7800 East Union Avenue Lobby Level In addition, all documents filed by the Trust with the Securities and Exchange Commission can be located on a web site maintained by the Commission at http://www.sec.gov. PROSPECTUS January 1, 1998 INVESCO VALUE TRUST INVESCO Total Return Fund INVESCO Total Return Fund (the "Fund") seeks to achieve a high total return on investment through capital appreciation and current income by investing in a combination of equity securities (consisting of common stocks and, to a lesser degree, securities convertible into common stock) and fixed income securities. The equity securities purchased by the Fund generally will be issued by companies which are listed on a national securities exchange and which usually pay regular dividends. This Fund seeks reasonably consistent total returns over a variety of market cycles. The Fund is a series of INVESCO Value Trust (the "Trust"), an open-end management investment company consisting of three separate portfolios of investments. This Prospectus relates to shares of INVESCO Total Return Fund. Separate prospectuses are available upon request from INVESCO Distributors, Inc. for the Trust's other two funds, INVESCO Value Equity Fund and INVESCO Intermediate Government Bond Fund. Investors may purchase shares of any or all funds. Additional funds may be offered in the future. 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, dated January 1, ^ 1998, has been filed with the Securities and Exchange Commission and is incorporated by reference into this ^ Prospectus. To obtain a free copy, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado 80217-3706; ^ call 1-800-525-8085; or visit our web site at: http://www.invesco.com. 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. ---------- TABLE OF CONTENTS Page ---- ANNUAL FUND EXPENSES 56 FINANCIAL HIGHLIGHTS 58 PERFORMANCE DATA 62 INVESTMENT OBJECTIVE AND POLICIES 62 RISK FACTORS 63 THE TRUST AND ITS MANAGEMENT 67 HOW SHARES CAN BE PURCHASED 70 SERVICES PROVIDED BY THE TRUST 72 HOW TO REDEEM SHARES 75 TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS 76 ADDITIONAL INFORMATION 78 ANNUAL FUND EXPENSES The Fund is 100% no-load; there are no fees to purchase, exchange or redeem shares, nor any ongoing marketing ("12b-1") expenses. Lower expenses benefit Fund shareholders by increasing the Fund's total return. 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 0.64% 12b-1 Fees None Other Expenses 0.22% Transfer Agency Fee(1) 0.16% General Services, Administrative Services, Registration, Postage(2) 0.06% Total Fund Operating Expenses(3) 0.86% (1) Consists of the transfer agency fee described under "Additional Information - Transfer and Dividend Disbursing Agent." (2) Includes, but is not limited to, fees and expenses of trustees, custodian bank, legal counsel and independent accountants, ^ securities pricing ^ services, 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. (3) It should be noted that the Fund's actual total operating expenses were lower than the figures shown because the Fund's custodian ^ and transfer agent fees were reduced under expense offset arrangements. However, as a result of an SEC requirement for mutual funds to state their total operating expenses without crediting any such expense offset arrangement, the figures shown above do not reflect these reductions. In comparing expenses for different years, please note that the ratios of Expenses to Average Net Assets shown under "Financial Highlights" do reflect reductions for periods prior to the fiscal year ended August 31, 1996. (See "The Trust ^ and Its ^ Management.") 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 ------ ------- ------- -------- $9 $28 $48 $106 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 Trust ^ and Its Management.") The above figures for INVESCO Total Return Fund are based on fiscal year-end information. The Fund charges no sales load, redemption fee or exchange fee and bears no distribution expenses. 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. FINANCIAL HIGHLIGHTS (For a Fund Share Outstanding Throughout Each Period) The following information for each of the four years ended August 31, 1997, the eight-month fiscal period ended August 31, 1993, each of the ^ four years ended December 31, 1992, and the period ended December 31, 1987, has been audited by Price Waterhouse LLP, independent accountants. Prior years' information was audited by another independent accounting firm. This information should be read in conjunction with the audited financial statements and the report of independent accountants thereon appearing in the Trust's 1997 Annual Report to Shareholders which is incorporated by reference into the Statement of Additional Information. Both are available without charge by contacting INVESCO Distributors, Inc., at the address or telephone number on the cover of this Prospectus. All per share data has been adjusted to reflect an 80 to 1 stock split which was effected on January 2, 1991.
Period Period Ended Ended Decem- Year Ended August 31 August 31 Year Ended December 31 ber 31 ----------------------------------- -------- ------------------------------------------- -------- 1997 1996 1995 1994 1993^ 1992 1991 1990 1989 1988 1987> PER SHARE DATA Net Asset Value - Beginning of Period $22.60 $20.95 $18.54 $18.27 $17.18 $16.43 $14.21 $15.08 $13.46 $12.56 $12.50 ----------------------------------- -------- ---------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.77 0.73 0.72 0.69 0.40 0.66 0.71 0.74 0.79 0.39 0.22 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 5.26 1.78 2.46 0.60 1.09 0.93 2.78 (0.80) 1.74 0.93 0.00 ----------------------------------- -------- ---------------------------------------------------- Total from Investment Operations 6.03 2.51 3.18 1.29 1.49 1.59 3.49 (0.06) 2.53 1.32 0.22 ----------------------------------- -------- ---------------------------------------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.77 0.73 0.72 0.60 0.40 0.65 0.72 0.75 0.78 0.40 0.16 In Excess of Net Investment Income+ 0.00 0.00 0.00 0.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Distributions from Capital Gains 0.09 0.13 0.05 0.17 0.00 0.19 0.55 0.06 0.13 0.02 0.00 In Excess of Capital Gains 0.00 0.00 0.00 0.16 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ----------------------------------- -------- --------------------------------------------------- Total Distributions 0.86 0.86 0.77 1.02 0.40 0.84 1.27 0.81 0.91 0.42 0.16 ----------------------------------- -------- --------------------------------------------------- Net Asset Value - End of Period $27.77 $22.60 $20.95 $18.54 $18.27 $17.18 $16.43 $14.21 $15.08 $13.46 $12.56 =================================== ======== =================================================== TOTAL RETURN 27.01% 12.06% 17.54% 7.22% 8.72%* 9.84% 24.96% (0.35%) 19.13% 11.53% 1.72%* RATIOS Net Assets - End of Period ($000 Omitted) $1,845,594 $1,032,151 $563,468 $292,765 $220,224 $137,196 $82,219 $54,874 $44,957 $28,432 $219 Ratio of Expenses to Average Net Assets# 0.86%@ 0.89%@ 0.95% 0.96% 0.93%~ 0.88% 0.92% 1.00% 1.00% 1.00% 0.81%~ Ratio of Net Investment Income to Average Net Assets# 3.11% 3.44% 3.97% 3.31% 3.51%~ 4.06% 4.62% 5.22% 5.46% 5.56% 6.44%~ Portfolio Turnover Rate 4% 10% 30% 12% 19%* 13% 49% 24% 28% 13% 0%* Average Comission Rate Paid^^ $0.0520 $0.0539 - - - - - - - - -
^ From January 1, 1993 to August 31, 1993. > From September 22, 1987, commencement of investment operations, to December 31, 1987. + Distributions in excess of net investment income for the year ended August 31,1995, aggregated less than $0.01 on a per share basis. * Based on operations for the period shown and, accordingly, are not representative of a full year. # Various expenses of the Fund were voluntarily absorbed by IFG for the years ended December 31, 1989, 1988 and the period ended December 31, 1987. If such expenses had not been voluntarily absorbed, ratio of expenses to average net assets would have been 1.05%, 1.21% and 2.00%, respectively, and ratio of net investment income to average net assets would have been 5.41%, 5.35% and 5.25%, respectively. @ Ratio is based on Total Expenses of the Fund, which is before any expense offset arrangements. ~ Annualized ^^ The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased or sold which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. Further information about the performance of the Fund is contained in the Trust's Annual Report to Shareholders, which may be obtained without charge by writing INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado 80217-3706; or by calling 1-800- 525-8085. PERFORMANCE DATA From time to time, the Fund advertises its total return performance. These figures are based upon historical investment results and are not intended to indicate future performance. Total return is computed by calculating the percentage change in value of an investment, assuming reinvestment of all income dividends and capital gain distributions, to the end of a specified period. Cumulative total return reflects actual performance over a stated period of time. Average annual total return is a hypothetical rate of return that, if achieved annually, would have produced the same cumulative total return if performance had been constant over the entire period. Thus, a 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 total return computations. 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 the performance of recognized bond indices and 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 ^, a division of The McGraw-Hill Companies, Inc. ("S&P"), 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 Fund in performance reports, will be drawn from the "Flexible Portfolio Funds" Lipper mutual fund groupings, in addition to the broad-based Lipper general fund grouping. INVESTMENT OBJECTIVE AND POLICIES The Trust consists of three separate portfolios of investments (referred to as the "Funds"), each represented by a different class of the Trust's shares. This Prospectus relates to INVESCO Total Return Fund; separate prospectuses for INVESCO Value Equity Fund and INVESCO Intermediate Government Bond Fund are available. The investment objective of the Fund is to seek a high total return on investment through capital appreciation and current income. Funds having an investment objective of seeking a high total return may be limited in their ability to attain their objective by the limitations on the types of securities in which they may invest. ^ No assurance can be given that the Fund will be able to achieve its investment objective. The Fund intends to accomplish its objective by investing in a combination of equity securities and fixed income securities. The equity securities to be acquired by the Fund will consist of common stocks and, to a lesser extent, securities convertible into common stocks. Such securities generally will be issued by companies which are listed on a national securities exchange, such as the New York Stock Exchange, and which usually pay regular dividends, although the Fund also may invest in securities traded on regional stock exchanges or on the over-the-counter market. The Trust has not established any minimum investment standards, such as an issuer's asset level, earnings history, type of industry, dividend payment history, etc. with respect to the Fund's investments in common stocks, although in selecting common stocks for the Fund, the investment adviser and sub-adviser (collectively, "Fund Management") generally apply an investment discipline which seeks to achieve a yield higher than the overall equity market. Therefore, because smaller companies may be subject to more significant losses, as well as have the potential for more substantial growth, than larger, more established companies, investors in the Fund should consider that the Fund's investments may consist in part of securities which may be deemed to be speculative. The income securities to be acquired by the Fund primarily will include obligations of the U.S. government and its agencies. These U.S. government obligations consist of direct obligations of the U.S. government (U.S. Treasury Bills, Notes and Bonds), obligations guaranteed by the U.S. government, such as Government National Mortgage Association obligations, and obligations of U.S. government authorities, agencies and instrumentalities, which are supported only by the assets of the issuer, such as ^ Fannie Mae (formerly, Federal National Mortgage Association), Federal Home Loan ^ Banks, Federal Financing Bank and Federal Farm Credit Bank. The Fund also may invest in corporate debt obligations which are rated by Moody's Investors Service, Inc. ("Moody's") in its four highest ratings of corporate obligations (Aaa, Aa, A and Baa) or by S&P in its four highest ratings of corporate obligations (AAA, AA, A and BBB) or, if not rated, ^ in Fund Management's opinion have investment characteristics similar to those described in such ratings. A bond rating of Baa by Moody's indicates that the bond issue is of "medium grade," neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present, but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and have speculative characteristics as well. A bond rating of BBB by S&P indicates that the bond issue is in the lowest "investment grade" security rating. Bonds rated BBB are regarded as having an adequate capacity to pay principal and interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this category than for bonds in the A category, and they may have speculative characteristics. (See Appendix A to the Statement of Additional Information for specific descriptions of these corporate bond rating categories.) Although there is no limitation on the maturity of the Fund's investment in income securities, the dollar weighted average maturity of such investments normally will be from 3 to 15 years. Obligations of certain U.S. government agencies and instrumentalities may not be supported by the full faith and credit of the United States. Some are backed by the right of the issuer to borrow from the U.S. Treasury; others, such as the Federal National Mortgage Association, by discretionary authority of the U.S. government to purchase the agencies' obligations; while still others, such as the Student Loan Marketing Association, are supported only by the credit of the instrumentality. In the case of securities not backed by the full faith and credit of the United States, the Fund must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitments. The Fund will invest in securities of such instrumentalities only when Fund Management is satisfied that the credit risk with respect to any such instrumentality is minimal. Typically, the Fund will maintain a minimum investment in equities of 30% of total assets, and a ^ minimum of 30% of total assets will be invested in fixed and variable income securities. The remaining 40% of the portfolio will vary in asset allocation according to Fund Management's assessment of business, economic and market conditions. The analytical process associated with making allocation decisions is based upon a combination of demonstrated historic financial results, current prices for stocks and the current yield to maturity available in the market for bonds. The premium return available from one category relative to the other determines the actual asset deployment. Fund Management's asset allocation process is systematic and is based on current information rather than forecasted change. The Fund seeks reasonably consistent returns over a variety of market cycles. (See "Risk Factors" section of this Prospectus for an analysis of the risks presented by this Fund's ability to enter into ^ futures contracts, and its ability to use options to purchase or sell ^ futures contracts or ^ securities.) The investment objective of the Fund and its investment policies, ^ where indicated ^, are fundamental policies and thus may not be changed without prior approval by the holders of a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act. In addition, the Trust and this Fund are also subject to certain investment restrictions which also are set forth in the Statement of Additional Information and which may not be altered without approval of the Fund's shareholders. One of those restrictions limits the Fund's borrowing of money to borrowings from banks for temporary or emergency purposes (but not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of the Fund's total assets. RISK FACTORS Investors should consider the special factors associated with the policies discussed below in determining the appropriateness of an investment in the INVESCO Total Return Fund. The Fund's policies regarding investments in foreign securities and foreign currencies are not fundamental and may be changed by vote of the Trust's board of trustees. Foreign Securities. The Fund may invest up to 25% of its total assets in foreign equity or debt securities. Investments in securities of foreign companies and in foreign markets involve certain additional risks not associated with investments in domestic companies and markets, including the risks of fluctuations in foreign currency exchange rates and of political or economic instability, the difficulty of predicting international trade patterns, and the possibility of imposition of exchange controls or currency blockage. In addition, there may be less information publicly available about a foreign company than about a domestic company, and there is generally less government regulation of stock exchanges, brokers and listed companies abroad than in the United States. Moreover, with respect to certain foreign countries, there may be a possibility of expropriation or confiscatory taxation. Further, economies of particular countries or areas of the world may differ favorably or unfavorably from the economy of the United States. Forward Foreign Currency Contracts. The Fund may enter into contracts to purchase or sell foreign currencies at a future date ("forward contracts") as a hedge against fluctuations in foreign exchange rates pending the settlement of transactions in foreign securities or during the time the Fund holds foreign securities. A forward contract is an agreement between contracting parties to exchange an amount of currency at some future time at an agreed upon rate. Although the Fund has not adopted any limitations on its ability to use forward contracts as a hedge against fluctuations in foreign exchange rates, it does not attempt to hedge all of its foreign investment positions and will enter into forward contracts only to the extent, if any, deemed appropriate by Fund Management. The Fund will not enter into a forward contract for a term of more than one year or for purposes of speculation. Investors should be aware that hedging against a decline in the value of a currency in the foregoing manner does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. Furthermore, such hedging transactions may preclude the opportunity for gain if the value of the hedged currency should rise. No predictions can be made with respect to whether the total of such transactions will result in a better or a worse position than had the Fund not entered into any forward contracts. Forward contracts may, from time to time, be considered illiquid, in which case they would be subject to the Fund's limitation on investing in illiquid securities, discussed below. For additional information regarding foreign securities, see the Trust's Statement of Additional Information. Repurchase Agreements. The Fund may engage in repurchase agreements with banks, registered broker-dealers, and registered government securities dealers which are deemed creditworthy by Fund Management under guidelines established by the board of trustees. A repurchase agreement is a transaction in which the Fund purchases a security and simultaneously commits to sell the security to the seller at an agreed upon price and date (usually not more than seven days) after the date of purchase. The resale price reflects the purchase price plus an agreed upon market rate of interest which is unrelated to the coupon rate or maturity of the purchased security. The Fund's risk is limited to the ability of the seller to pay the agreed upon amount on the delivery date. However, in the event the seller should default, the underlying security constitutes collateral for the seller's obligations to pay. This collateral will be held by the custodian for the Fund's assets. ^ In the event of insolvency of a counterparty to a repurchase agreement, the Fund could experience delays and incur costs in realizing on the collateral. To the extent that the proceeds from a sale upon a default in the obligation to repurchase are less than the repurchase price, the Fund would suffer a loss. Although the Fund has not adopted any limit on the amount of its total assets that may be invested in repurchase agreements, the Fund intends that at no time will the market value of its securities subject to repurchase agreements exceed 20% of the total assets of the Fund. Illiquid Securities. The Fund may invest from time to time in securities subject to restrictions on disposition under the Securities Act of 1933 ("restricted securities"), securities without readily available market quotations or illiquid securities (those which cannot be sold in the ordinary course of business within seven days at approximately the valuation given to them by the Fund). However, on the date of purchase, no such investment may increase the Fund's holdings of restricted securities to more than 2% of the value of the Fund's total assets or its holdings of illiquid securities or those without readily available market quotations to more than 5% of the value of the Fund's total assets. The Fund is not required to receive registration rights in connection with the purchase of restricted securities and, in the absence of such rights, marketability and value can be adversely affected because the Fund may be unable to dispose of such securities 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 registrations. Futures and Options. A futures contract is an agreement to buy or sell a specific amount of a financial instrument or commodity at a particular price on a particular date. The Fund will use futures contracts only to hedge against price changes in the value of its current or intended investments in securities. In the event that an anticipated decrease in the value of portfolio securities occurs as a result of a general decrease in prices, the adverse effects of such changes may be offset, at least in part, by gains on the sale of futures contracts. Conversely, the increased cost of portfolio securities to be acquired, caused by a general increase in prices, may be offset, at least in part, by gains on futures contracts purchased by the Fund. Brokerage fees are paid to trade futures contracts, and the Fund is required to maintain margin deposits. Put and call options on futures contracts or securities may be traded by the Fund in order to protect against declines in the value of portfolio securities or against increases in the cost of securities to be acquired. The purchaser of an option purchases the right to effect a transaction in the underlying future or security at a specified price (the "strike price") before a specified date (the "expiration date"). In exchange for the right, the purchaser pays a "premium" to the seller, which represents the price of the right to buy or to sell the underlying instrument. In exchange for the premium, the seller of the option becomes obligated to effect a transaction in the underlying future or security, at the strike price, at any time prior to the expiration date, should the buyer choose to exercise the option. A call option contract grants the purchaser the right to buy the underlying future or security, at the strike price, before the expiration date. A put option contract grants the purchaser the right to sell the underlying future or security, at the strike price, before the expiration date. Purchases of options on futures contracts may present less dollar risk in hedging the Fund's portfolio than the purchase and sale of the underlying futures contracts, since the potential loss is limited to the amount of the premium plus related transaction costs. The premium paid for such a put or call option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise or liquidation of the option, and, unless the price of the underlying futures contract or security changes sufficiently, the option may expire without value to the Fund. Although the Fund will enter into futures contracts and options on futures contracts and securities solely for hedging or other nonspeculative purposes, within the meaning and intent of applicable rules of the CFTC, their use does involve certain risks. For example, a lack of correlation between the value of an instrument underlying an option or futures contract and the assets being hedged, or unexpected adverse price movements, could render the Fund's hedging strategy unsuccessful and could result in losses. In addition, there can be no assurance that a liquid secondary market will exist for any contract purchased or sold, and the Fund may be required to maintain a position until exercise or expiration, which could result in losses. Transactions in futures contracts and options are subject to other risks as well, which are set forth in greater detail in the Statement of Additional Information and Appendix B therein. Securities Lending. The Fund may make loans of its portfolio securities (not to exceed 10% of the Fund's total assets) to broker-dealers or other institutional investors under contracts requiring such loans to be callable at any time and to be secured continuously by collateral in cash, cash equivalents, high quality short-term government securities or irrevocable letters of credit maintained on a current basis at an amount at least equal to the market value of the securities loaned, including accrued interest and dividends. The Fund will continue to collect the equivalent of the interest or dividends paid by the issuer on the securities loaned and will also receive either interest (through investment of cash collateral) or a fee (if the collateral is government securities). The Fund may pay finder's and other fees in connection with securities loans. Portfolio Turnover. There are no fixed limitations regarding portfolio turnover for the Fund. Although the Fund does not trade for short-term profits, securities may be sold without regard to the time they have been held in the Fund when, in the opinion of Fund Management, market considerations warrant such action. As a result, while it is anticipated that the Fund's annual portfolio turnover rate generally will not exceed 100%, under certain market conditions the portfolio turnover rate for the Fund may exceed 100%. Increased portfolio turnover would cause the Fund to incur greater brokerage costs than would otherwise be the case. The Fund's portfolio turnover rates are set forth under "Financial Highlights" and, along with the Trust's brokerage allocation policies, are discussed in the Statement of Additional Information. THE TRUST AND ITS MANAGEMENT The Trust is a no-load mutual fund, registered with the Securities and Exchange Commission as an open-end, diversified management investment company. The Trust was organized on July 15, 1987, under the laws of the Commonwealth of Massachusetts as "Financial Series Trust." On July 1, 1993, the Trust changed its name to "INVESCO Value Trust." The overall supervision of the ^ Fund is the responsibility of ^ the Trust's board of trustees. INVESCO Funds Group, Inc. ("IFG"), 7800 E. Union Avenue, Denver, Colorado, serves as the Trust's investment adviser pursuant to an investment advisory agreement. Under this agreement, IFG provides the Fund with various management services and supervises the Fund's daily business affairs. Specifically, IFG performs all administrative, clerical, statistical, secretarial and all other services necessary or incidental to the administration of the affairs of the Trust, excluding, however, those services that are the subject of a separate agreement between the Trust and IFG or any affiliate thereof. Services provided pursuant to separate agreement include the distribution and sale of Trust shares and provision of transfer agency, dividend disbursing agency and registrar services, and services furnished under an Administrative Services Agreement with IFG dated as of February 28, 1997. ^ IFG has contracted with INVESCO Capital Management, Inc. ("ICM"), the Trust's investment adviser prior to 1991, for investment sub-advisory and research services on behalf of the Fund. ICM currently manages in excess of ^ $40 billion of assets on behalf of tax-exempt accounts (such as pension and profit-sharing funds for corporations and state and local governments) and investment companies. ICM, subject to the supervision of IFG, is primarily responsible for selecting and managing the Fund's investments. Although the Trust is not a party to the sub-advisory agreement, the agreement has been approved by the shareholders of the Trust. Services provided by IFG and ICM are subject to review by the Trust's board of trustees. Pursuant to an agreement with the Trust, INVESCO Distributors, Inc. ("IDI") became the Fund's distributor. IDI, established in 1997, is a registered broker-dealer that acts as distributor for all retail mutual funds advised by IFG. Prior to September 30, 1997, IFG served as the Fund's distributor. IFG, ICM and IDI are indirect wholly-owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC is a publicly-traded holding company that, through its subsidiaries, engages in the business of investment management on an international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3, 1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct subsidiary of INVESCO PLC and A I M Management, Inc. that created one of the largest independent investment management businesses in the world. IFG and ICM ^ continue to operate under their existing names. Together, IFG and ICM constitute "Fund Management." AMVESCAP PLC has approximately $177.5 billion in assets under management. IFG was established in 1932 and, as of August 31, 1997, managed 14 mutual funds, consisting of ^ 45 separate portfolios, with combined assets of approximately 15.9 billion on behalf of more than 854,448 shareholders. ^ The following individuals serve as portfolio managers for the Fund and are primarily responsible for the day-to-day management of the Fund's portfolio of securities: Edward C. Mitchell, Jr., C.F.A. Portfolio manager of the Fund since 1987; ^ Chairman (1997 to present), president (1992 to 1997), vice president (1979 to 1991) and director (1979 to present) of INVESCO Capital Management, Inc.; began investment career in 1969; B.A., University of Virginia; M.B.A., University of Colorado; Chartered Financial Analyst; Chartered Investment Counselor. James O. Baker Portfolio manager of the Fund since 1997; portfolio manager of the INVESCO Intermediate Government Bond Fund since 1993; portfolio manager of INVESCO Capital Management, Inc. (1992 to present); portfolio manager, Willis Investment Counsel (1990 to 1992); broker, Morgan Keegan (1989 to 1990); broker, Drexel Burnham Lambert (1985 to 1990); began investment career in 1977; B.A., Mercer University; Chartered Financial Analyst. Margaret W. Durkes Assistant portfolio manager of the Fund since 1997; assistant portfolio manager of AIM Advisor Flex Fund since 1997; assistant portfolio manager for INVESCO Capital Management, Inc. (1993 to present); vice president and portfolio manager for Sovran Capital Management (1991 to 1993); B.A., The Colorado College; Chartered Financial Analyst. David S. Griffin Assistant portfolio manager of the Fund since 1993; portfolio manager for INVESCO Capital Management, Inc. (1991 to present); mutual fund sales representative, INVESCO Services, Inc. (1986 to 1991); began investment career in 1982; B.A., Ohio Wesleyan University; M.B.A., William and Mary; Chartered Financial Analyst. Under the investment advisory agreement, the Fund pays IFG a monthly fee at the following annual rates, based on the average net assets of the Fund: 0.75% on the first $500 million of the Fund's average net assets; 0.65% on the next $500 million of the Fund's average net assets; and 0.50% on the average net assets of the Fund in excess of $1 billion. For the fiscal year ended August 31, 1997, the advisory fees paid to IFG amounted to 0.64% of the average net assets of the Fund. Out of its advisory fee which it receives from the Fund, IFG pays ICM, as the Fund's sub-adviser, a monthly fee, which is computed at the following annual rates: prior to January 1, 1998, 0.20% on the first $500 million of the Fund's average net assets, 0.17% on the next $500 million of the Fund's average net assets and 0.13% on the Fund's average net assets in excess of $1 billion and effective January 1, 1998, 0.25% on the first $500 million of the Fund's average net assets, 0.2167% on the second $500 million of the Fund's average net assets and 0.1667% on the Fund's average net assets in excess of $1 billion. No fee is paid by the Fund to ICM. The Fund bears those Trust expenses which are accrued daily that are incurred on its behalf and, in addition, bears a portion of general Trust expenses, allocated based upon the relative net assets of the three Funds of the Trust. Such expenses are generally deducted from the Fund's total income before dividends are paid. Total expenses of the Fund, including investment advisory fees (but excluding brokerage commissions), as a percentage of its average net assets for the fiscal year ended August 31, 1997, were 0.86%. The Trust also has entered into an Administrative Services Agreement (the "Administrative Agreement") with IFG. Pursuant to the Administrative Agreement, INVESCO performs certain administrative and internal accounting services, including without limitation, maintaining general ledger and capital stock accounts, preparing a daily trial balance, calculating net asset value daily and 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 an annual rate not to exceed a maximum of 0.015% per annum of the average net assets of the Fund. The Declaration of Trust pursuant to which the Trust is organized contains an express disclaimer of shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each instrument entered into or executed by the Trust. The Declaration of Trust also provides for indemnification out of the Trust's property for any shareholder held personally liable for any Trust obligation. Thus, the risk of a shareholder being personally liable for obligations of the Trust is limited to the unlikely circumstance in which the Trust itself would be unable to meet its obligations. Fund Management places orders for the purchase and sale of portfolio securities with brokers and dealers based upon Fund Management's evaluation of the broker-^ dealers' financial responsibility coupled with such broker-^ dealers' ability to effect transactions at the best available prices. The Fund may place orders for portfolio transactions with qualified broker-dealers that recommend the Fund or sell shares of the Fund to clients, or act as agent in the purchase of fund shares for clients, if Fund Management believes that the quality of the execution of the transaction and level of commission are comparable to those available from other qualified brokerage firms. For further information, see "Investment Practices -- Placement of Portfolio Brokerage" in the Statement of Additional Information. Fund Management permits investment and other personnel to purchase and sell securities for their own accounts, subject to a compliance policy governing personal investing. This policy requires Fund Management's personnel to conduct their personal investment activities in a manner that Fund Management believes is not detrimental to the Fund or Fund Management's other advisory clients. See the Statement of Additional Information for more detailed information. HOW SHARES CAN BE PURCHASED Shares of the Fund are sold on a continuous basis by ^ IDI, as the Fund's 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 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 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) 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; (3) Fund Management may permit a lesser amount to be invested in the Fund under a federal income tax-deferred retirement plan (other than an IRA), or under a group investment plan qualifying as a sophisticated investor; and (4) Fund Management reserves the right to increase, 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 shares in the Fund can be expedited by placing bank wire, overnight courier or telephone orders. For further information, the purchaser may call the Trust'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., 7800 E. Union Avenue, Denver, Colorado 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. Generally, payments for telephone orders must be received by the Trust 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. IFG has agreed to indemnify the Trust for any losses resulting from the cancellation of telephone purchases. 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 IFG 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 also may 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 if the broker so elects. Any investor may deal directly with the Fund in any transaction. In that event, there is no such charge. IFG or IDI may from time to time make payments from its revenues to securities dealers and other financial institutions that provide distribution-related and/or administrative services for the Fund. 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 Fund Management, such rejection is in the best interest of the Fund. 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 the 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 the Fund. If market quotations are not readily available, a security will be valued at fair value as determined in good faith by the board of trustees. Debt securities with remaining maturities of 60 days or less at the time of purchase will be valued at amortized cost, absent unusual circumstances, so long as the Trust's board of trustees believes that such value represents fair value. Under certain circumstances, the Fund may offer its shares, in lieu of cash payment, for securities to be purchased by the Fund. Such a transaction can benefit the Fund by allowing it to acquire securities for its portfolio without paying brokerage commissions. For the same reason, the transaction also may be beneficial to the party exchanging the securities. The Fund shall not enter into such transactions, however, unless the securities to be exchanged for Fund shares are readily marketable and not restricted as to transfer either by law or liquidity of the market, comply with the investment policies and objectives of the Fund, are of the type and quality which would normally be purchased for the Fund's portfolio, are acquired for investment and not for resale, have a value which is readily ascertainable as evidenced by a listing on the American Stock Exchange, the New York Stock Exchange or NASDAQ, and are securities which the Fund would otherwise purchase on the open market. The value of Fund shares used to purchase portfolio securities as stated herein will be the net asset value as of the effective time and date of the exchange. The securities to be received by the Fund will be valued in accordance with the same procedure used in valuing the Fund's portfolio securities. Any investor wishing to acquire shares of the Fund in exchange for securities should contact either the president or the secretary of the Trust at the address or telephone number shown on the cover page of this Prospectus. SERVICES PROVIDED BY THE TRUST Shareholder Accounts. IFG maintains a share account that reflects the current holdings of each shareholder. A separate account will be maintained for a shareholder for each Fund in which the shareholder invests. As a business trust, the Trust does not issue share certificates. Each shareholder is sent a detailed confirmation of each transaction in shares of the Trust. 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 IFG by using the telephone number on the cover of this Prospectus. Reinvestment of Distributions. Dividends and other distributions are automatically reinvested in additional shares of the Fund at the net asset value per share of the Fund in effect on the ex-dividend or ex-distribution date. A shareholder may, however, elect to reinvest dividends and other distributions in certain of the other no-load mutual funds advised by IFG and distributed by IDI, or to receive payment of all dividends and other distributions in excess of $10.00 by check by giving written notice to IFG 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 IFG. Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to shareholders who own or purchase shares of any mutual funds advised by IFG 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, IFG, 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 IFG 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 IFG. Exchange Policy. Shares of the Fund may be exchanged for shares of any other fund of the Trust, 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 Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc., INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios, Inc. and INVESCO Tax-Free Income Funds, Inc. An exchange involves the redemption of shares in the Fund and investment of the redemption proceeds in shares of another fund of the Trust 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 IFG, using the telephone number or address on the cover of this Prospectus. Exchanges made by telephone must be in the 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 option to exchange Fund shares by telephone is available to shareholders automatically unless expressly declined. By signing the new account Application or a Telephone Transaction Authorization Form or otherwise utilizing the telephone exchange, 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 transactions 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 policy to the disadvantage of other shareholders, the Fund reserves the right to terminate the exchange option of any shareholder who requests more than four exchanges in 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 policy 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 1940 Act, 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. Shareholders interested in exercising the exchange option may contact IFG for information concerning their particular exchanges. Automatic Monthly Exchange. Shareholders who have accounts in any one or more of the mutual funds distributed by IDI 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 Policy" on a monthly basis, subject to the Fund's minimum initial investment or subsequent investment requirements. This automatic exchange program can be changed by the shareholder at any time by notifying IFG at least two weeks prior to the date the change is to be made. Further information regarding this service can be obtained by contacting IFG. 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 notifying IFG at least two weeks prior to the date the change is to be made. Further information regarding this service can be obtained by contacting IFG. 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 IFG. Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for self-employed individual retirement plans, ^ various 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 IFG. INVESCO Trust Company, a subsidiary of IFG, 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 IDI 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 next determined after a request in proper form is received at the Trust's office. 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. (See "How Shares Can Be Purchased.") Net asset value per share of the Fund at the time of the redemption may be more or less than the price originally paid to purchase shares. In order to redeem shares, a written redemption request signed by each registered owner of the account may be submitted to IFG at the address noted above. If shares are held in the name of a corporation, additional documentation may be necessary. Call or write for specific information. 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 or when an emergency as defined by the Securities and Exchange Commission exists. If the shares to be redeemed were purchased by check and that check has not yet cleared, payment will be made promptly upon clearance of the purchase check (which will take up to 15 days). If a shareholder participates in EasiVest, the Fund's automatic monthly investment program, and redeems all of the shares in a Fund account, IFG will terminate any EasiVest purchases unless otherwise instructed by the shareholder. 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 Trust 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 IFG, using the telephone number on the cover of this Prospectus. For INVESCO Trust Company sponsored federal income tax-deferred 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. Unless IFG 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 redemption proceeds, at the shareholder's option, either will be mailed to the address listed for the shareholder on its Fund account, or wired (minimum $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. The telephone redemption policy may be modified or terminated in the future at the discretion of Fund Management. 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 will require up to seven days following receipt of the redemption request, or additional time because of the unusual circumstances set forth above. The ^ option to redeem Fund shares by telephone is available to shareholders automatically unless expressly declined. By signing a new account Application or a Telephone Transaction Authorization Form or otherwise utilizing the telephone redemption ^ option, 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 confirmations 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. TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS Taxes. The Fund intends to distribute to shareholders all of its net investment income, net capital gains and net gains from foreign currency transactions, if any, in order to continue to qualify for tax treatment as a regulated investment company. Thus, the Fund does not expect to pay any federal income or excise taxes. Unless shareholders are exempt from income taxes, they must include all dividends and other distributions in taxable income for federal, state and local income tax purposes. Dividends and other distributions are taxable whether they are received in cash or automatically reinvested in shares of the Fund or another fund in the INVESCO group. Net realized capital gains of the Fund are classified as short-term and long-term gains depending upon how long the Fund held the security that gave rise to the gains. Short-term capital gains are included in income from dividends and interest as ordinary income and are taxed at the taxpayer's marginal tax rate. The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in August 1997, changed the taxation of long-term capital gains by applying different capital gains rates depending on the taxpayer's holding period and marginal rate of federal income tax. Long-term gains realized on the sale of securities held for more than one year but not for more than 18 months are taxable at a rate of 28%. This category of long-term gains is often referred to as "mid-term" gains but is technically termed "28% rate gains". Long-term gains realized on the sale of securities held for more than 18 months are taxable at a rate of 20%.^ At the end of each year, information regarding the tax status of dividends and other distributions is provided to shareholders. Shareholders should consult their tax advisers as to the effect of the Tax Act on distributions by the Fund of net capital gain. Shareholders also may realize capital gains or losses when they sell their Fund shares at more or less than the price originally paid. Capital gain on shares held for more than one year will be long-term capital gain, in which event it will be subject to federal income tax at the rates indicated above. The Fund may be subject to withholding of foreign taxes on dividends or interest received on foreign securities. Foreign taxes withheld will be treated as an expense of the Fund. Individuals and certain other non-corporate shareholders may be subject to backup withholding of 31% on dividends, capital gain and other distributions and redemption proceeds. Unless you are subject to backup withholding for other reasons, you can avoid backup withholding on your Fund account by ensuring that we have a correct, certified tax identification number. We encourage you to consult a tax adviser with respect to these matters. For further information see "Dividends, Other Distributions and Taxes" in the Statement of Additional Information. Dividends and Other Distributions. The Fund earns ordinary or net investment income in the form of dividends and interest on its investments. Dividends paid by the Fund will be based solely on the income earned by it. The Fund's policy is to distribute substantially all of this income, less Fund expenses, to shareholders. Dividends from net investment income are paid on a quarterly basis, at the end of November, February, May and August, at the discretion of the Trust's Board of Trustees. Dividends are automatically reinvested in additional shares of the Fund at the net asset value on the ^ payable date unless otherwise requested. In addition, the Fund realizes capital gains and losses when it sells securities for more or less than it paid. If total gains on sales exceed total losses (including losses carried forward from previous years), the Fund has a net realized capital gain. Net realized capital gains, if any, together with gains, if any, realized on foreign currency transactions, are distributed 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 on the ^ payable date unless otherwise requested. Dividends and other distributions are paid to holders of shares on the record date of distribution regardless of how long the Fund shares have been held by the shareholder. The Fund's share price will then drop by the amount of the distribution on the ex-dividend ^ or ex-distribution date . If a shareholder purchases shares immediately prior to the distribution, the shareholder will, in effect, have "bought" the distribution by paying the full purchase price, a portion of which is then returned in the form of a taxable distribution. ADDITIONAL INFORMATION Voting Rights. All shares of the Trust's funds have equal voting rights. When shareholders are entitled to vote upon a matter, each shareholder is entitled to one vote for each share owned and a corresponding fractional vote for each fractional share owned. Voting with respect to certain matters, such as ratification of independent accountants and the election of trustees, will be by all funds of the Trust voting together. In other cases, such as voting upon the investment advisory contract for the individual funds, voting is on a fund-by-fund basis. To the extent permitted by law, 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 Trust is not generally required and does not expect, to hold regular annual meetings of shareholders. However, the board of trustees will call such special meetings of shareholders for the purpose, among other reasons, of voting the question of removal of a trustee or trustees when requested to do so in writing by the holders of 10% or more of the outstanding shares of the Trust or as may be required by applicable law or the Trust's Declaration of Trust. The Trust will assist shareholders in communicating with other shareholders as required by the 1940 Act. Trustees may be removed by action of the holders of two-thirds of the outstanding shares of the Trust. Shareholder Inquiries. All inquiries regarding the Fund should be directed to the Trust 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 an annual fee of $20.00 per shareholder account or, where applicable, per participant in an omnibus account. 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. Registered broker-dealers, third party administrators of tax-qualified retirement plans and other entities, including affiliates of IFG, 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 IFG. In such cases, IFG may pay the third party an annual sub-transfer agency or recordkeeping fee out of the transfer agency fee which is paid to IFG by the Fund. ^ PROSPECTUS January 1, 1998 INVESCO Total Return Fund INVESCO Distributors, Inc., Distributor Post Office Box 173706 Denver, Colorado 80217-3706 1-800-525-8085 PAL(R): 1-800-424-8085 http://www.invesco.com In Denver, visit one of our convenient Investor Centers: Cherry Creek 155-B Fillmore Street Denver Tech Center 7800 East Union Avenue Lobby Level In addition, all documents filed by the Trust with the Securities and Exchange Commission can be located on a web site maintained by the Commission at http://www.sec.gov. STATEMENT OF ADDITIONAL INFORMATION January 1, 1998 INVESCO VALUE TRUST Address: Mailing Address: 7800 E. Union Avenue Post Office Box 173706 Denver, Colorado 80237 Denver, Colorado 80217-3706 Telephone: In continental U.S., 1-800/525-8085 INVESCO VALUE TRUST (the "Trust"), is an open-end management investment company organized in series form in which all of the Funds seek to provide investors with a high total return on investment through capital appreciation and current income. Each of the Trust's three individual funds (collectively, the "Funds") has separate investment policies. Investors may purchase shares of any or all Funds. The following Funds are available: INVESCO VALUE EQUITY Fund (the "Value Equity Fund") INVESCO INTERMEDIATE GOVERNMENT BOND Fund (the "Intermediate Government Bond Fund") INVESCO TOTAL RETURN Fund (the "Total Return Fund") Additional Funds may be offered in the future. Prospectuses for the Funds dated January 1, 1998, which provide the basic information you should know before investing in a Fund, may be obtained without charge from INVESCO Distributors, Inc., Post Office Box 173706, Denver, Colorado 80217-3706. This Statement of Additional Information is not a prospectus but contains information in addition to and more detailed than that set forth in each Prospectus. It is intended to provide additional information regarding the activities and operations of the Trust and should be read in conjunction with the Prospectus. Investment Adviser: INVESCO FUNDS GROUP, INC. Distributor: INVESCO DISTRIBUTORS, INC. TABLE OF CONTENTS Page ---- INVESTMENT POLICIES AND RESTRICTIONS 82 THE TRUST AND ITS MANAGEMENT 91 HOW SHARES CAN BE PURCHASED 103 HOW SHARES ARE VALUED 106 TRUST PERFORMANCE 107 SERVICES PROVIDED BY THE TRUST 109 TAX-DEFERRED RETIREMENT PLANS 109 HOW TO REDEEM SHARES 110 DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES 110 INVESTMENT PRACTICES 112 ADDITIONAL INFORMATION 115 APPENDIX A 119 APPENDIX B 120 INVESTMENT POLICIES AND RESTRICTIONS Reference is made to the section entitled "Investment Objectives And Policies" in the Prospectuses for a discussion of the investment objectives and policies of the Funds. In addition, set forth below is further information relating to the INVESCO Value Equity, Intermediate Government Bond and Total Return Funds. Loans of Portfolio Securities. As described in the section entitled "Risk Factors" in the Prospectuses, all of the Funds may lend their portfolio securities to brokers, dealers, and other financial institutions, provided that such loans are callable at any time by the Funds and are at all times secured by collateral held by the Funds' custodian consisting of cash or securities issued or guaranteed by the United States Government or its agencies, or any combination thereof, equal to at least the market value, determined daily, of the loaned securities. The advantage of such loans is that such a Fund continues to earn income on the loaned securities, while at the same time receiving interest from the borrower of the securities. Loans will be made only to firms deemed by the adviser or sub-adviser (collectively, "Fund Management"), under procedures established by the Trust's Board of Trustees, to be creditworthy and when the amount of interest to be received justifies the inherent risks. A loan may be terminated by the borrower on one business day's notice, or by such Fund at any time. If at any time the borrower fails to maintain the required amount of collateral (at least 100% of the market value of the borrowed securities), the Fund will require the deposit of additional collateral not later than the business day following the day on which a collateral deficiency occurs or the collateral appears inadequate. If the deficiency is not remedied by the end of that period, such Fund will use the collateral to replace the securities while holding the borrower liable for any excess of replacement cost over collateral. Upon termination of the loan, the borrower is required to return the securities to such Fund. Any gain or loss during the loan period would inure to such Fund. Futures and Options on Futures. As described in the Value Equity and Total Return Funds' Prospectuses, ^ the Value Equity and Total Return Funds may enter into futures contracts, and purchase and sell ("write") options to buy or sell futures contracts. The Funds will comply with and adhere to all limitations in the manner and extent to which it effects transactions in futures and options on such futures currently imposed by the rules and policy guidelines of the Commodity Futures Trading Commission ("CFTC") as conditions for exemption of a mutual fund, or investment advisers thereto, from registration as a commodity pool operator. No Fund will, as to any positions, whether long, short or a combination thereof, enter into futures and options thereon for which the aggregate initial margins and premiums exceed 5% of the fair market value of its assets after taking into account unrealized profits and losses on options it has entered into. In the case of an option that is "in-the-money," as defined in the Commodity Exchange Act (the "CEA"), the in-the-money amount may be excluded in computing such 5%. (In general a call option on a future is "in-the-money" if the value of the future exceeds the exercise ("strike") price of the call; a put option on a future is "in-the-money" if the value of the future which is the subject of the put is exceeded by the strike price of the put.) Each Fund may use futures and options thereon solely for bona fide hedging or for other non-speculative purposes within the meaning and intent of the applicable provisions of the CEA. Unlike when a Fund purchases or sells a security, no price is paid or received by a Fund upon the purchase or sale of a futures contract. Instead, the Fund will be required to deposit in its segregated asset account an amount of cash or qualifying securities (currently U.S. Treasury bills), currently in a minimum amount of $15,000. This is called "initial margin." Such initial margin is in the nature of a performance bond or good faith deposit on the contract. However, since losses on open contracts are required to be reflected in cash in the form of variation margin payments, a Fund may be required to make additional payments during the term of the contracts to its broker. Such payments would be required, for example, where, during the term of an interest rate futures contract purchased by a Fund, there was a general increase in interest rates, thereby making such Fund's portfolio securities less valuable. In all instances involving the purchase of futures contracts by a Fund, an amount of cash together with such other securities as permitted by applicable regulatory authorities to be utilized for such purpose, at least equal to the market value of the futures contracts, will be deposited in a segregated account with such Fund's custodian to collateralize the position. At any time prior to the expiration of a futures contract, a Fund may elect to close its position by taking an opposite position which will operate to terminate its position in the futures contract. For a more complete discussion of the risks involved in futures and options on futures and other securities, refer to Appendix B ("Description of Futures, Options and Forward Contracts"). Where futures are purchased to hedge against a possible increase in the price of a security before a Fund is able in an orderly fashion to invest in the security, it is possible that the market may decline instead. If the Fund, as a result, concluded not to make the planned investment at that time because of concern as to possible further market decline or for other reasons, the Fund would realize a loss on the futures contract that is not offset by a reduction in the price of securities purchased. In addition to the possibility that there may be an imperfect correlation or no correlation at all between movements in the futures contracts and the portion of the portfolio being hedged, the price of futures may not correlate perfectly with movements in the prices due to certain market distortions. All participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between underlying instruments and the value of the futures contract. Moreover, the deposit requirements in the futures market are less onerous than margin requirements in the securities market and may therefore cause increased participation by speculators in the futures market. Such increased participation may also cause temporary price distortions. Due to the possibility of price distortion in the futures market and because of the imperfect correlation between movements in the underlying instrument and movements in the prices of futures contracts, the value of futures contracts as a hedging device may be reduced. In addition, if a Fund has insufficient available cash, it may at times have to sell securities to meet variation margin requirements. Such sales may have to be effected at a time when it may be disadvantageous to do so. Forward Foreign Currency Contracts. The Value Equity and Total Return Funds may enter into forward currency contracts to purchase or sell foreign currencies (i.e., non-U.S. currencies) ("forward contracts") as a hedge against possible variations in foreign exchange rates. A forward foreign currency exchange contract is an agreement between the contracting parties to exchange an amount of currency at some future time at an agreed upon rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. A forward contract generally has no deposit requirement, and such transactions do not involve commissions. By entering into a forward contract for the purchase or sale of the amount of foreign currency invested in a foreign security transaction, a Fund can hedge against possible variations in the value of the dollar versus the subject currency either between the date the foreign security is purchased or sold and the date on which payment is made or received or during the time the Fund holds the foreign security. Hedging against a decline in the value of a currency in the foregoing manner does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. Furthermore, such hedging transactions preclude the opportunity for gain if the value of the hedged currency should rise. The Funds will not speculate in forward contracts. The Funds will not attempt to hedge all of their non-U.S. portfolio positions and will enter into such transactions only to the extent, if any, deemed appropriate by their investment adviser. The Funds will not enter into forward contracts for a term of more than one year. Forward contracts may, from time to time, be considered illiquid, in which case they would be subject to the Fund's limitation on investing in illiquid securities, discussed in the Prospectus. Real Estate Investment Trusts. Although they are not permitted to invest in real estate directly, the Funds may invest in real estate investment trusts ("REITs"). A REIT is a trust which sells shares to investors and uses the proceeds to invest in real estate or interests in real estate. The Total Return and Value Equity Funds have adopted a policy which permits each Fund to write, purchase or sell put and call options on individual securities, securities indexes and currencies, or financial futures or options on financial futures, or undertake forward currency contracts. The following subsections entitled "Put and Call Options," "Futures and Options on Futures" and "Options on Futures Contracts" apply only to the Total Return and Value Equity Funds. Put and Call Options. An option on a security provides the purchaser, or "holder," with the right, but not the obligation, to purchase in the case of a "call" option or sell in the case of a "put" option, the security or securities underlying the option, for a fixed exercise price up to a stated expiration date. The holder pays a non-refundable purchase price for the option, known as the "premium." The maximum amount of risk the purchaser of the option assumes is equal to the premium plus related transaction costs, although the entire amount may be lost. The risk of the seller, or "writer," however, is potentially unlimited, unless the option is "covered," which is generally accomplished through the writer's ownership of the underlying security in the case of a call option, or the writer's segregation of an amount of cash or securities equal to the exercise price in the case of a put option. If the writer's obligation is not so covered, it is subject to the risk of the full change in value of the underlying security from the time the option is written until exercise. Upon exercise of the option, the holder is required to pay the purchase price of the underlying security in the case of a call option or to deliver the security in return for the purchase price in the case of a put option. Conversely, the writer is required to deliver the security in the case of a call option or to purchase the security in the case of a put option. Options on securities which have been purchased or written may be closed out prior to exercise or expiration by entering into an offsetting transaction on the exchange on which the initial position was established, subject to the availability of a liquid secondary market. Options on securities are traded on national securities exchanges, such as the Chicago Board of Options Exchange and the New York Stock Exchange, which are regulated by the Securities and Exchange Commission. The Options Clearing Corporation guarantees the performance of each party to an exchange-traded option, by in effect taking the opposite side of each such option. A holder or writer may engage in transactions in exchange-traded options on securities and options on indices of securities only through a registered broker/dealer which is a member of the exchange on which the option is traded. An option position in an exchange-traded option may be closed out only on an exchange which provides a secondary market for an option of the same series. Although a Fund will generally purchase or write only those options for which there appears to be an active secondary market, there is no assurance that a liquid secondary market on an exchange will exist for any particular option at any particular time. In such event it might not be possible to effect closing transactions in a particular option with the result that a Fund would have to exercise the option in order to realize any profit. This would result in a Fund's incurring brokerage commissions upon the disposition of underlying securities acquired through the exercise of a call option or upon the purchase of underlying securities upon the exercise of a put option. If a Fund as covered call option writer is unable to effect a closing purchase transaction in a secondary market, unless a Fund is required to deliver the securities pursuant to the assignment of an exercise notice, it will not be able to sell the underlying security until the option expires. Reasons for the potential absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options or underlying securities; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or a clearing corporation may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or particular class or series of options) in which event the secondary market on that exchange (or in the class or series of options) would cease to exist, although outstanding options on that exchange which had been issued by a clearing corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms. There is no assurance that higher than anticipated trading activity or other unforeseen events might not, at a particular time, render certain of the facilities of any of the clearing corporations inadequate and thereby result in the institution by an exchange of special procedures which may interfere with the timely execution of customers' orders. However, the Options Clearing Corporation, based on forecasts provided by the U.S. exchanges, believes that its facilities are adequate to handle the volume of reasonably anticipated options transactions, and such exchanges have advised such clearing corporation that they believe their facilities will also be adequate to handle reasonably anticipated volume. For a more complete discussion of the risks involved in futures and options on futures and other securities, refer to Appendix B ("Description of Futures, Options and Forward Contracts"). Futures and Options on Futures. As described in the Funds' Prospectuses, each Fund may enter into futures contracts and purchase and sell ("write") options to buy or sell futures contracts. Each Fund will comply with and adhere to all limitations in the manner and extent to which it effects transactions in futures and options on such futures currently imposed by the rules and policy guidelines of the Commodity Futures Trading Commission ("CFTC") as conditions for exemption of a mutual fund, or investment advisers thereto, from registration as a commodity pool operator. No Fund will, as to any positions, whether long, short or a combination thereof, enter into futures and options thereon for which the aggregate initial margins and premiums exceed 5% of the fair market value of its assets after taking into account unrealized profits and losses on options it has entered into. In the case of an option that is "in-the-money," as defined in the commodity Exchange Act (the "CEA"), the in-the-money amount may be excluded in computing such 5%. (In general a call option on a future is "in-the-money" if the value of the future exceeds the exercise ("strike") price of the call; a put option on a future is "in-the-money" if the value of the future which is the subject of the put is exceeded by the strike price of the put.) Each Fund may use futures and options thereon solely for bona fide hedging or for other non-speculative purposes within the meaning and intent of the applicable provisions of the CEA. Unlike when a Fund purchases or sells a security, no price is paid or received by a Fund upon the purchase or sale of a futures contract. Instead, a Fund will be required to deposit in its segregated asset account an amount of cash or qualifying securities (currently U.S. Treasury bills). This is called "initial margin." Such initial margin is in the nature of a performance bond or good faith deposit on the contract. However, since losses on open contracts are required to be reflected in cash in the form of variation margin payments, a Fund may be required to make additional payments during the term of the contracts to its broker. Such payments would be required, for example, where, during the term of an interest rate futures contract purchased by a Fund, there was a general increase in interest rates, thereby making such Fund's portfolio securities less valuable. In all instances involving the purchase of futures contracts by a Fund, an amount of cash together with such other securities as permitted by applicable regulatory authorities to be utilized for such purpose, at least equal to the market value of the futures contracts, will be deposited in a segregated account with such Fund's custodian to collateralize the position. At any time prior to the expiration of a futures contract, a Fund may elect to close its position by taking an opposite position which will operate to terminate its position in the futures contract. Where futures are purchased to hedge against a possible increase in the price of a security before a fund is able in an orderly fashion to invest in the security, it is possible that the market may decline instead. If the Fund, as a result, concluded not to make the planned investment at that time because of concern as to possible further market decline or for other reasons, the Fund would realize a loss on the futures contract that is not offset by a reduction in the price of securities purchased. In addition to the possibility that there may be an imperfect correlation or no correlation at all between movements in the futures contracts and the portion of the portfolio being hedged, the price of futures may not correlate perfectly with movements in the prices due to certain market distortions. All participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between underlying instruments and the value of the futures contract. Moreover, the deposit requirements in the futures market are less onerous than margin requirements in the securities market and may therefore cause increased participation by speculators in the futures market. Such increased participation may also cause temporary price distortions. Due to the possibility of price distortion in the futures market and because of the imperfect correlation between movements in the underlying instrument and movements in the prices of futures contracts, the value of futures contracts as a hedging device may be reduced. In addition, if a Fund has insufficient available cash, it may at times have to sell securities to meet variation margin requirements. Such sales may have to be effected at a time when it may be disadvantageous to do so. Options on Futures Contracts. ^ The Value Equity and Total Return Funds may buy and write options on futures contracts for hedging purposes. The purchase of a call option on a futures contract is similar in some respects to the purchase of a call option on an individual security. Depending on the pricing of the option compared to either the price of the futures contract upon which it is based or the price of the underlying instrument, ownership of the option may or may not be less risky than ownership of the futures contract or the underlying instrument. As with the purchase of futures contracts, when a Fund is not fully invested it may buy a call option on a futures contract to hedge against a market advance. The writing of a call option on a futures contract constitutes a partial hedge against declining prices of the security or foreign currency which is deliverable under, or of the index comprising, the futures contract. If the futures price at the expiration of the option is below the exercise price, a Fund will retain the full amount of the option premium which provides a partial hedge against any decline that may have occurred in such ^ Fund's portfolio holdings. The writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the security or foreign currency which is deliverable under, or of the index comprising, the futures contract. If the futures price at expiration of the option is higher than the exercise price, a Fund will retain the full amount of the option premium which provides a partial hedge against any increase in the price of securities which the Fund is considering buying. If a call or put option which a Fund has written is exercised, such Fund will incur a loss which will be reduced by the amount of the premium it received. Depending on the degree of correlation between changes in the value of its portfolio securities and changes in the value of the futures positions, a ^ Fund's losses from existing options on futures may to some extent be reduced or increased by changes in the value of portfolio securities. The purchase of a put option on a futures contract is similar in some respects to the purchase of protective put ^ option on portfolio securities. For example, a Fund may buy a put option on a futures contract to hedge its portfolio against the risk of falling prices. The amount of risk a Fund assumes when it buys an option on a futures contract is the premium paid for the option plus related transaction costs. In addition to the correlation risks discussed above, the purchase of an option also entails the risk that changes in the value of the underlying futures contract will not be reflected fully in the value of the options bought. ^ For a more complete discussion of the risks involved in futures and options on futures and other securities, refer to Appendix B ("Description of Futures, Options and Forward Contracts"). Investment Restrictions. As described in each Fund's Prospectus, ^ the Funds are subject to certain investment restrictions. The following restrictions are fundamental and may not be changed with respect to a particular Fund without the prior approval of the holders of a majority, as defined in the Investment Company Act of 1940 (the "1940 Act"), of the outstanding voting securities of that Fund. For purposes of the following ^ investment restrictions, all percentage limitations apply immediately after a purchase or initial investment. Any subsequent change in a particular percentage resulting from fluctuations in value does not require elimination of any security from the Fund. ^ Each Fund, unless otherwise indicated, may not: (1) Other than investments by the Funds, including the INVESCO Intermediate Government Bond Fund, in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, invest in the securities of issuers conducting their principal business activities in the same industry (investments in obligations issued by a foreign government, including the agencies or instrumentalities of a foreign government, are considered to be investments in a single industry), if immediately after such investment the value of a Fund's investments in such industry would exceed 25% of the value of such Fund's total assets; (2) Invest in the securities of any one issuer, other than the United States Government, if immediately after such investment more than 5% of the value of a Fund's total assets, taken at market value, would be invested in such issuer or more than 10% of such issuer's outstanding voting securities would be owned by such Fund. (3) Underwrite securities of other issuers, except insofar as it may technically be deemed an "underwriter" under the Securities Act of 1933, as amended, in connection with the disposition of a Fund's portfolio securities. (4) Invest in companies for the purpose of exercising control or management. (5) Issue any class of senior securities or borrow money, except borrowings from banks for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of a Fund's total assets at the time the borrowing is made. (6) Mortgage, pledge, hypothecate or in any manner transfer as security for indebtedness any securities owned or held except to an extent not greater than 5% of the value of a Fund's total assets. (7) Sell short, except the Value Equity and Total Return Funds may purchase or sell options or futures, or write, purchase or sell puts and calls. (8) Buy on margin, except the Value Equity and Total Return Funds may purchase or sell options or futures, or write, purchase or sell puts and calls. (9) Purchase or sell real estate or interests in real estate^ (except for the Total Return and Value Equity Funds). Each of the Funds may invest in securities secured by real estate or interests therein or issued by companies, including real estate investment trusts, which invest in real estate or interests therein. (10) Buy or sell commodities contracts (however the Value Equity and Total Return Funds may purchase securities of companies which invest in the foregoing). This restriction shall not prevent the Value Equity and Total Return Funds from purchasing or selling options on individual securities, security indexes, and currencies or financial futures or options on financial futures, or undertaking forward currency contracts. The Intermediate Government Bond Fund may enter into interest rate futures contracts if immediately after such a commitment the sum of the then aggregate futures market prices of financial instruments required to be delivered under open futures contract sales and the aggregate purchase prices under futures contract purchases would not exceed 30% of the Intermediate Government Bond Fund's total assets. (11) Make loans to other persons, provided that a Fund may purchase debt obligations consistent with its investment objectives and policies and the INVESCO Value Equity, Intermediate Government Bond, and Total Return Funds may lend limited amounts (not to exceed 10% of their total assets) of their portfolio securities to broker-dealers or other institutional investors. (12) Purchase securities of other investment companies except (i) in connection with a merger, consolidation, acquisition or reorganization, or (ii) by purchase in the open market of securities of other investment companies involving only customary brokers' commissions and only if immediately thereafter (i) no more than 3% of the voting securities of any one investment company are owned by such a Fund, (ii) no more than 5% of the value of the total assets of such a Fund would be invested in any one investment company, and (iii) no more than 10% of the value of the total assets of such a Fund would be invested in the securities of such investment companies. The Trust may invest from time to time a portion of the INVESCO Value Equity, Intermediate Government Bond, and Total Return Funds' cash in investment companies to which the Adviser serves as investment adviser; provided that no management or distribution fee will be charged by the Adviser with respect to any such assets so invested and provided further that at no time will more than 3% of such a Fund's assets be so invested. Should such a Fund purchase securities of other investment companies, shareholders may incur additional management and distribution fees. (13) Invest in securities for which there are legal or contractual restrictions on resale, except that each of the Funds may invest no more than 2% of the value of its total assets in such securities; or invest in securities for which there is no readily available market, except that each of the Funds may invest no more than 5% of the value its total assets in such securities. In applying the industry concentration investment restriction (no. 1 above), the Funds use a modified S&P industry code classification schema which uses various sources to classify securities. In applying restriction (13) above, each Fund also includes illiquid securities (those which cannot be sold in the ordinary course of business within seven days at approximately the valuation given to them by the Fund) among the securities subject to the 5% of total assets limit. Additional investment restrictions adopted by the Trust on behalf of the Funds and which may be changed by the Trustees at their discretion provide that the ^ Funds may not: (1) (a) enter into any futures contracts, options on futures, puts and calls if immediately thereafter the aggregate margin deposits on all outstanding derivative positions held by each Fund and premiums paid on outstanding positions, after taking into account unrealized profits and losses, would exceed 5% of the market value of the total assets of the Fund, or (b) enter into any derivative positions if the aggregate net amount of the Fund's commitments under outstanding derivative positions of the Fund would exceed the market value of the total assets of the Fund. The INVESCO Intermediate Government Bond Fund may not enter into future contracts, options on futures, puts or calls. (2) Purchase or sell interests in oil, gas or other mineral leases or exploration or development programs. All of the Funds, however, may purchase or sell securities issued by entities which invest in such interests. (3) Invest more than 5% of a Fund's total assets in securities of companies having a record, together with predecessors, of less than three years of continuous operation. (4) Purchase or retain the securities of any issuer if any individual officers and trustees/directors of the Trust, the Adviser, or any subsidiary thereof owns individually more than 0.5% of the securities of that issuer and all such officers and trustees/directors together own more than 5% of the securities of that issuer. (5) Engage in arbitrage transactions. (6) To the extent a Fund invests in warrants, such a Fund's investment in warrants, valued at the lower of cost or market, may not exceed 5% of the value of such Fund's net assets. Included within that amount, but not to exceed 2% of the value of each Fund's net assets may be warrants which are not listed on the New York or American Stock Exchanges. Warrants acquired by such a Fund as part of a unit or attached to securities may be deemed to be without value. (7) Invest more than 25% of the value of such a Fund's total assets in securities of foreign issuers. Investing in securities issued by companies whose principal business activities are outside the United States may involve significant risks not present in domestic investments. THE TRUST AND ITS MANAGEMENT The Trust. The Trust was organized under the laws of Massachusetts on July 15, 1987 as "Financial Series Trust." On July 1, 1993, the Trust changed its name to "INVESCO Value Trust." In addition, the names INVESCO Intermediate Government Bond Fund, INVESCO Value Equity Fund and INVESCO Total Return Fund were adopted as the names of the Intermediate Government Bond Fund, Equity Fund and Flex Fund series of the Trust, respectively, effective July 1, 1993. The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation ("IFG"), is employed as the Trust's investment adviser. IFG was established in 1932 and also serves as an investment adviser to INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc., and INVESCO Variable Investment Funds, Inc. The Sub-Adviser. IFG, as investment adviser, has contracted with INVESCO Capital Management, Inc. ("ICM") to provide investment advisory and research services to the Trust. ICM, the Trust's investment adviser from inception of the Trust through 1990, has the primary responsibility for providing portfolio investment management services to the Funds. The Distributor. Effective September 30, 1997, INVESCO Distributors, Inc. ("IDI") became the Funds' distributor. IDI, established in 1997, is a registered broker-dealer that acts as distributor for all retail mutual funds advised by IFG. Prior to September 30, 1997, IFG served as the Funds' distributor. IFG, ICM and IDI are indirect wholly-owned subsidiaries of AMVESCAP PLC, a publicly-traded holding company that, through its subsidiaries, engages in the business of investment management on an international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3, 1997, and to AMVESCAP PLC on May 8, 1997 as part of a merger between a direct subsidiary of INVESCO PLC and A I M Management Group, Inc., that created one of the largest independent investment management businesses in the world with approximately $177.5 billion in assets under management. IFG was established in 1932 and, as of August 31, 1997 managed 14 mutual funds, consisting of ^ 45 separate portfolios, on behalf of over 854,448 shareholders. AMVESCAP PLC's other North American subsidiaries include the following: --INVESCO Capital Management, Inc. of Atlanta, Georgia manages institutional investment portfolios, consisting primarily of discretionary employee benefit plans for corporations and state and local governments, and endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of INVESCO Services, Inc., a registered broker-dealer ^. --INVESCO Management & Research, Inc. of Boston, Massachusetts primarily manages pension and endowment accounts. --PRIMCO Capital Management, Inc. of Louisville, Kentucky specializes in managing stable return investments, principally on behalf of Section 401(k) retirement plans. --INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for providing advisory services in the U.S. real estate markets for AMVESCAP PLC's clients worldwide. Clients include corporate plans, public pension funds, and endowment and foundation accounts. --A I M Advisors, Inc. of Houston, Texas provides investment advisory and administrative services for retail and institutional mutual funds. --A I M Capital Management, Inc. of Houston, Texas provides investment advisory services to individuals, corporations, pension plans and other private investment advisory accounts and also serves as a sub-adviser to certain retail and institutional mutual funds, one Canadian mutual fund and one portfolio of an open-end registered investment company that is offered to separate accounts of variable insurance companies. --A I M Distributors, Inc. and Fund Management Company of Houston, Texas are registered broker-dealers that act as the principal underwriters for retail and institutional mutual funds. The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire Square, London, EC2M 4YR, England. As indicated in the Funds' Prospectuses, IFG and ICM permit investment and other personnel to purchase and sell securities for their own accounts in accordance with a compliance policy governing personal investing by directors, officers and employees of IFG, ICM and their North American affiliates. The policy requires officers, inside directors, investment and other personnel of IFG, ICM and their North American affiliates to pre-clear all transactions in securities not otherwise exempt under the policy. Requests for trading authority will be denied when, among other reasons, the proposed personal transaction would be contrary to the provisions of the policy or would be deemed to adversely affect any transaction then known to be under consideration for or to have been effected on behalf of any client account, including the Funds. In addition to the pre-clearance requirement described above, the policy subjects officers, inside directors, investment and other personnel of IFG, ICM and their North American affiliates to various trading restrictions and reporting obligations. All reportable transactions are reviewed for compliance with the policy. The provisions of this policy are adminstered by and subject to exceptions authorized by IFG or ICM. Investment Advisory Agreement. IFG serves as investment adviser pursuant to an investment advisory agreement dated February 28, 1997 with the Trust (the "Agreement") which was approved by the board of trustees on November 6, 1996 by a vote cast in person by a majority of the trustees of the Trust, including a majority of the trustees who are not "interested persons" of the Trust or INVESCO at a meeting called for such purpose. Shareholders of the Funds approved the Agreement on Janaury 31, 1997 for an initial term expiring February 28, 1999. Thereafter, the Agreement may be continued from year to year as to each Fund as long as such continuance is specifically approved at least annually by the board of trustees of the Trust, or by a vote of the holders of a majority, as defined in the 1940 Act, of the outstanding shares of the Fund. Any such continuance also must be approved by a majority of the Trust's trustees who are not parties to the Agreement or interested persons (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such continuance. The Agreement may be terminated at any time without penalty by either party upon sixty (60) days' written notice and terminates automatically in the event of an assignment to the extent required by the 1940 Act and the rules thereunder. The Agreement provides that IFG shall manage the investment portfolios of the Funds in conformity with the Funds' investment policies (either directly or by delegation to a sub-adviser, which may be a party affiliated with IFG). Further, IFG shall perform all administrative, internal accounting (including computation of net asset value), clerical, statistical, secretarial and all other services necessary or incidental to the administration of the affairs of the Funds, excluding, however, those services that are the subject of separate agreement between the Trust and IFG or any affiliate thereof, including distribution and sale of Trust shares and provision of transfer agency, dividend disbursing agency, and registrar services, and services furnished under an Administrative Services Agreement with IFG discussed below. ^ IFG will pay the fee of any sub-adviser. Services provided include, but are not limited to: supplying the Trust with officers, clerical staff and other employees, if any, who are necessary in connection with the Funds' operations; furnishing office space, facilities, equipment and supplies; providing personnel and facilities required to respond to inquiries related to shareholder accounts; conducting periodic compliance reviews of the Funds' operations; preparation and review of required documents, reports and filings by ^ IFG's in-house legal and accounting staff (including the prospectus, statement of additional information, proxy statements, shareholder reports, tax returns, reports to the SEC, and other corporate documents of the Funds), except insofar as the assistance of independent accountants or attorneys is necessary or desirable; supplying basic telephone service and other utilities; and preparing and maintaining certain of the books and records required to be prepared and maintained by the Funds under the 1940 Act. Expenses not assumed by ^ IFG are borne by the Funds. The responsibility for making decisions to buy, sell, or hold a particular security rests with IFG, as well as ICM as the Sub-Adviser, subject to review by the board of trustees. Expenses not assumed by IFG are borne by the Trust. As full compensation for its advisory services to the Trust, IFG receives a monthly fee. The fee is based upon a percentage of each Fund's average net assets, determined daily. With respect to the INVESCO Value Equity and Total Return Funds, the fee is calculated at the annual rate of: 0.75% on the first $500 million of the average net assets of each Fund; 0.65% on the next $500 million of average net assets of each Fund; and 0.50% on average net assets in excess of $1 billion. With respect to the INVESCO Intermediate Government Bond Fund, the fee is calculated at the annual rate of: 0.60% on the first $500 million of the average net assets of the Fund; 0.50% on the next $500 million of the average net assets of the Fund; and 0.40% on average net assets in excess of $1 billion. Sub-Advisory Agreement. ICM serves as sub-adviser to the INVESCO Value Equity, Intermediate Government Bond and Total Return Funds pursuant to a sub-advisory agreement dated February 28, 1997 (the "Sub-Agreement") with IFG which was approved by the board of trustees of the Trust on November 6, 1996, including a majority of the trustees who are not "interested persons" of the Trust, IFG or ICM at a meeting called for such purpose. Shareholders of each of the Funds approved the Sub-Agreement on January 31, 1997 for an initial term expiring February 28, 1999. The Agreement and Sub-Agreement may be continued from year to year as to each Fund as long as each such continuance is specifically approved by the board of trustees of the Trust, or by a vote of the holders of a majority, as defined in the 1940 Act, of the outstanding shares of each of the Funds. Each such continuance also must be approved by a majority of the trustees who are not parties to the Agreement or Sub-Agreements or interested persons (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such continuance. The Agreement or Sub-Agreement may be terminated as to any Fund at any time without penalty by either party or the Trust upon sixty (60) days' written notice and terminates automatically in the event of an assignment to the extent required by the 1940 Act and the rules thereunder. The Sub-Agreement provides that ICM, subject to the supervision of IFG, shall manage the investment portfolios of the respective Funds in conformity with each Fund's investment policies. These management services include: (a) managing the investment and reinvestment of all the assets, now or hereafter acquired, of the Funds, and executing all purchases and sales of portfolio securities; (b) maintaining a continuous investment program for the Funds, consistent with (i) each Fund's investment policies as set forth in the Company's Articles of Incorporation, Bylaws, and Registration Statement, as from time to time amended, under the 1940 Act, and in any prospectus and/or statement of additional information of the Company, as from time to time amended and in use under the 1933 Act, and (ii) the Trust's status as a regulated investment company under the Internal Revenue Code of 1986, as amended; (c) determining what securities are to be purchased or sold for each of the Funds, unless otherwise directed by the ^ trustees of the ^ Trust or IFG, and executing transactions accordingly; (d) providing the Funds the benefit of all of the investment analysis and research, the reviews of current economic conditions and trends, and the consideration of long-range investment policy now or hereafter generally available to investment advisory customers of the Sub-Advisers; (e) determining what portion of each of the Funds should be invested in the various types of securities authorized for purchase by each Fund; and (f) making recommendations as to the manner in which voting rights, rights to consent to Trust action and any other rights pertaining to the portfolio securities of each Fund shall be exercised. The Sub-Agreement provides that as compensation for its services, ICM shall receive from IFG, at the end of each month, a fee based on the average daily value of each Fund's net assets at the following annual rates: prior to January 1, 1998, 0.20% on the INVESCO Value Equity Fund's and INVESCO Total Return Fund's, and 0.16% on the INVESCO Intermediate Government Bond Fund's, average net assets on the first $500 million; 0.17% on the INVESCO Value Equity Fund's and INVESCO Total Return Fund's, and 0.13% on the INVESCO Intermediate Government Bond Fund's, average net assets on the next $500 million; and 0.13% on the INVESCO Value Equity Fund's and INVESCO Total Return Fund's, and 0.11% on the INVESCO Intermediate Government Bond Fund's, average net asset value in excess of $1 billion. Effective January 1, 1998, ICM shall receive a fee based on the following annual rates: 0.25% on the INVESCO Value Equity Fund's and INVESCO Total Return Fund's, and 0.20% on the INVESCO Intermediate Government Bond Fund's, average net assets on the first $500 million; 0.2167% on the INVESCO Value Equity Fund's and INVESCO Total Return Fund's, and 0.1667% on the INVESCO Intermediate Government Bond Fund's, average net assets on the next $500 million; and 0.1667% on the INVESCO Value Equity Fund's and INVESCO Total Return Fund's, and 0.1333% on the INVESCO Intermediate Government Bond Fund's, average net assets in excess of $1 billion. The Sub-Advisory fees are paid by IFG, not the Funds. Administrative Services Agreement. IFG, either directly or through affiliated companies, provides certain administrative, sub-accounting, and recordkeeping services to the Trust pursuant to an Administrative Services Agreement dated February 28, 1997 (the "Administrative Agreement"). The Administrative Agreement was approved by the board of trustees on November 6, 1996 by a vote cast in person by all of the trustees of the Trust, including all of the trustees who are not "interested persons" of the Trust or IFG at a meeting called for such purpose. The Administrative Agreement was for an initial term expiring February 28, 1998, and has been continued by action of the board of trustees until May 15, 1998. The Administrative Agreement may be continued from year to year thereafter as long as each such continuance is specifically approved by the board of trustees of the Trust, including a majority of the trustees who are not parties to the Administrative Agreement or interested persons (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such continuance. The Administrative Agreement may be terminated at any time without penalty by IFG on sixty (60) days' written notice, or by the Trust upon thirty (30) days' written notice, and terminates automatically in the event of an assignment unless the board of trustees approves such assignment. The Administrative Agreement provides that IFG shall provide the following services to the Funds: required administrative and internal accounting services, including without limitation, maintaining general ledger and capital stock accounts, preparing a daily trial balance, calculating net asset value daily, and providing selected general ledger reports. As full compensation for services provided under the Administrative Agreement, the Trust pays a monthly fee to IFG consisting of ^ an incremental fee computed daily and paid monthly at an annual rate of 0.015% per year of the average net assets of each Fund of the Trust. For providing such services, IFG received administrative services fees in the amount of $295,965 for the fiscal year ended August 31, 1997. Transfer Agency Agreement. IFG performs transfer agent, dividend disbursing agent, and registrar services for the Trust pursuant to a Transfer Agency Agreement dated February 28, 1997, which was approved November 6, 1996 by the board of trustees of the Trust, including a majority of the Trust's trustees who are not parties to the Transfer Agency Agreement or "interested persons" of any such party. The Transfer Agency Agreement was for an initial term expiring February 28, 1998 and has been extended by the board of trustees until May 15, 1998. Thereafter, the Transfer Agency Agreement may be continued from year to year as to each Fund as long as such continuance is specifically approved at least annually by the board of trustees of the Trust, or by a vote of the holders of a majority of the outstanding shares of each Fund of the Trust. Any such continuance also must be approved by a majority of the Trust's trustees who are not parties to the Transfer Agency Agreement or interested persons (as defined by the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such continuance. The Transfer Agency Agreement may be terminated at any time without penalty by either party upon sixty (60) days' written notice. The Transfer Agency Agreement provides that the Trust shall pay to IFG an annual fee of $20.00 per shareholder account or, where applicable, per participant in an omnibus account with respect to the INVESCO Value Equity and Total Return Funds, and $26.00 per shareholder account or omnibus account with respect to INVESCO Intermediate Government Bond Fund. These fees are paid monthly at the rate of 1/12 of the annual fee and are based upon the number of shareholder accounts or, where applicable, per participant in an omnibus account. For the year ended August 31, 1997, the Trust paid IFG transfer agency fees of $3,193,607. Set forth below is a table showing the advisory fees, transfer agency fees and administrative fees paid by each of the Funds for the fiscal years ended August 31, 1997, 1996 and 1995.
Fiscal year Fiscal year Fiscal year ended August 31, 1997 ended August 31, 1996 ended August 31, 1995 --------------------- --------------------- --------------------- Transfer Adminis- Transfer Adminis- Transfer Adminis- Advisory Agency trative Advisory Agency trative Advisory Agency trative Portfolio Fees Fees Fees Fees Fees Fees Fees Fees Fees - --------- -------- -------- -------- -------- -------- -------- -------- -------- -------- INVESCO Intermediate Government Bond $ 268,593 $ 251,070 $ 16,115 $ 235,160 $156,123 $ 15,879 $ 214,128 $130,781 $15,353 INVESCO Value Equity $2,250,039 $ 610,115 $ 55,001 $1,382,049 $282,255 $ 37,641 $ 974,578 $168,354 $29,713 INVESCO Total Return $9,140,227 $2,332,422 $224,249 $6,025,905 $953,383 $137,623 $2,824,847 $477,373 $66,616
Officers and Trustees of the Trust. The overall direction and supervision of the Trust is the responsibility of the board of trustees, which has the primary duty of seeing that the ^ general investment policies and programs of the Trust are carried out and that the Trust's Funds are properly administered. The officers of the Trust, all of whom are officers and employees of, and are paid by, IFG, are responsible for the day-to-day administration of the Trust. IFG, along with ICM, has the primary responsibility for making investment decisions on behalf of each of the Funds of the Trust. These investment decisions are reviewed by the investment committee of IFG. All of the officers and trustees of the Trust hold comparable positions with INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc., and INVESCO Variable Investment Funds, Inc. In addition, all of the trustees of the Trust, with the exception of Mr. Hesser, are also trustees of INVESCO Treasurer's Series Trust. Set forth below is information with respect to each of the Trust's officers and trustees. Unless otherwise indicated, the address of the trustees and officers is Post Office Box 173706, Denver, Colorado 80217-3706. Their affiliations represent their principal occupations during the past five years. CHARLES W. BRADY,*+ ^ Chairman of the Board. Chief Executive Officer and Director of AMVESCAP PLC, London, England, and of various subsidiaries thereof. Chairman of the Board of INVESCO Treasurer's Series Trust. Address: 1315 Peachtree Street, NE, Atlanta, Georgia. Born: May 11, 1935. FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of INVESCO Treasurer's Series Trust. Trustee of INVESCO Global Health Sciences Fund. Formerly, Chairman of the Executive Committee and Chairman of the Board of Security Life of Denver Insurance Company, Denver, Colorado; Director of ING America Life Insurance Company, Urbaine Life Insurance Company and Midwestern United Life Insurance Company. Address: Security Life Center, 1290 Broadway, Denver, Colorado. Born: January 12, 1928. VICTOR L. ANDREWS,** Trustee. Professor Emeritus, Chairman Emeritus and Chairman of the CFO Roundtable of the Department of Finance at Georgia State University, Atlanta, Georgia; President, Andrews Financial Associates, Inc. (consulting firm); since October 1984, Director of the Center for the Study of Regulated Industry at Georgia State University; formerly, member of the faculties of the Harvard Business School and the Sloan School of Management of MIT. Dr. Andrews is also a Director of the Southeastern Thrift and Bank Fund, Inc. and The Sheffield Funds, Inc. Address: 4625 Jettridge Drive, Atlanta, Georgia. Born: June 23, 1930. BOB R. BAKER,+** Trustee. President and Chief Executive Officer of AMC Cancer Research Center, Denver, Colorado, since January 1989; until mid-December 1988, Vice Chairman of the Board of First Columbia Financial Corporation (a financial institution), Englewood, Colorado. Formerly, Chairman of the Board and Chief Executive Officer of First Columbia Financial Corporation. Address: 1775 Sherman Street, #1000, Denver, Colorado. Born: August 7, 1936. LAWRENCE H. BUDNER,# Trustee. Trust Consultant; prior to June 30, 1987, Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas, Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930. DANIEL D. CHABRIS,+# Trustee. Financial Consultant; Assistant Treasurer of Colt Industries Inc., New York, New York, from 1966 to 1988. Address: 19 Kingsbridge Way, Madison, Connecticut. Born: August 1, 1923. WENDY L. GRAMM, Ph.D.,** Trustee. Self-employed (since 1993); Professor of Economics and Public Administration, University of Texas at Arlington. Formerly, Chairman, Commodity Futures Trading Commission from 1988 to 1993, administrator for Information and Regulatory Affairs at the Office of Management and Budget from 1985 to 1988, Executive Director of the Presidential Task Force on Regulatory Relief and Director of the Federal Trade Commission's Bureau of Economics. Dr. Gramm is also a director of the Chicago Mercantile Exchange, Enron Corporation, IBP, Inc., State Farm Insurance Company, State Farm Life Insurance Company, ^ Independant Women's Forum, International Republic Institute, and the Republican Women's Federal Forum. Dr. Gramm is also a member of the Board of Visitors, College of Business Administration, University of Iowa, and a member of the Board of Visitors, Center for Study of Public Choice, George Mason University. Address: 4201 Yuma Street, N.W., Washington, D.C. Born: January 10, 1945. HUBERT L. HARRIS, JR.,* Trustee. Chairman (since 1996) and President (January 1990 to May 1996) of INVESCO Services, Inc.; Chief Executive Officer of INVESCO Individual Services Group. Chief Executive Officer, Chairman and Trustee of INVESCO Global Health Sciences Fund. Member of the Executive Committee of the Alumni Board of Trustees of Georgia Institute of Technology. Address: 1315 Peachtree Street, NE, Atlanta, Georgia. Born: July 15, 1943. KENNETH T. KING,# Trustee. Formerly, Chairman of the Board of The Capitol Life Insurance Company, Providence Washington Insurance Company, and Director of numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the Board of the Symbion Corporation (a high technology company) until 1987. Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16, 1925. JOHN W. MCINTYRE,# Trustee. Retired. Formerly, Vice Chairman of the Board of Directors of the Citizens and Southern Corporation and Chairman of the Board and Chief Executive Officer of the Citizens and Southern Georgia Corporation and Citizens and Southern National Bank. Director of Golden Poultry Co., Inc. Trustee of INVESCO Global Health Sciences Fund and Gables Residential Trust. Address: 7 Piedmont Center, Suite 100, Atlanta, Georgia. Born: September 14, 1930. LARRY SOLL, Ph.D.,** Trustee. Formerly, Chairman of the Board (1987 to 1994), Chief Executive Officer (1982 to 1989 and 1993 to 1994) and President (1982 to 1989) of Synergen Corp. Director of Synergen since incorporation in 1982. Director of ISD Pharmaceuticals, Inc., Trustee of INVESCO Global Health Sciences Fund. Address: 345 Poorman Road, Boulder, Colorado. Born: April 26, 1942. GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company (since 1989) and INVESCO Distributors, Inc. (since 1997); Vice President (May 1989 to April 1995)^ of INVESCO Funds Group, Inc.; formerly, employee of a U.S. regulatory agency, Washington, D.C., (June 1973 through May 1989). Born: September 25, 1947. RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO Funds Group, Inc. and INVESCO Trust Company (since 1988). Senior Vice President and Treasurer of INVESCO Distributors, Inc. (since 1997). Born: October 1, 1946. WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of INVESCO Funds Group, Inc. (since 1995) and of INVESCO Distributors, Inc. (since 1997) and Trust Officer of INVESCO Trust Company (since July 1995) and formerly (August 1992 to July 1995), Vice President of INVESCO Funds Group, Inc. ^ Formerly, Vice President of 440 Financial Group from June 1990 to August 1992; Assistant Vice President of Putnam Companies from November 1986 to June 1990. Born: August 21, 1956. ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group, Inc. (since 1984) and Trust Officer of INVESCO Trust Company. Born: September 14, 1941. JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group, Inc. (since 1984) and of INVESCO Distributors, Inc. (since 1997) and Trust Officer of INVESCO Trust Company. Born: February 3, 1948. #Member of the audit committee of the Trust. +Member of the executive committee of the Trust. On occasion, the executive committee acts upon the current and ordinary business of the Trust between meetings of the board of trustees. Except for certain powers which, under applicable law, may only be exercised by the full board of trustees, the executive committee may exercise all powers and authority of the board of trustees in the management of the business of the Trust. All decisions are subsequently submitted for ratification by the board of trustees. *These trustees are "interested persons" of the Trust as defined in the ^ 1940 Act. **Member of the management liaison committee of the ^ Trust. As of ^ December 19, 1997, officers and trustees of the Trust, as a group, beneficially owned less than 1% of the Trust's outstanding shares and less than 1% of any Fund's outstanding shares. Director Compensation The following table sets forth, for the fiscal year ended August 31, 1997^, the compensation paid by the Trust to its independent trustees for services rendered in their capacities as trustees of the Trust; the benefits accrued as Trust expenses with respect to the Defined Benefit Deferred Compensation Plan discussed below; and the estimated annual benefits to be received by these trustees upon retirement as a result of their service to the Trust. In addition, the table sets forth the total compensation paid by all of the mutual funds distributed by INVESCO Distributors, Inc. (including the Funds), INVESCO Advisor Funds, Inc., INVESCO Treasurer's Series Trust and INVESCO Global Health Sciences Fund (collectively, the "INVESCO Complex") to these trustees for services rendered in their capacities as directors or trustees during the year ended December 31, 1996. As of December 31, 1996, there were 49 funds in the INVESCO Complex. Dr. Soll became an independent trustee of the Trust effective May 15, 1997. Dr. Gramm became an independent trustee of the Trust effective July 29, 1997. Total Compensa- Benefits Estimated tion From Aggregate Accrued As Annual INVESCO Compensa- Part of Benefits Complex tion From Trust Upon Paid To Trust(1) Expenses(2) Retirement(3) Trustees(1) Fred A.Deering, $7,694 $2,611 $2,542 $98,850 Vice Chairman of the Board Victor L. Andrews 7,662 2,467 2,943 84,350 Bob R. Baker 7,894 2,203 3,944 84,850 Lawrence H. Budner 7,394 2,467 2,943 80,350 Daniel D. Chabris 7,569 2,816 2,092 84,850 A. D. Frazier, Jr.(4) 1,404 0 0 81,500 Wendy L. Gramm 1,617 0 0 0 Kenneth T. King 6,629 2,711 2,306 71,350 John W. McIntyre 7,060 0 0 90,350 Larry Soll 3,045 0 0 17,500 ------- ------- ------- -------- Total $57,968 $15,275 $16,770 $693,950 % of Net Assets 0.0026%(5) 0.0007%(5) 0.0045%(6) (1)The vice chairman of the board, the chairmen of the audit, management liaison and compensation committees, ^ the members of the executive and valuation committees, and the members of specially ^ appointed task forces of the board of trustees each receive compensation for serving in such capacities in addition to the compensation paid to all independent trustees. (2)Represents benefits accrued with respect to the Defined Benefit Deferred Compensation Plan discussed below, and not compensation deferred at the election of the trustees. (3)These figures represent the Trust's share of the estimated annual benefits payable by the INVESCO Complex (excluding INVESCO Global Health Sciences Fund which does not participate in any retirement plan) upon the trustees' retirement, calculated using the current method of allocating trustee compensation among the funds in the INVESCO Complex. These estimated benefits assume retirement at age 72 and that the basic retainer payable to the trustees will be adjusted periodically for inflation, for increases in the number of funds in the INVESCO Complex and for other reasons during the period in which retirement benefits are accrued on behalf of the respective trustees. This results in lower estimated benefits for trustees who are closer to retirement and higher estimated benefits for trustees who are further from retirement. With the exception of Messrs. Frazier and McIntyre and Drs. Soll and Gramm, each of these trustees has served as a director/trustee of one or more of the funds in the INVESCO Complex for the minimum five-year period required to be eligible to participate in the Defined Benefit Deferred Compensation Plan. (4)Effective February 28, 1997, Mr. Frazier resigned as a trustee of the Trust. Effective November 1, 1996, Mr. Frazier was employed by INVESCO PLC (the predecessor to AMVESCAP PLC), a company affiliated with IFG and did not receive any director's fees or other compensation from the Trust or other funds in the INVESCO Complex for his service as a director/trustee. (5)Total as a percentage of the Trust's net assets as of August 31, 1997. (6)Total as a percentage of the net assets of the INVESCO Complex as of December 31, 1996. Messrs. Brady and Harris, as "interested persons" of the Trust and of the other funds in the INVESCO Complex, receive compensation as officers or employees of IFG or its affiliated companies and do not receive any trustee's fees or other compensation from the Trust or other funds in the INVESCO Complex for their services as trustees. The boards of directors/trustees of the mutual funds managed by IFG and INVESCO Treasurer's Series Trust have adopted a Defined Benefit Deferred Compensation Plan for the non-interested directors and trustees of the funds. Under this plan, each director or trustee who is not an interested person of the funds (as defined in the 1940 Act) and who has served for at least five years (a "qualified director") is entitled to receive, upon retiring from the boards at the retirement age of 72 (or the retirement age of 73 to 74, if the retirement date is extended by the boards for one or two years, but less than three years) continuation of payment for one year (the "first year retirement benefit") of the annual basic retainer payable by the funds to the qualified trustee at the time of his or her retirement (the "basic retainer"). Commencing with any such trustee's second year of retirement, and commencing with the first year of retirement of a trustee whose retirement has been extended by the board for three years, a qualified trustee shall receive quarterly payments at an annual rate equal to 40% of the basic retainer. These payments will continue for the remainder of the qualified trustee's life or ten years, whichever is longer (the "reduced retainer payments"). If a qualified trustee dies or becomes disabled after age 72 and before age 74 while still a trustee of the funds, the first year retirement benefit and the reduced retainer payments will be made to him or her or to his or her beneficiary or estate. If a qualified trustee becomes disabled or dies either prior to age 72 or during ^ his or her 74th year while still a trustee of the funds, the trustee will not be entitled to receive the first year retirement benefit; however, the reduced retainer payments will be made to his or her beneficiary or estate. The plan is administered by a committee of three trustees who are also participants in the plan and one trustee who is not a plan participant. The cost of the plan will be allocated among the INVESCO and Treasurer's Series Trust funds in a manner determined to be fair and equitable by the committee. The Trust is not making any payments to trustees under the plan as of the date of this Statement of Additional Information. The Trust has no stock options or other pension or retirement plans for management or other personnel and pays no salary or compensation to any of its officers. The Trust has an audit committee that is comprised of five of the trustees who are not interested persons of the Trust. The committee meets periodically with the Trust's independent accountants and officers to review accounting principles used by the Trust, the adequacy of internal controls, the responsibilities and fees of the independent accountants, and other matters. The Trust also has a management liaison committee which meets quarterly with various management personnel of IFG in order (a) to facilitate better understanding of management and operations of the Trust, and (b) to review legal and operational matters which have been assigned to the committee by the board of trustees, in furtherance of the board of trustees' overall duty of supervision. HOW SHARES CAN BE PURCHASED The shares of each Fund are sold on a continuous basis at the net asset value per share of the Fund next calculated after receipt of a purchase order in good form. The net asset value per share of each Fund is computed once each day that the New York Stock Exchange is open as of the close of regular trading on that Exchange, but may also be computed at other times. See "How Shares Are Valued." IDI acts as the Trust's distributor under a distribution agreement with the Trust under which it receives no compensation and bears all expenses, including the costs of printing and distribution of prospectuses incident to direct sales and distribution of Trust shares on a no-load basis. Distribution Plan. The Value Equity and Intermediate Government Bond Funds have adopted a Plan and Agreement of Distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act, which was implemented on November 1, 1997. The Plan was approved on May 16, 1997, at a meeting called for such purpose by a majority of the trustees of the Trust, including a majority of the trustees who neither are "interested persons" of the Trust nor have any financial interest in the operation of the Plan ("12b-1 trustees"). The Plan was approved by the shareholders of each of the Funds on October 28, 1997. The following disclosures relate only to the Value Equity and Intermediate Government Bond Funds and do not concern the Total Return Fund. The Plan provides that these Funds may make monthly payments to IDI of amounts computed at an annual rate no greater than 0.25% of each Fund's average net new sales of shares, exchanges into the Fund and reinvestments of dividends and capital gain distributions added after November 1, 1997 to permit ^ compensation for expenses incurred by it in connection with the distribution of a Fund's shares to investors. Payment amounts by a Fund under the Plan, for any month, may only be made to compensate or pay expenditures incurred during the rolling 12-month period in which that month falls. For the fiscal year ended August 31, 1997, the Funds had made no payments to IFG (the predecesor of IDI as distributor of shares of the Funds) under the 12b-1 plan. As noted in the Prospectuses, one type of expenditure permitted by the Plan is the payment of compensation to securities companies, and other financial institutions and organizations, which may include IDI- affiliated companies, in order to obtain various distribution-related and/or administrative services for the Funds. Each Fund is authorized by the Plan to use its assets to finance the payments made to obtain those services. Payments will be made by IDI to broker-dealers who sell shares of a Fund and may be made to banks, savings and loan associations and other depository institutions. Although the Glass-Steagall Act limits the ability of certain banks to act as underwriters of mutual fund shares, the Funds do not believe that these limitations would affect the ability of such banks to enter into arrangements with IDI, but can give no assurance in this regard. However, to the extent it is determined otherwise in the future, arrangements with banks might have to be modified or terminated, and, in that case, the size of one or more of the Funds possibly could decrease to the extent that the banks would no longer invest customer assets in a particular Fund. Neither the Trust nor its investment adviser will give any preference to banks or other depository institutions which enter into such arrangements when selecting investments to be made by each Fund. The Plan was not implemented until November 1, 1997. Therefore, for the fiscal year ended August 31, 1997 no 12b-1 amounts were paid by the Value Equity Fund or Intermediate Government Bond Fund. The nature and scope of services which are provided by securities dealers and other organizations may vary by dealer but include, among other things, processing new stockholder account applications, preparing and transmitting to the Trust's Transfer Agent computer-processable tapes of each Fund's transactions by customers, serving as the primary source of information to customers in answering questions concerning each Fund, and assisting in other customer transactions with each Fund. The Plan provides that it shall continue in effect with respect to each Fund for so long as such continuance is approved at least annually by the vote of the board of trustees cast in person at a meeting called for the purpose of voting on such continuance. The Plan can also be terminated at any time with respect to any Fund, without penalty, if a majority of the 12b-1 trustees, or shareholders of such Fund, vote to terminate the Plan. The Trust may, in its absolute discretion, suspend, discontinue or limit the offering of its shares of any Fund at any time. In determining whether any such action should be taken, the board of trustees intends to consider all relevant factors including, without limitation, the size of a particular Fund, the investment climate for any particular Fund, general market conditions, and the volume of sales and redemptions of a Fund's shares. The Plan may continue in effect and payments may be made under the Plan following any such temporary suspension or limitation of the offering of a Fund's shares; however, neither Fund is contractually obligated to continue the Plan for any particular period of time. Suspension of the offering of a Fund's shares would not, of course, affect a shareholder's ability to redeem his shares. So long as the Plan is in effect, the selection and nomination of persons to serve as independent trustees of the Trust shall be committed to the independent trustees then in office at the time of such selection or nomination. The Plan may not be amended to increase materially the amount of any Fund's payments thereunder without approval of the shareholders of that Fund, and all material amendments to the Plan must be approved by the board of trustees, including a majority of the 12b-1 trustees. Under the agreement implementing the Plan, IDI or the Funds, the latter by vote of a majority of the 12b-1 trustees, or of the holders of a majority of a Fund's outstanding voting securities, may terminate such agreement as to that Fund without penalty upon 30 days' written notice to the other party. No further payments will be made by a Fund under the Plan in the event of its termination as to that Fund. To the extent that the Plan constitutes a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so as to authorize the use of each Fund's assets in the amounts and for the purposes set forth therein, notwithstanding the occurrence of an assignment, as defined by the 1940 Act, and rules thereunder. To the extent it constitutes an agreement pursuant to a plan, each Fund's obligation to make payments to IDI shall terminate automatically, in the event of such "assignment," in which case the Funds may continue to make payments pursuant to the Plan to IDI or another organization only upon the approval of new arrangements, which may or may not be with IDI, regarding the use of the amounts authorized to be paid by it under the Plan, by the trustees, including a majority of the 12b-1 trustees, by a vote cast in person at a meeting called for such purpose. Information regarding the services rendered under the Plan and the amounts paid therefor by the Funds are provided to, and reviewed by, the trustees on a quarterly basis. On an annual basis, the trustees consider the continued appropriateness of the Plan and the level of compensation provided therein. The only trustees or interested persons, as that term is defined in Section 2(a)(19) of the 1940 Act, of the Trust who have a direct or indirect financial interest in the operation of the Plan are the officers and trustees of the Trust listed herein under the section entitled "The Fund And Its Management--Officers and Trustees of the Trust" who are also officers either of IDI or companies affiliated with IDI. The benefits which the Trust believes will be reasonably likely to flow to it and its shareholders under the Plan include the following: (1) Enhanced marketing efforts, if successful, should result in an increase in net assets through the sale of additional shares and afford greater resources with which to pursue the investment objectives of the Funds; (2) The sale of additional shares reduces the likelihood that redemption of shares will require the liquidation of securities of the Funds in amounts and at times that are disadvantageous for investment purposes; (3) The positive effect which increased Fund assets will have on its revenues could allow IFG and its affiliated companies: (a) To have greater resources to make the financial commitments necessary to improve the quality and level of each Fund's shareholder services (in both systems and personnel), (b) To increase the number and type of mutual funds available to investors from IFG and its affiliated companies (and support them in their infancy), and thereby expand the investment choices available to all shareholders, and (c) To acquire and retain talented employees who desire to be associated with a growing organization; and (4) Increased Fund assets may result in reducing each investor's share of certain expenses through economies of scale (e.g. exceeding established breakpoints in the advisory fee schedule and allocating fixed expenses over a larger asset base), thereby partially offsetting the costs of the Plan. HOW SHARES ARE VALUED As described in the section of each Fund's Prospectus entitled "How Shares Can Be Purchased," the net asset value of shares of each Fund of the Trust is computed once each day that the New York Stock Exchange is open as of the close of regular trading on that Exchange (generally 4:00 p.m., New York time) and applies to purchase and redemption orders received prior to that time. Net asset value per share is also computed on any other day on which there is a sufficient degree of trading in the securities held by a Fund that the current net asset value per share might be materially affected by changes in the value of the securities held, but only if on such day the Trust receives a request to purchase or redeem shares of that Fund. Net asset value per share is not calculated on days the New York Stock Exchange is closed, such as federal holidays including New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. The net asset value per share of each Fund is calculated by dividing the value of all securities held by that Fund and its other assets (including dividends and interest accrued but not collected), less the Fund's liabilities (including accrued expenses), by the number of outstanding shares of that Fund. Securities traded on national securities exchanges, the NASDAQ National Market System, the NASDAQ Small Cap market and foreign markets are valued at their last sale prices on the exchanges or markets where such securities are primarily traded. Securities traded in the over-the-counter market for which last sale prices are not available, and listed securities for which no sales were reported on a particular date, are valued at their highest closing bid prices (or, for debt securities, yield equivalents thereof) obtained from one or more dealers making markets for such securities. If market quotations are not readily available, securities will be valued at their fair values as determined in good faith by the Trust's board of trustees or pursuant to procedures adopted by the board of trustees. The above procedures may include the use of valuations furnished by a pricing service which employs a matrix to determine valuations for normal institutional-size trading units of debt securities. Prior to utilizing a pricing service, the Trust's board of trustees reviews the methods used by such service to assure itself that securities will be valued at their fair values. The Trust's board of trustees also periodically monitors the methods used by such pricing services. Debt securities with remaining maturities of 60 days or less at the time of purchase are normally valued at amortized cost. The value of securities held by each Fund, and other assets used in computing net asset value, generally is determined as of the time regular trading in such securities or assets is completed each day. Since regular trading in most foreign securities markets is completed simultaneously with, or prior to, the close of regular trading on the New York Stock Exchange, closing prices for foreign securities usually are available for purposes of computing the Funds' net asset value. However, in the event that the closing price of a foreign security is not available in time to calculate a Fund's net asset value on a particular day, the Trust's board of trustees has authorized the use of the market price for the security obtained from an approved pricing service at an established time during the day which may be prior to the close of regular trading in the security. The value of all assets and liabilities initially expressed in foreign currencies will be converted into U.S. dollars at the spot rate of such currencies against U.S. dollars provided by an approved pricing service. TRUST PERFORMANCE As discussed in the section of each Fund's Prospectus entitled "Performance Data," all of the Funds advertise their total return performance. In addition, the INVESCO Intermediate Government Bond Fund advertises its yield. The average annual total return as of August 31, 1997 for shares of each of the following Funds for the periods listed below were as follows: ^ Portfolio 1 Year 5 Years ^ 10 Years - --------- ------ ------- -------- INVESCO Intermediate Government Bond Fund 6.64% 5.65% 7.54%^ INVESCO Value Equity Fund 32.04% 17.60% 12.74%^ INVESCO Total Return Fund 27.01% 15.38% 13.68%^ Average annual total return performance for each Fund reflects the deduction of a proportional share of Trust expenses allocated to the Fund for the periods indicated. In each case, average annual total return was computed by finding the average annual compounded rates of return that would equate the initial amount invested to the ending redeemable value, according to the following formula: P(1 + T)exponent n = ERV where: P = initial payment of $1000 T = average annual total return n = number of years ERV = ending redeemable value of initial payment The average annual total return performance figures shown above were determined by solving the above formula for "T" for each time period and Fund indicated. The yield of the INVESCO Intermediate Government Bond Fund for the 30 days ended August 31, 1997, was 4.86%. This yield was computed by dividing the net investment income per share earned during the period as calculated according to a prescribed formula by the net asset value per share on August 31, 1997. In conjunction with performance reports, comparative data between a Fund's performance for a given period and other types of investment vehicles, including certificates of deposit, may be provided to prospective investors and shareholders. From time to time, evaluations of performance made by independent sources may also be used in advertisements, sales literature or shareholder reports, including reprints of, or selections from, editorials or articles about the Funds. Sources for Fund performance information and articles about the Funds include, but are not limited to, the following: American Association of Individual Investors' Journal Banxquote Barron's Business Week CDA Investment Technologies CNBC CNN Consumer Digest Financial Times Financial World Forbes Fortune Ibbotson Associates, Inc. Institutional Investor Investment Company Data, Inc. Investor's Business Daily Kiplinger's Personal Finance Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis Money Morningstar Mutual Fund Forecaster No-Load Analyst No-Load Fund X Personal Investor Smart Money The New York Times The No-Load Fund Investor U.S. News and World Report United Mutual Fund Selector USA Today Wall Street Journal Wiesenberger Investment Companies Services Working Woman Worth SERVICES PROVIDED BY THE TRUST Periodic Withdrawal Plan. As described in the section of each Fund's Prospectus entitled "Services Provided by the Trust," the Trust offers a Periodic Withdrawal Plan. All dividends and distributions on shares owned by shareholders participating in this Plan are reinvested in additional shares. Since withdrawal payments represent the proceeds from sales of shares, the amount of shareholders' investments in the Trust will be reduced to the extent that withdrawal payments exceed dividends and other distributions paid and reinvested. Any gain or loss on such redemptions must be reported for tax purposes. In each case, shares will be redeemed at the close of business on or about the 20th day of each month preceding payment and payments will be mailed within five business days thereafter. The Periodic Withdrawal Plan involves the use of principal and is not a guaranteed annuity. Payments under such a Plan do not represent income or a return on investment. Participation in the Periodic Withdrawal Plan may be terminated at any time by sending a written request to IFG. Upon termination, all future dividends and capital gain distributions will be reinvested in additional shares unless a shareholder requests otherwise. Exchange Policy. As discussed in the section of each Fund's Prospectus entitled "Services Provided by the Trust," the Trust offers shareholders the ability to exchange shares of any Fund of the Trust for shares of certain other mutual funds advised by IFG. Exchange requests may be made either by telephone or by written request to IFG using the telephone number or address on the cover of this Statement of Additional Information. Exchanges made by telephone must be in an amount of at least $250, if the exchange is being made into an existing account of one of the INVESCO funds. All exchanges that establish a new account must meet the fund's applicable initial minimum investment requirements. Written exchange requests into an existing account have no minimum requirements other than the fund's applicable minimum subsequent investment requirements. Any gain or loss realized on such an exchange is recognized for federal income tax purposes. This privilege is not an option or right to purchase securities, but is a revocable privilege permitted under the present policies of each of the funds and is not available in any state or other jurisdiction where the shares of the mutual fund into which transfer is to be made are not qualified for sale, or when the net asset value of the shares presented for exchange is less than the minimum dollar purchase required by the appropriate prospectus. TAX-DEFERRED RETIREMENT PLANS As described in the section of each Fund's Prospectus entitled "Services Provided by the Trust," shares of the Trust may be purchased as the investment medium for various tax-deferred retirement plans. Persons who request information regarding these plans from IFG will be provided with prototype documents and other supporting information regarding the type of plan requested. Each of these plans involves a long-term commitment of assets and is subject to possible regulatory penalties for excess contributions, premature distributions or for insufficient distributions after age 70-1/2. The legal and tax implications may vary according to the circumstances of the individual investor. Therefore, the investor is urged to consult with an attorney or tax adviser prior to the establishment of such a plan. HOW TO REDEEM SHARES Normally, payments for shares redeemed will be mailed within seven (7) days following receipt of the required documents as described in the section of each Fund's Prospectus entitled "How To Redeem Shares." The right of redemption may be suspended and payment postponed when: (a) the New York Stock Exchange is closed for other than customary weekends and holidays; (b) trading on that exchange is restricted; (c) an emergency exists as a result of which disposal by the Trust of securities owned by it is not reasonably practicable, or it is not reasonably practicable for the Trust fairly to determine the value of its net assets; or (d) the Securities and Exchange Commission ("SEC") by order so permits. It is possible that in the future conditions may exist which would, in the opinion of the Trust's investment adviser, make it undesirable for a Fund to pay for redeemed shares in cash. In such cases, the Trust's investment adviser may authorize payment to be made in portfolio securities or other property of the Fund. However, the Trust is obligated under the 1940 Act to redeem for cash all shares of a Fund presented for redemption by any one shareholder having a value up to $250,000 (or 1% of the applicable Fund's net assets if that is less) in any 90-day period. Securities delivered in payment of redemptions are selected entirely by the Trust's investment adviser based on what is in the best interests of the Trust and its shareholders, and are valued at the value assigned to them in computing the Fund's net asset value per share. Shareholders receiving such securities are likely to incur brokerage costs on their subsequent sales of the securities. DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES Each Fund intends to continue to conduct its business and satisfy the applicable diversification of assets and source of income requirements to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Each Fund so qualified for the taxable year ended August 31, 1997, and intends to continue to qualify during its current taxable year. As a result, because each Fund intends to distribute all of its income and recognized gains, it is anticipated that the Funds will pay no federal income or excise taxes and will be accorded conduit or "pass through" treatment for federal income tax purposes. Dividends paid by the Funds from net investment income as well as distributions of net realized short-term capital gains and net realized gains from certain foreign currency transactions are, for federal income tax purposes, taxable as ordinary income to shareholders. After the end of each calendar year, each Fund sends shareholders information regarding the amount and character of dividends paid in the year. Distributions by the Funds of net capital gain (the excess of net long-term capital gain over net short-term capital loss) are, for federal income tax purposes, taxable to the shareholder as long-term capital gains regardless how long a shareholder has held shares of a Fund. The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in August 1997, changed the taxation of long-term capital gains by applying different capital gains rates depending on the taxpayer's holding period and marginal rate of federal income tax. Long-term gains realized on the sale of securities held for more than one year but not for more than 18 months are taxable at a rate of 28%. This category of long-term gains is often referred to as "mid-term" gains but is technically termed "28% rate gains". Long- term gains realized on the sale of securities held for more than 18 months are taxable at a rate of 20%. ^ At the end of each year, information regarding the tax status of dividends and other distributions is provided to shareholders. Shareholders should consult their tax advisers as to the effect of the Tax Act on distributions by the Funds of net capital ^ gains. All dividends and other distributions are regarded as taxable to the investor, regardless of whether such dividends and distributions are reinvested in additional shares of a Fund or another Fund in the INVESCO group. The net asset value of Fund shares reflects accrued net investment income and undistributed realized capital and foreign currency gains; therefore, when a distribution is made, the net asset value is reduced by the amount of the distribution. If the net asset value of Fund shares were reduced below a shareholder's cost as a result of a distribution, such distribution would be taxable to the shareholder although a portion would be, in effect, a return of invested capital. However, the net asset value per share will be reduced by the amount of the distribution, which would reduce any ^ gains or increase any ^ losses for tax purposes on any subsequent redemption of shares by the shareholder. IFG may provide ^ shareholders of the Funds with information concerning the average cost basis of their shares in order to help them prepare their tax returns. This information is intended as a convenience to shareholders and will not be reported to the Internal Revenue Service (the "IRS"). The IRS permits the use of several methods to determine the cost basis of mutual fund shares. The cost basis information provided by IFG will be computed using the single-category average cost method, although neither IFG nor the Fund recommends any particular method of determining cost basis. Other methods may result in different tax consequences. If a shareholder has reported gains or losses with respect to shares of the Fund in past years, the shareholder must continue to use the cost basis method previously used unless the shareholder applies to the IRS for permission to change the method. If Fund shares are sold at a loss after being held for six months or less, the loss will be treated as a long-term, instead of short-term, capital loss to the extent of any capital gain distributions received on those shares. Each Fund will be subject to a non-deductible 4% excise tax to the extent it fails to distribute by the end of any calendar year substantially all of it ordinary income for that year and net capital gains for the one-year period ending on October 31 of that year, plus certain other amounts. Dividends and interest received by each Fund may be subject to income, withholding or other taxes imposed by foreign countries and U.S. possessions that would reduce the yield on its securities. Tax conventions between certain countries and the United States may reduce or eliminate these foreign taxes, however, and many foreign countries do not imposes taxes on capital gains in respect of investments by foreign investors. Foreign taxes withheld will be treated as an expense of the Fund. Each Fund may invest in the stock of "passive foreign investment companies" ^("PFICs"). A PFIC is a foreign corporation (other than a controlled foreign corporation) that, in general, meets either of the following tests: (1) at least 75% of its gross income is passive or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. Under certain circumstances, a Fund will be subject to federal income tax on a portion of any "excess distribution" received on the stock of a PFIC or of any gain on disposition of the stock (collectively "PFIC income"), plus interest thereon, even if the Fund distributes the PFIC income as a taxable dividend to its shareholders. The balance of the PFIC income will be included in the Fund's investment company taxable income and, accordingly, will not be taxable to the Fund to the extent that income is distributed to its shareholders. Each Fund may elect to "mark-to-market" its stock in any PFIC. Marking-to-market, in this context, means including in ordinary income for each taxable year the excess, if any, of the fair market value of the PFIC stock over the Fund's adjusted tax basis therein as of the end of that year. Once the election has been made, a Fund also will be allowed to deduct from ordinary income the excess, if any, of its adjusted basis in PFIC stock over the fair market value thereof as of the end of the year, but only to the extent of any net mark-to-market gains with respect to that PFIC stock included by the Fund for prior taxable years. The Fund's adjusted tax basis in each PFIC's stock with respect to which it makes this election will be adjusted to reflect the amounts of income included and deductions taken under the election. Gains or losses (1) from the disposition of foreign currencies, (2) from the disposition of debt securities denominated in foreign currency that are attributable to fluctuations in the value of the foreign currency between the date of acquisition of each security and the date of disposition, and (3) that are attributable to fluctuations in exchange rates that occur between the time the Fund accrues interest, dividends or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects the receivables or pays the liabilities, generally will be treated as ordinary income or loss. These gains or losses may increase or decrease the amount of the Fund's investment company taxable income to be distributed to its shareholders. Shareholders should consult their own tax advisers regarding specific questions as to federal, state and local taxes. Dividends and other distributions generally will be subject to applicable state and local taxes. Qualification as a regulated investment company under the Code for federal income tax purposes does not entail government supervision of management or investment policies. INVESTMENT PRACTICES Portfolio Turnover. There are no fixed limitations regarding portfolio turnover for any of the Trust's Funds. Brokerage costs to the Trust are commensurate with the rate of portfolio activity. Portfolio turnover rates for the fiscal years ended August 31, 1997, 1996 and 1995, were as follows: Fund 1997 1996 1995 - ---- ---- ---- ---- INVESCO Intermediate Government Bond 37% 63% 92% INVESCO Value Equity 37% 27% 34% INVESCO Total Return 4% 10% 30% In computing the portfolio turnover rate, all investments with maturities or expiration dates at the time of acquisition of one year or less are excluded. Subject to this exclusion, the turnover rate is calculated by dividing (A) the lesser of purchases or sales of portfolio securities for the fiscal year by (B) the monthly average of the value of portfolio securities owned by the Fund during the fiscal year. Placement of Portfolio Brokerage. IFG, as the Funds' investment adviser, and ICM, as sub-adviser of the Funds under the direct supervision of IFG, place orders for the purchase and sale of securities with brokers and dealers based upon IFG's or ICM's evaluation of ^ such broker-dealers' financial responsibility subject to ^ their ability to effect transactions at the best available prices. IFG or ICM evaluates the overall reasonableness of brokerage commissions paid by reviewing the quality of executions obtained on the Trust's portfolio transactions, viewed in terms of the size of transactions, prevailing market conditions in the security purchased or sold, and general economic and market conditions. In seeking to ensure that the commissions charged the Trust are consistent with prevailing and reasonable commissions, IFG or ICM also endeavors to monitor brokerage industry practices with regard to the commissions charged by ^ broker-dealers on transactions effected for other comparable institutional investors. While IFG or ICM seeks reasonably competitive rates, the Trust does not necessarily pay the lowest commission or spread available. Consistent with the standard of seeking to obtain the best execution on portfolio transactions, IFG or ICM may select brokers that provide research services to effect such transactions. Research services consist of statistical and analytical reports relating to issuers, industries, securities and economic factors and trends, which may be of assistance or value to Fund Management in making informed investment decisions. Research services prepared and furnished by brokers through which the Funds effect securities transactions may be used by IFG or ICM in servicing all of their respective accounts and not all such services may be used by IFG or ICM in connection with the Funds. In recognition of the value of the above-described brokerage and research services provided by certain brokers, IFG or ICM, consistent with the standard of seeking to obtain the best execution on portfolio transactions, may place orders with such brokers for the execution of Trust transactions on which the commissions are in excess of those which other brokers might have charged for effecting the same transactions. Fund transactions may be effected through qualified broker-dealers who recommend the Trust to their clients, or who act as agent in the purchase of the Trust's shares for their clients. When a number of brokers and dealers can provide comparable best price and execution on a particular transaction, the Trust's adviser or sub-adviser may consider the sale of Trust shares by a broker or dealer in selecting among qualified broker-dealers. Certain financial institutions (including brokers who may sell shares of the Funds, or affiliates of such brokers) are paid a fee (the "Services Fee") for recordkeeping, shareholder communications and other services provided by the brokers to investors purchasing shares of the Funds through no transaction fee programs ("NTF Programs") offered by the financial institution or its affiliate broker (an "NTF Program Sponsor"). The Services Fee is based on the average daily value of the investments in each Fund made in the name of such NTF Program Sponsor and held in omnibus accounts maintained on behalf of investors participating in the NTF Program. With respect to certain NTF Programs, the trustees of the Trust have authorized the Intermediate Government Bond and Value Equity Funds to apply dollars generated from the Trust's Plan and Agreement of Distribution pursuant to Rule 12b-1 under the 1940 Act (the "Plan") to pay the entire Services Fee, subject to the maximum Rule 12b-1 fee permitted by the Plan. With respect to other NTF Programs, the Trust's trustees have authorized all Funds to pay transfer agency fees to IFG based on the number of investors who have beneficial interests in the NTF Program Sponsor's omnibus accounts in the Funds. IFG, in turn, pays these transfer agency fees to the NTF Program Sponsor as a sub-transfer agency or recordkeeping fee in payment of all or a portion of the Services Fee. In the event that the sub-transfer agency or recordkeeping fee is insufficient to pay all of the Services Fee with respect to these NTF Programs, the trustees of the Trust have authorized the Trust to apply dollars generated from the Plan to pay the remainder of the Services Fee, subject to the maximum Rule 12b-1 fee permitted by the Plan. IDI itself pays the portion of each Fund's Services Fee, if any, that exceeds the sum of the sub-transfer agency or recordkeeping fee and Rule 12b-1 fee. The Trust's trustees have further authorized IFG to place a portion of each Fund's brokerage transactions with certain NTF Program Sponsors or their affiliated brokers, if IFG reasonably believes that, in effecting the Fund's transactions in portfolio securities, the broker is able to provide the best execution of orders at the most favorable prices. A portion of the commissions earned by such a broker from executing portfolio transactions on behalf of the Funds may be credited by the NTF Program Sponsor against its Services Fee. Such credit shall be applied first against any sub-transfer agency or recordkeeping fee payable with respect to the Funds, and second against any Rule 12b-1 fees used to pay a portion of the Services Fee, on a basis which has resulted from negotiations between IFG or IDI and the NTF Program Sponsor. Thus, the Funds pay sub-transfer agency or recordkeeping fees to the NTF Program Sponsor in payment of the Services Fee only to the extent that such fees are not offset by a Fund's credits. In the event that the transfer agency fee paid by the Funds to IFG with respect to investors who have beneficial interests in a particular NTF Program Sponsor's omnibus accounts in a Fund exceeds the Services Fee applicable to the Fund, after application of credits, IFG may carry forward the excess and apply it to future Services Fees payable to that NTF Program Sponsor with respect to a Fund. The amount of excess transfer agency fees carried forward will be reviewed for possible adjustment by IFG prior to each fiscal year-end of the Funds. The Trust's board of trustees has also authorized the Intermediate Government Bond and Value Equity Funds to pay to IDI the full Rule 12b-1 fees contemplated by the Plan to compensate IDI for expenses incurred by IDI in engaging in the activities and providing the services on behalf of the Funds contemplated by the Plan, subject to the maximum Rule 12b-1 fee permitted by the Plan, notwithstanding that credits have been applied to reduce the portion of the 12b-1 fee that would have been used to compensate IDI for payments to such NTF Program Sponsor absent such credits. The aggregate dollar amount of brokerage commissions paid by the Intermediate Government Bond, Value Equity and Total Return Funds for the fiscal year ended August 31, 1997 were $0, $470,619 and $484,776, respectively. For the fiscal year ended August 31, 1997 brokers providing research services received $0 in commissions on portfolio transactions effected for each Fund. Neither the Trust, IFG, nor ICM paid any compensation to brokers for the sale of shares of the Trust during the fiscal year ended August 31, 1997. At August 31, 1997, the Funds held securities of their regular brokers or dealers, or their parents, as follows: Value of Securities at Fund Broker or Dealer August 31, 1997 - ---- ---------------- --------------- INVESCO Value Equity Salomon Inc. $2,455,000 Fund INVESCO Intermediate State Street Bank 1,724,000 Government Bond Fund & Trust INVESCO Total Return State Street Bank 76,624,000 Fund & Trust Bankamerica Corp. 4,018,000 Neither IFG nor ICM receive any brokerage commissions on portfolio transactions effected on behalf of the Trust, and there is no affiliation between IFG, ICM, or any person affiliated with IFG, ICM, or the Trust and any broker or dealer that executes transactions for the Trust. ADDITIONAL INFORMATION Shares of Beneficial Interest. As a Massachusetts Business Trust, the Trust has an unlimited number of authorized shares of beneficial interest. The board of trustees has the authority to designate additional series of beneficial shares for any new fund of the Trust without seeking the approval of shareholders and may classify and reclassify any unissued shares. Shares of each series represent the interests of the shareholders of such series in a particular portfolio of investments of the Trust. Each series of the Trust's shares is preferred over all other series in respect of the assets specifically allocated to that series, and all income, earnings, profits and proceeds from such assets, subject only to the rights of creditors, are allocated to shares of that series. The assets of each series are segregated on the books of account and are charged with the liabilities of that series and with a share of the Trust's general liabilities. The board of trustees determines those assets and liabilities deemed to be general assets or liabilities of the Trust, and these items are allocated among series in proportion to the relative net assets of each series. In the unlikely event that a liability allocable to one series exceeds the assets belonging to the series, all or a portion of such liability may have to be borne by the holders of shares of the Trust's other series. All shares, regardless of series, have equal voting rights. Voting with respect to certain matters, such as ratification of independent accountants or election of trustees, will be by all series of the Trust. When not all series are affected by a matter to be voted upon, such as approval of an investment advisory contract or changes in a Fund's investment policies, only shareholders of the series affected by the matter may be entitled to vote. Trust shares have noncumulative voting rights, which means that the holders of a majority of the shares voting for the election of trustees can elect 100% of the trustees if they choose to do so. In such event, the holders of the remaining shares voting for the election of trustees will not be able to elect any person or persons to the board of trustees. After they have been elected by shareholders, the trustees will continue to serve until their successors are elected and have qualified or they are removed from office, in either case by a shareholder vote, or until death, resignation, or retirement. Trustees may appoint their own successors, provided that always at least a majority of the trustees have been elected by the Trust's shareholders. As a Massachusetts Business Trust, it is the intention of the Trust not to hold annual meetings of shareholders. The trustees will call annual or special meetings of shareholders for action by shareholder vote as may be required by the 1940 Act or the Trust's Declaration of Trust, or at their discretion. Principal Shareholders. As of ^ December 1, 1997, the following entities held more than 5% of ^ each Fund's outstanding equity securities. Name and Address Percent of Beneficial Owner Number of Shares of Class - ------------------- ---------------- -------- INVESCO Value Equity Fund Charles Schwab & Co. Inc. 896,651.4760 7.28% Special Custody Acct. for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery St. San Francisco, CA 94104 INVESCO Trust Co. Trustee 789,332.4960 6.41% HNTB Corporation Retirement & Savings Plan c/o Joan Watanabie 1201 Walnut, Suite 700 Kansas City, MO 64106 First Union National Bank 619,968.2260 5.04% of North Carolina Attn: Rich Sapienza 1525 West W. T. Harris Blvd. NC-1076 Charlotte, NC 28288 INVESCO Intermediate Government Bond Fund INVESCO Trust Co. Trustee 640,996.1360 17.52% Arch Mineral Corporation Employee Thrift Plan 01/4/93 City Place One, Suite 300 St. Louis, MO 63141 Charles Schwab & Co. Inc. 577,421.9050 15.78% Special Custody Acct. for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery St. San Francisco, CA 94104 Northern Trust Co. Trustee 508,153.4490 13.89% Ericsson Cap & Savings Plan Attn: Myra Baldwin-Larkins 801 S. Canal, Flr. C-35 Chicago, IL 60607 Donaldson Lufkin & Jenrette 232,624.2530 6.36% Securities Corp. Mutual Funds, 5th Flr. P.O. Box 2052 Jersey City, NJ 07303 INVESCO Total Return Fund Charles Schwab & Co. Inc. 12,100,004.7610 16.98% Special Custody Acct. for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery St. San Francisco, CA 94104 Connecticut General Life Ins. 10,530,522.2170 14.78% c/o Liz Pezda M-110 P.O. Box 2975 Hartford, CT 06104 Independent Accountants. Price Waterhouse LLP, 950 Seventeenth Street, Denver, Colorado, has been selected as the independent accountants of the Trust. The independent accountants are responsible for auditing the financial statements of the Trust. Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts, has been designated as the custodian of the cash and investment securities of the Trust. The bank is responsible for, among other things, receipt and delivery of the Funds' investment securities in accordance with procedures and conditions specified in the custody agreement. Under its contract with the Trust, the custodian is authorized to establish separate accounts in foreign countries and to cause foreign securities owned by the Trust to be held outside the United States in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks and securities depositories. Transfer Agent. IFG, 7800 E. Union Avenue, Denver, Colorado 80237, acts as registrar, dividend disbursing agent, and transfer agent for the Trust pursuant to the Transfer Agency Agreement described in "The Trust and Its Management." Such services include the issuance, cancellation and transfer of shares of the Trust, and the maintenance of records regarding the ownership of such shares. Reports to Shareholders. The Trust's fiscal year ends on August 31. The Trust distributes reports at least semiannually to its shareholders. Financial statements regarding the Trust, audited by the independent accountants, are sent to shareholders annually. Legal Counsel. The firm of Kirkpatrick & Lockhart LLP, Washington, D.C., is legal counsel for the Trust. The firm of Moye, Giles, O'Keefe, Vermeire & Gorrell, Denver, Colorado, acts as special counsel to the Trust. Financial Statements. The Trust's audited financial statements and the notes thereto for the year ended August 31, 1997, and the report of Price Waterhouse LLP with respect to such financial statements are incorporated herein by reference from the Trust's Annual Report to Shareholders for the fiscal year ended August 31, 1997. Prospectuses. The Trust will furnish, without charge, a copy of the Prospectus for any Fund upon request. Such requests should be made to the Trust at the mailing address or telephone number set forth on the first page of this Statement of Additional Information. Registration Statement. This Statement of Additional Information and the Prospectuses do not contain all of the information set forth in the Registration Statement the Trust has filed with the SEC. The complete Registration Statement may be obtained from the SEC upon payment of the fee prescribed by the rules and regulations of the SEC. Declaration of Trust Provisions. The Declaration of Trust establishing the Trust dated July 9, 1987, a copy of which, together with all amendments thereto (the "Declaration"), is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name of the Trust refers to the Trustees under the Declaration collectively as Trustees, but not as individuals or personally; and no Trustee, shareholder, officer, employee or agent of the Trust shall be held to any personal liability; nor shall resort be had to their private property for the satisfaction of any obligation or claim of the Trust, but the "Trust Property" only shall be liable. APPENDIX A Bond Ratings. Description of Moody's and S&P's four highest bond rating categories: Moody's Corporate Bond Ratings: Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin, and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa - Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long term risk appear somewhat larger than in Aaa securities. A - Bonds which are rated A possess many favorable investment attributes, and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa - Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. S&P's Corporate Bond Ratings: AAA - This is the highest rating assigned by Standard & Poor's to a debt obligation and indicates an extremely strong capacity to pay principal and interest. AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay principal and interest is very strong, and in the majority of instances they differ from AAA issues only in small degree. A - Bonds rated A have a strong capacity to pay principal and interest, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories. BBB - Bonds rated BBB are regarded as having an adequate capability to pay principal and interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this category than for bonds in higher rated categories. APPENDIX B DESCRIPTION OF FUTURES, OPTIONS AND FORWARD CONTRACTS Options on Securities An option on a security provides the purchaser, or "holder," with the right, but not the obligation, to purchase, in the case of a "call" option, or sell, in the case of a "put" option, the security or securities underlying the option, for a fixed exercise price up to a stated expiration date. The holder pays a non-refundable purchase price for the option, known as the "premium." The maximum amount of risk the purchaser of the option assumes is equal to the premium plus related transaction costs, although the entire amount may be lost. The risk of the seller, or "writer," however, is potentially unlimited, unless the option is "covered," which is generally accomplished through the writer's ownership of the underlying security, in the case of a call option, or the writer's segregation of an amount of cash or securities equal to the exercise price, in the case of a put option. If the writer's obligation is not so covered, it is subject to the risk of the full change in value of the underlying security from the time the option is written until exercise. Upon exercise of the option, the holder is required to pay the purchase price of the underlying security, in the case of a call option, or to deliver the security in return for the purchase price, in the case of a put option. Conversely, the writer is required to deliver the security, in the case of a call option, or to purchase the security, in the case of a put option. Options on securities which have been purchased or written may be closed out prior to exercise or expiration by entering into an offsetting transaction on the exchange on which the initial position was established, subject to the availability of a liquid secondary market. Options on securities are traded on national securities exchanges, such as the Chicago Board of Options Exchange and the New York Stock Exchange, which are regulated by the Securities and Exchange Commission. The Options Clearing Corporation guarantees the performance of each party to an exchange-traded option, by in effect taking the opposite side of each such option. A holder or writer may engage in transactions in exchange-traded options on securities and options on indices of securities only through a registered broker/dealer which is a member of the exchange on which the option is traded. An option position in an exchange-traded option may be closed out only on an exchange which provides a secondary market for an option of the same series. Although the Fund will generally purchase or write only those options for which there appears to be an active secondary market, there is no assurance that a liquid secondary market on an exchange will exist for any particular option at any particular time. In such event it might not be possible to effect closing transactions in a particular option with the result that the Fund would have to exercise the option in order to realize any profit. This would result in the Fund's incurring brokerage commissions upon the disposition of underlying securities acquired through the exercise of a call option or upon the purchase of underlying securities upon the exercise of a put option. If the Fund as covered call option writer is unable to effect a closing purchase transaction in a secondary market, unless the Fund is required to deliver the securities pursuant to the assignment of an exercise notice, it will not be able to sell the underlying security until the option expires. Reasons for the potential absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options or underlying securities; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or a clearing corporation may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or particular class or series of options) in which event the secondary market on that exchange (or in the class or series of options) would cease to exist, although outstanding options on that exchange which had been issued by a clearing corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms. There is no assurance that higher than anticipated trading activity or other unforeseen events might not, at a particular time, render certain of the facilities of any of the clearing corporations inadequate and thereby result in the institution by an exchange of special procedures which may interfere with the timely execution of customers' orders. However, the Options Clearing Corporation, based on forecasts provided by the U.S. exchanges, believes that its facilities are adequate to handle the volume of reasonably anticipated options transactions, and such exchanges have advised such clearing corporation that they believe their facilities will also be adequate to handle reasonably anticipated volume. In addition, options on securities may be traded over-the-counter through financial institutions dealing in such options as well as the underlying instruments. OTC options are purchased from or sold (written) to dealers or financial institutions which have entered into direct agreements with a Fund. With OTC options, such variables as expiration date, exercise price and premium will be agreed upon between a Fund and the transacting dealer, without the intermediation of a third party such as the OCC. If the transacting dealer fails to make or take delivery of the securities underlying an option it has written, in accordance with the terms of that option as written, the Fund would lose the premium paid for the option as well as any anticipated benefit of the transaction. A Fund will engage in OTC option transactions only with primary U.S. Government securities dealers recognized by the Federal Reserve Bank of New York. Futures Contracts A Futures Contract is a bilateral agreement providing for the purchase and sale of a specified type and amount of a financial instrument or foreign currency, or for the making and acceptance of a cash settlement, at a stated time in the future, for a fixed price. By its terms, a Futures Contract provides for a specified settlement date on which, in the case of the majority of interest rate and foreign currency futures contracts, the fixed income securities or currency underlying the contract are delivered by the seller and paid for by the purchaser, or on which, in the case of stock index futures contracts and certain interest rate and foreign currency futures contracts, the difference between the price at which the contract was entered into and the contract's closing value is settled between the purchaser and seller in cash. Futures Contracts differ from options in that they are bilateral agreements, with both the purchaser and the seller equally obligated to complete the transaction. In addition, Futures Contracts call for settlement only on the expiration date, and cannot be "exercised" at any other time during their term. The purchase or sale of a Futures Contract also differs from the purchase or sale of a security or the purchase of an option in that no purchase price is paid or received. Instead, an amount of cash or cash equivalent, which varies but may be as low as 5% or less of the value of the contract, must be deposited with the broker as "initial margin." Subsequent payments to and from the broker, referred to as "variation margin," are made on a daily basis as the value of the index or instrument underlying the Futures Contract fluctuates, making positions in the Futures Contract more or less valuable, a process known as "marking to the market." A Futures Contract may be purchased or sold only on an exchange, known as a "contract market," designated by the Commodity Futures Trading Commission for the trading of such contract, and only through a registered futures commission merchant which is a member of such contract market. A commission must be paid on each completed purchase and sale transaction. The contract market clearing house guarantees the performance of each party to a Futures Contract, by in effect taking the opposite side of such Contract. At any time prior to the expiration of a Futures Contract, a trader may elect to close out its position by taking an opposite position on the contract market on which the position was entered into, subject to the availability of a secondary market, which will operate to terminate the initial position. At that time, a final determination of variation margin is made and any loss experienced by the trader is required to be paid to the contract market clearing house while any profit due to the trader must be delivered to it. Interest rate futures contracts currently are traded on a variety of fixed income securities, including long-term U.S. Treasury Bonds, Treasury Notes, Government National Mortgage Association modified pass-through mortgage-backed securities, U.S. Treasury Bills, bank certificates of deposit and commercial paper. In addition, interest rate futures contracts include contracts on indices of municipal securities. Foreign currency futures contracts currently are traded on the British pound, Canadian dollar, Japanese yen, Swiss franc, German mark and on Eurodollar deposits. Options on Futures Contracts An Option on a Futures Contract provides the holder with the right to enter into a "long" position in the underlying Futures Contract, in the case of a call option, or a "short" position in the underlying Futures Contract, in the case of a put option, at a fixed exercise price to a stated expiration date. Upon exercise of the option by the holder, the contract market clearing house establishes a corresponding short position for the writer of the option, in the case of a call option, or a corresponding long position, in the case of a put option. In the event that an option is exercised, the parties will be subject to all the risks associated with the trading of Futures Contracts, such as payment of variation margin deposits. In addition, the writer of an Option on a Futures Contract, unlike the holder, is subject to initial and variation margin requirements on the option position. A position in an Option on a Futures Contract may be terminated by the purchaser or seller prior to expiration by effecting a closing purchase or sale transaction, subject to the availability of a liquid secondary market, which is the purchase or sale of an option of the same series (i.e., the same exercise price and expiration date) as the option previously purchased or sold. The difference between the premiums paid and received represents the trader's profit or loss on the transaction. An option, whether based on a Futures Contract, a stock index or a security, becomes worthless to the holder when it expires. Upon exercise of an option, the exchange or contract market clearing house assigns exercise notices on a random basis to those of its members which have written options of the same series and with the same expiration date. A brokerage firm receiving such notices then assigns them on a random basis to those of its customers which have written options of the same series and expiration date. A writer therefore has no control over whether an option will be exercised against it, nor over the time of such exercise. PART C. OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: Page in Prospectus ---------- (1) Financial statements and schedules included in Prospectuses (Part A): Financial Highlights for the four 8 years ended August 31, 1997, the 33 eight-month period ended August 31, 58 1993, and each of the six years in the period ended December 31, 1992, for the INVESCO Value Equity^, Intermediate Government Bond and Total Return Funds. Page in Statement of Addi- tional In- formation ---------- (2) The following audited financial statements of the INVESCO Value Equity Fund, the INVESCO Intermediate Government Bond Fund and the INVESCO Total Return Fund and the notes thereto for the fiscal year ended August 31, 1997, and the report of Price Waterhouse LLP with respect to such financial statements, are incorporated in the Statement of Additional Information by reference from the Company's Annual Report to Shareholders for the fiscal year ended August 31, 1997: Statement of Investment Securities as of August 31, 1997; Statement of Assets and Liabilities as of August 31, 1997; Statement of Operations for the year ended August 31, 1997; Statement of Changes in Net Assets for each of the two years in the period ended August 31, 1997; Financial Highlights for each of the four years in the period ended August 31, 1997, the eight-month fiscal period ended August 31, 1993, and the year ended December 31, 1992. (3) Financial statements and schedules included in Part C: None: Schedules have been omitted as all information has been presented in the financial statements. (b) Exhibits: (1) (a) Declaration of Trust ^ dated July 9, 1987. (b) Amendment to Declaration of Trust effective ^ December 31, 1990. (c) Amendment to Declaration of Trust effective July 1, 1993. (2) Bylaws, as amended as of January 22, ^ 1992. (3) Not applicable. (4) Not applicable. (5) (a) Investment Advisory Agreement between Registrant and INVESCO Funds Group, Inc. dated as of February 28, ^ 1997.(2) (b) Sub-Advisory Agreement between INVESCO Funds Group, Inc. and INVESCO Capital Management, Inc., dated as of February 28, ^ 1997.(2) (6) (a) General Distribution Agreement between Registrant and INVESCO Funds Group, Inc., dated as of February 28, ^ 1997.(2) (b) General Distribution Agreement between Registrant and INVESCO Distributors, Inc. dated September 30, ^ 1997.(2) (7) Defined Benefit Deferred Compensation Plan for Non-Interested Directors and ^ Trustees.(2) (8) Custody Agreement between INVESCO Value Trust and State Street Bank and Trust ^ Company.(1) (a) Amendment to this Custodian Contract dated October 25, ^ 1995.(1) (b) Data Access Service Addendum dated May 19, ^ 1997.(2) (9) (a) Transfer Agency Agreement between Registrant and INVESCO Funds Group, Inc. dated as of February 28, ^ 1997.(2) (b) Administrative Services Agreement between Registrant and INVESCO Funds Group, Inc. dated February 28 ^ 1997.(2) ^ (10) Opinion and consent of counsel as to the legality of the securities being registered, indicating whether they will, when sold, be legally issued, fully paid and non-assessable ^. (11) Consent of Independent Accountants. (12) Not applicable. (13) Not applicable. (14) Copies of model plans used in the establishment of retirement plans as follows: Non-standardized Profit Sharing Plan; Non-standardized Money Purchase Pension Plan; Standardized Profit Sharing Plan Adoption Agreement; Standardized Money Purchase Pension Plan; Non-standardized 401(k) Plan Adoption Agreement; Standardized 401(k) Paired Profit Sharing Plan; Standardized Simplified Profit Sharing Plan; Standardized Simplified Money Purchase Plan; Defined Contribution Master Plan & Trust Agreement; and Financial 403(b) Retirement ^ Plan, previously filed with Post-Effective Amendment No. 18 to this Registration Statement on October 18, 1994 and incorporated by reference herein. (15) Plan and Agreement of Distribution adopted pursuant to 12b-1 under the Investment Company Act of 1940 dated October 28, ^ 1997.(2) (16) (a) Schedule for computation of performance ^ data for INVESCO Intermediate Government Bond Fund. (b) Schedule for computation of performance date for INVESCO Value Equity Fund. (c) Schedule for computation of performance data for INVESCO Total Return Fund. (17) (a) Financial Data Schedule for the period ended August 31, 1997 for INVESCO Value Equity Fund. (b) Financial Data Schedule for the period ended August 31, 1997 for INVESCO Intermediate Government Bond Fund. (c) Financial Data Schedule for the period ended August 31, 1997 for INVESCO Total Return Fund. (18) Not Applicable. (1)Previously filed on EDGAR with Post-Effective Amendment No. ^ 19 to this Registration Statement on ^ December 15, 1995 and incorporated by reference herein. (2)Previously^ filed on EDGAR with Post-Effective Amendment No. ^ 21 to this Registration Statement on ^ October 30, 1997 and incorporated by reference herein. Item 25. Persons Controlled by or Under Common Control with Registrant No person is presently controlled by or under common control with Registrant. Item 26. Number of Holders of Securities Number of Record Holders as of Title of Class ^ November 30, 1997 -------------- ------------------- Beneficial Interest INVESCO Value Equity Fund ^ 10,963 INVESCO Intermediate Government Bond Fund ^ 1,799 INVESCO Total Return Fund ^ 17,600 Item 27. Indemnification Indemnification provisions for officers and directors of Registrant are set forth in Article Seven of the Bylaws and Article V of the Articles of Restatement of the Declaration of Trust, and are hereby incorporated by reference. See Item 24(b)(1) and (2) above. Under these Articles, officers and trustees will be indemnified to the fullest extent permitted by law, subject only to such limitations as may be required by the Investment Company Act of 1940, as amended, and the rules thereunder. Under the Investment Company Act of 1940, the trustees and officers of the Trust cannot be protected against liability to the Trust or its shareholders to which they would be subject because of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties of their office. The Trust also maintains liability insurance policies covering its trustees and officers. Item 28. Business and Other Connections of Investment Adviser See "The Trust and Its Management" in the Prospectuses and Statement of Additional Information for information regarding the business of the investment adviser and sub-adviser. For information as to the business, profession, vocation or employment of a substantial nature of each of the officers and directors of INVESCO Funds Group, Inc., and INVESCO Capital Management, Inc., reference is made to the Schedule Ds to the Form ADVs filed under the Investment Advisers Act of 1940 by these companies, which schedules are herein incorporated by reference. Item 29. Principal Underwriters (a) INVESCO Capital Appreciation Funds, Inc. INVESCO Diversified Funds, Inc. INVESCO Emerging Opportunity Funds, Inc. INVESCO Growth Fund, Inc. INVESCO Income Funds, Inc. INVESCO Industrial Income Fund, Inc. INVESCO International Funds, Inc. INVESCO Money Market Funds, Inc. INVESCO Multiple Asset Funds, Inc. INVESCO Specialty Funds, Inc. INVESCO Strategic Portfolios, Inc. INVESCO Tax-Free Income Funds, Inc. INVESCO Variable Investment Funds, Inc. (b) Positions and Positions and Name and Principal Offices with Offices with Business Address Underwriter Registrant - ------------------ ------------- ------------- William J. Galvin, Jr. Senior Vice Assistant 7800 E. Union Avenue President Secretary Denver, CO 80237 Ronald L. Grooms Senior Vice Treasurer, 7800 E. Union Avenue President & Chief Fin'l Denver, CO 80237 Treasurer Officer, and Chief Acctg. Off. Dan J. Hesser Chairman of President, 7800 E. Union Avenue the Board, CEO & Dir. Denver, CO 80237 President , Chief Executive Officer, & Director Gregory E. Hyde Vice President 7800 E. Union Avenue Denver, CO 80237 Charles P. Mayer Director 7800 E. Union Avenue Denver, CO 80237 Glen A. Payne Senior Vice Secretary 7800 E. Union Avenue President, Denver, CO 80237 Secretary & General Counsel Judy P. Wiese Vice President Asst. Treas. 7800 E. Union Avenue Denver, CO 80237 (c) Not applicable. Item 30. Location of Accounts and Records Dan J. Hesser 7800 E. Union Avenue Denver, CO 80237 Item 31. Management Services Not applicable. Item 32. Undertakings (a) The Registrant hereby undertakes that the board of trustees will call such meetings of shareholders of all the Funds, for action by shareholder vote, including acting on the question of removal of a trustee or trustees, as may be requested in writing by the holders of at least 10% of the outstanding shares of a Fund or as may be required by applicable law or the Trust's Declaration of Trust, and to assist in communicating with other shareholders as required by Section 16(c) of the Investment Company Act of 1940. (b) The Registrant shall furnish each person to whom a prospectus is delivered with a copy of the Registrant's latest annual report to shareholders, upon request and without charge. Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this post-effective amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, County of Denver, and State of Colorado, on the ^23rd day of ^ December, 1997. Attest: INVESCO Value Trust /s/ Glen A. Payne /s/ Dan J. Hesser - ------------------------------------ ------------------------------------ Glen A. Payne, Secretary Dan J. Hesser, President Pursuant to the requirements of the Securities Act of 1933, this post-effective amendment to Registrant's Registration Statement has been signed by the following persons in the capacities indicated on this ^23rd day of ^ December, 1997. /s/ Dan J. Hesser /s/ Lawrence H. Budner - ------------------------------------ ------------------------------------ Dan J. Hesser, President & Lawrence H. Budner, Trustee Trustee (Chief Executive Officer) /s/ Ronald L. Grooms /s/ Daniel D. Chabris - ------------------------------------ ------------------------------------ Ronald L. Grooms, Treasurer Daniel D. Chabris, Trustee (Chief Financial and Accounting Officer) /s/ Victor L. Andrews /s/ Fred A. Deering - ------------------------------------ ------------------------------------ Victor L. Andrews, Trustee Fred A. Deering, Trustee /s/ Bob R. Baker /s/ Larry Soll - ------------------------------------ ------------------------------------ Bob R. Baker, Trustee Larry Soll, Trustee /s/ Hubert L. Harris, Jr. /s/ Kenneth T. King - ------------------------------------ ------------------------------------ Hubert L. Harris, Jr., Trustee Kenneth T. King, Trustee /s/ Charles W. Brady /s/ John W. McIntyre - ------------------------------------ ------------------------------------ Charles W. Brady, Trustee John W. McIntyre, Trustee /s/ Wendy L. Gramm - ------------------------------------ Wendy L. Gramm, Trustee By* By* /s/ Glen A. Payne --------------------------------- --------------------------------- Edward F. O'Keefe Glen A. Payne Attorney in Fact Attorney in Fact * Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne, and each of them, to execute this post-effective amendment to the Registration Statement of the Registrant on behalf of the above-named directors and officers of the Registrant have been filed with the Securities and Exchange Commission on April 12, 1990, May 12, 1990, May 27, 1992, October 18, 1994, December 14, 1995 ^, December 24, 1996 and October 30, 1997. ^ EXHIBIT INDEX ------------- Page in Exhibit Number Registration Statement - -------------- ---------------------- ^1(a) 133 1(b) 174 1(c) 181 2 185 10 196 11 197 16(a) 198 16(b) 199 16(c) 200 17(a) 201 17(b) 202 17(c) 203 ^ EX-99.1ADECLARTRUST 2 DECLARATION OF TRUST OF INVESCO Institutional Series Trust THE DECLARATION OF TRUST OF INVESCO Institutional Series Trust is made the 9th day of July, 1987 by the parties signatory hereto, as trustees (such persons, so long as they shall continue in office in accordance with the terms of this Declaration of Trust, and all other persons who at the time in question have been duly elected or appointed as trustees in accordance with the provisions of this Declaration of Trust and are then in office, being hereinafter called the "Trustees"). W I T N E S S E T H: WHEREAS, the Trustees desire to form a trust fund under the laws of Massachusetts for the investment and reinvestment of funds contributed thereto; and WHEREAS, it is proposed that the beneficial interest in the trust assets be divided into transferable shares of beneficial interest which may, at the discretion of the Trustees, be divided into separate series (the "Series") as hereinafter provided; NOW, THEREFORE, the Trustees hereby declare that they will hold in trust, all money and property contributed to the trust fund to manage and dispose of the same for the benefit of the holders from time to time of the shares of beneficial interest issued hereunder and subject to the provisions hereof, to wit: ARTICLE I The Trust 1.1. Name. The name of the trust created hereby (the "Trust," which term shall be deemed to include any Series of the Trust when the context requires) shall be INVESCO institutional Series Trust," and so far as may e practicable the Trustees shall conduct the activities of the Trust and execute all documents under that name, which name (and the word "Trust" wherever hereinafter used) shall refer to the trustees as Trustees, and no individually, and shall not refer to the officers, agents, employees or Shareholders of the Trust or any Series thereof. Each Series of the Trust which shall be established and designated pursuant to Sections 6.2, 6.2.1, or 6.2.2 shall conduct its activities under such name as the Trustees shall determine and set forth in the instruments establishing such Series. Should the Trustees determine that the use of the name of the Trust or any Series is not advisable, they may select such other name for the Trust or such Series as they deem proper and the Trust or Series may conduct its activities under such other name. Any name change shall be effective upon the execution by a majority of the then Trustees of an instrument setting forth the new name. Any such instrument shall have the status of an amendment to this Declaration. 1.2. Definitions. As used in this Declaration, the following terms shall have the following meaning: The terms "Affiliated Person," "Assignment," "Commission," "Interested Person," "Majority Shareholder Vote," (the 67% or 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) and "Principal Underwriter" shall have the meanings given them in the 1940 Act. "Declaration" shall mean this Declaration of Trust as amended from time to time. References in this Declaration to "Declaration," "hereof," "herein" and "hereunder" shall be deemed to refer to the Declaration rather than the article or section in which such words appear. "Fundamental Policies" shall mean the investment restrictions set forth in the Prospectus of any Series and designated as fundamental policies therein. "Person" shall mean and include individuals, corporations, partnerships, trusts, associations, joint ventures and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof. "Prospectus" shall mean the currently effective Prospectus of any Series of the Trust under the Securities Act of 1933, as amended or supplemented, including the Statement of Additional Information incorporated by reference therein. "Series" shall mean the separate series of Shares that may be established and designated pursuant to Sections 6.2, 6.2.1, or 6.2.2. "Shareholders" shall mean as of any particular time all holders of record of outstanding Shares at such time. "Shares" shall mean the equal proportionate transferable units of interest into which the beneficial interest in any Series of the Trust shall be divided from time to time and includes fractions of Shares as well as whole shares. All references to Shares shall be deemed to be Shares of any or all Series as the context may require. "Trustees" shall mean the signatories to this Declaration of Trust, so long as they shall continue in office in accordance with the terms hereof, and all other persons who at the time in question have been duly elected or appointed and have qualified as trustees in accordance with the provisions hereof and are then in office, and reference in this Declaration of Trust to a Trustee or Trustees shall refer to such person or persons in their capacity as Trustees hereunder. "Trust Property" shall mean as of any particular time any and all property, real or personal, tangible or intangible, which at such time is owned or held by or for the account of the Trust, any Series thereof or the Trustees. The "1940 Act" refers to the Investment Company Act of 1940 and the regulations promulgated thereunder, as amended from time to time. ARTICLE II Trustees 2.1. Number and Qualification. The number of Trustees shall be fixed from time to time by written instrument signed by a majority of the Trustees then in office, provided, however, that the number of Trustees shall in no event be less than three or more than fifteen. Any vacancy created by an increase in Trustees may, to the extent permitted by the 1940 Act, be filled by the appointment of an individual having the qualifications described in this Article made by a written instrument signed by a majority of the Trustees then in office. Any such appointment shall not become effective, however, until the individual named in the written instrument of appointment shall have accepted in writing such appointment and agreed in writing to be bound by the terms of this Declaration. No reduction in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his term. Whenever a vacancy in the number of Trustees shall occur, until such vacancy is filled as provided in Section 2.4 hereof, the Trustees in office, regardless of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration. A Trustee shall be an individual at least 21 years of age who is not under legal disability. Trustees need not own Shares. 2.2. Term of Office. Each Trustee shall (except in the event of resignations or removals or vacancies pursuant to Section 2.3 or 2.4 hereof) hold office until his successor has been elected and is qualified to serve as Trustee. 2.3. Resignation and Removal. Any trustee may resign his trust (without need for prior or subsequent accounting) by an instrument in writing signed by him and delivered or mailed to the President or the Secretary and such resignation shall be effective upon such delivery, or at a later date according to the terms of the instrument. Any of the Trustees may be removed (provided the aggregate number of Trustees after such removal shall not be less than the number required by Section 2.1 hereof) with cause, by the action of two-thirds of the remaining Trustees. Any Trustee may be removed, with or without cause, at any special meeting of the Shareholders by a vote of two-thirds of the outstanding Shares. Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver such documents as the remaining Trustees shall require for the purpose of conveying to the successor Trustee or the remaining Trustees any Trust Property held in the name of the resigning or removed Trustee. Upon the incapacity or death of any Trustee, his legal representative shall execute the deliver on his behalf such documents as the remaining Trustees shall require as provided in the preceding sentence. 2.4. Vacancies. The term of office of a Trustee shall terminate and a vacancy shall occur in the event of the death, resignation, bankruptcy, adjudicated incompetence or other incapacity to perform the duties of the office, or removal of such Trustee. No such vacancy shall operate to annul this Declaration or to revoke any existing agency created pursuant to the terms of this Declaration. In the case of a vacancy, the Shareholders, acting at any meeting of Shareholders held in accordance with Section 11.2 hereof, or, to the extent permitted by the 1940 Act, a majority of the Trustees continuing in office acting by written instrument or instruments, may fill such vacancy, and any Trustee so elected by the Trustees shall hold office as provided in this Declaration. 2.5. Meetings. Meetings of the Trustees shall be held from time to time upon the call of the chairman, the President, the Secretary or any two Trustees. Regular and special meetings o the Trustees may be held without call or notice at a time and place fixed by the By-laws or by resolution of the Trustees. Notice of any other meeting shall be mailed or otherwise given not less than 48 hours before the meeting but may be waived in writing by any Trustee either before or after such meeting. The attendance of a Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Trustee attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or conveyed. The Trustees may act with or without a meeting in accordance with the By-laws. A quorum for all meetings of the Trustees shall be a majority of the Trustees. Unless provided otherwise in this Declaration of Trust, any action of the Trustees may be taken at a meeting by vote of a majority of the Trustees present (a quorum being present) or without a meeting by written consents of a majority of the Trustees. Any committee of the Trustees, including an executive committee, if any, may act with or without a meeting in accordance with the By-laws. A quorum for all meetings of any such committee shall be a majority of the members thereof. Unless provided otherwise in this Declaration, any action of any such committee may be taken at a meeting by vote of a majority of the members present (a quorum being present) or without a meeting by written consent of a majority of the members. With respect to actions of the Trustees and any committee of the Trustees, Trustees who are Interested Persons of the Trust within the meaning of Section 1.2 hereof or otherwise interested in any action to be taken may be counted for quorum purposes under this Section and shall be entitled to vote to the extent permitted by the 1940 Act. To the extent permitted by the 1940 Act, all or any one or more Trustees may participate in a meeting of the Trustees or any committee thereof by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to such communications systems shall constitute presence in person at such meeting. 2.6. Officers. The Trustees shall annually elect a Chairman, President, Secretary and Treasurer. The Trustees may elect or appoint or request the Chairman or President to appoint such other officers or agents with such powers as the Trustees may deem to be advisable. The Chairman and the President shall be and any other officer may, but need not, be a Trustee. 2.7. By-Laws. The Trustees may adopt and from time to time amend or repeal the By-Laws for the conduct of the business of the Trust. ARTICLE III Powers of Trustees 3.1. General. The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust or any Series thereof to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right and with such powers of delegation as may be permitted by this Declaration. The Trustees may perform such acts as they determine from time to time, in their sole discretion, are proper for conducting the business of the Trust or any Series thereof. The enumeration of any specific power herein shall not be construed as limiting the aforesaid power. Such powers of the Trustees may be exercised without order of or resort to any court. 3.2. Investments. The Trustees shall have power, subject to the Fundamental Policies, to: (a) conduct, operate and carry on the business of an investment company; (b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or otherwise deal in or dispose of negotiable or non-negotiable instruments, obligations, evidences of indebtedness, certificates of deposit or indebtedness, commercial paper, repurchase agreements, reverse repurchase agreements and other securities, including, without limitation, those issued, guaranteed or sponsored by any state, territory or possession of the United States and the District of Columbia and their political sub-divisions, agencies and instrumentalities, or by the United States Government or its agencies or instrumentalities, or international instrumentalities, or by any bank, savings institution, corporation or other business entity organized under the laws of the United States and, to the extent provided in the Prospectus and not prohibited by the Fundamental Policies, organized under foreign laws; and to exercise any and all rights, powers and privileges of ownership ro interest in respect of any and all such investments of every kind and description, including, without limitation, the right to consent and otherwise act with firms, associations or corporations to exercise any of said instruments; and the Trustees shall be deemed to have the foregoing powers with respect to any additional securities in which any Series of the trust may invest should the investment policies set forth in the Prospectus or the Fundamental Policies be amended from time to time. The Trustees shall not be limited to investing in obligations maturing before the possible termination of the Trust or any Series, nor shall the trustees be limited by any law limiting the investments which may be made by fiduciaries. 3.3. Legal Title. Legal title to all the Trust Property shall be vested in the Trustees as joint tenants except that the Trustees shall have power to cause legal title to any Trust Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust or any Series thereof, or in the name of any other Person as nominee, on such terms as the Trustees may determine, provided that the interest of the Trust or any Series thereof is appropriately protected. Any Trustees holding title to Trust Property shall be entitled to the benefits provided by the provisions for limitation of liability contained in this Declaration, including without limitation the provisions of Section 5.1 hereof. The right, title and interest of the Trustees in the Trust Property shall vest automatically in each person who may hereafter become a Trustee upon his due election and qualification. Upon the resignation, removal or death of a Trustee he shall automatically cease to have any right, title or interest in any of the Trust Property, and the right, title and interest of such Trustee in the Trust Property shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. 3.4. Issuance and Repurchase of Securities. The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in, Shares, including shares in fractional denominations, and, subject to the more detailed provisions set forth in Articles VIII and IX, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares, any funds or property of the applicable Series of the Trust whether capital or surplus or otherwise, to the full extent now or hereafter permitted by the laws of the Commonwealth of Massachusetts governing business corporations. 3.5. Borrow Money. Subject to the Fundamental Policies, the Trustees shall have power to borrow money or otherwise obtain credit and to secure the same by mortgaging, pledging or otherwise subjecting as security the assets of the Trust or any Series thereof, including the lending of portfolio securities, and to endorse, guarantee, or undertake the performance of any obligation, contract or engagement of any other person, firm, association or corporation. 3.6. Delegation; Committees. The Trustees shall have power, consistent with their continuing exclusive authority over the management of the Trust and the Trust Property, to delegate from time to time to such of their number or to officers, employees or agents of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Trustees or otherwise as the Trustees may deem expedient, and as may be permitted by the 1940 Act. 3.7. Collection and Payment. The Trustees shall have power to collect all property due to the Trust or any Series thereof; to pay all claims, including taxes, against the Trust Property; to prosecute, defend, compromise or abandon any claims, relating to the Trust Property; to foreclose any security interest securing any obligations, by virtue of which any property is owed to the Trust or any Series thereof; and to enter into releases, agreements and other instruments. 3.8. Expenses. The Trustees shall have power to incur and pay any expenses which in the opinion of the Trustees are necessary or incidental to carry out any of the purposes of this Declaration of Trust, and to pay reasonable compensation from the funds of the Trust to themselves as Trustees. The Trustees shall fix the compensation of all officers, employees and Trustees. The Trustees may pay themselves such compensation or special services, including legal, underwriting, syndicating and brokerage services, as they in good faith may deem reasonable and reimbursement for expenses reasonably incurred by themselves on behalf of the Trust. 3.9. Miscellaneous Powers. The Trustees shall have the power, without limitation, to: (a) employ or contract with such Persons as the Trustees may deem desirable for the transaction of the business of the Trust or any Series thereof; (b) enter into joint ventures, partnerships and any other combinations or associations; (c) purchase, and pay for out of Trust Property, insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment adviser, distributors, selected dealers or independent contractors of the Trust or any Series thereof against all claims arising by reason of holding any such position or by reason of any action taken or omitted by any such Person in such capacity, whether or not constituting negligence, and whether or not the Trust would have the power to indemnify such Person against such liability; (d) establish pension, profit-sharing, share purchase, and other retirement, incentive and benefit plans for any Trustees, officers, employees and agents of the Trust; (e) make donations, irrespective of benefit to the Trust, for charitable, religious, educational, scientific, civic or similar purposes; (f) to the extent permitted by law, indemnify any Person with whom the Trust or any Series thereof has dealings, including any advisor, administrator, manager, distributor and selected dealers with respect to the Trust or any Series of the trust, to such extent as the Trustees shall determine; (g) guarantee indebtedness or contractual obligations of others; (h) determine and change the fiscal year of the Trust and the method in which its accounts shall be kept; and (i) adopt a seal for the Trust but the absence of such seal shall not impair the validity of any instrument executed on behalf of the Trust. 3.10.Further Powers. The Trustees shall have power to conduct the business of the Trust or any Series thereof and carry on its operations in any and all of its branches and maintain offices both within and without the Commonwealth of Massachusetts, in any and all states of the United States of America, in the District of Columbia, and in any and all commonwealths, territories, dependencies, colonies, possessions, agencies or instrumentalities of the United States of America and of foreign governments, and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust or any Series thereof although such things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust or any Series thereof made by the Trustees in good faith shall be conclusive. In construing, the provisions of this Declaration, the presumption shall be in favor of a grant of power to the Trustees. The Trustees will not be required to obtain any court order to deal with the Trust Property. ARTICLE IV Advisory, Management and Distribution Arrangements 4.1. Advisory and Management Arrangements. Subject to a Majority Shareholder Vote of the Trust, as required by the 1940 Act, the Trustees may in their discretion from time to time enter into advisory or management contracts whereby the other parties to such contracts shall undertake to furnish the Trustees advisory and management services with respect to one or more Series as the Trustees shall from time to time consider desirable and all upon such terms and conditions as the Trustees may in their discretion determine. Notwithstanding any provisions of this Declaration of Trust, the Trustees may authorize any advisor or manager to the Trustees (subject to such general or specific instructions as the Trustees may from time to time adopt) to effect purchases, sales, loans or exchanges of portfolio securities of any Series of the Trust on behalf of the Trustees or may authorize any officer, employee or Trustee to effect such purchases, sales, loans or exchanges pursuant to recommendations of any such advisor, administrator or manager, and in each such case such sales, loans and exchanges shall be deemed to have been authorized by all of the Trustees. 4.2. Distribution Arrangements. The Trustees may in their discretion from time to time enter into one or more contracts, providing for the sale of the Shares of the Trust or any Series of the Trust whereby the Trust may either agree to sell the Shares to the other party to the contract or appoint such other party its sales agent for such Shares. In either case, the contract shall be on such terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Article IV or the By-Laws; and such contract may also provide for the repurchase or sale of Shares by such other party as principal or as agent of the Trust and may provide that such other party may enter into selected dealer agreements with registered securities dealers to further the purpose of the distribution or repurchase of the Shares. 4.3. Parties to Contract. Any contract of the character described in Section 4.1 or 4.2 of this Article IV or in Article VII hereof may be entered into with any corporation, firm, trust or association, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract, and no such contract shall be invalidated or rendered voidable by reason of the existence of any such relationship, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or accountable for any profit realized directly or indirectly therefrom, provided that the contract when entered into was reasonable and fair and not inconsistent with the provisions of this Article IV or the By-Laws. The same person (including a firm, corporation, trust, or association) may be the other party to contracts entered into pursuant to Sections 4.1 and 4.2 above or Article VII, and any individual may be financially interested or otherwise affiliated with persons who are parties to any or all of the contracts mentioned in this Section 4.3. 4.4. Provisions and Amendments. Any contract entered into pursuant to Section 4.1 or 4.2 of this Article IV shall be consistent with and subject to the requirements of Section 15 of the 1940 Act with respect to its continuance in effect, its termination, and the method of authorization and approval of such contract or renewal thereof, and any amendment. ARTICLE V Limitations of Liability of Shareholders Trustees and Others 5.1. No Personal Liability of Shareholders, Trustees, etc. No Shareholder shall be subject to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust or any Series thereof. No Trustee, officer, employee or agent of the Trust shall be subject to any personal liability whatsoever to any Person, other than the Trust or its Shareholders to the extent provided in Section 5.2, in connection with Trust Property or the affairs of the Trust or any Series thereof, save only that arising from his bad faith, willful misfeasance, gross negligence or reckless disregard of his duty to such Person; and all such Persons shall look solely to the Trust Property for satisfaction of claims of any nature arising in connection with the affairs of the Trust or any Series thereof. If any Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is made a party to any suit or proceeding to enforce any such liability, he shall not on account thereof, be held to any personal liability. The Trust shall indemnify and hold each Shareholder harmless from and against all claims and liabilities, to which such Shareholder may become subject by reason of a claim or liability incurred by the Trust, and shall reimburse such Shareholder for all legal and other expenses reasonably incurred by him in connection with any such claim or liability. The indemnification and reimbursement required by the preceding sentence shall be made only out of the assets of the one or more Series of which the Shareholder who is entitled to indemnification or reimbursement was a Shareholder at the time the act or event occurred which gave use to the claim against or liability of said Shareholder. The rights accruing to a Shareholder under this Section 5.1 shall not exclude any other right to which such Shareholder may be lawfully entitled, nor shall anything herein contained restrict the right of the Trust to indemnify or reimburse a Shareholder in any appropriate situation even though not specifically provided herein. 5.2. Non-Liability of Trustees, etc. No Trustees, officer, employee or agent of the Trust shall be liable to the trust, any Series, its Shareholders, or to any Shareholder, Trustee, officer, employee, or agent thereof for any action or failure to act (including without limitation the failure to compel in any way any former or acting Trustee to redress any breach of trust) except for his own bad faith, willful misfeasance, gross negligence or reckless disregard of his duties. 5.3. Mandatory Indemnification. (a) Subject to the exceptions and limitations contained in paragraph (b) below: (i) every person who is, or has been, a Trustee or officer of the Trust shall be indemnified by the Trust to the fullest extent permitted by law against all liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suite or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Trustee or officer and against amounts paid or incurred by him in the settlement thereof; (ii) the words "claim," "action," "suit," or "proceeding" shall apply to all claims, actions, suits or proceedings (civil, criminal, administrative or other (including arbitration and appeals), actual or threatened; and the words "liability" and "expenses" shall include, without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities. (b) No indemnification shall be provided hereunder to a Trustee or officer: (i) against any liability to the Trust, a Series thereof, or the Shareholders by reason of a final adjudication by a court or other body before which a proceeding was brought that he engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office; (ii) with respect to any matter as to which he shall have been finally adjudicated not to have acted in good faith in the reasonable belief that his action was in the best interest of the trust; (iii)in the event of a settlement or other disposition not involving a final adjudication as provided in paragraph (b)(i) or (b)(ii) resulting in a payment by a Trustee or officer, unless there has been a determination that such Trustee or officer did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office: (A) by the court or other body approving the settlement or other disposition; or (B) based upon a review of readily available facts (as opposed to a full trial-type inquiry_ by (1) vote of a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter) or (2) written opinion of independent legal counsel. (c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not affect any other rights to which any Trustee or officer may now or hereafter be entitled, shall continue as to a person who has ceased to be such Trustee or officer and shall inure to the benefit of the heirs, executors, administrators and assigns of such a person. Nothing contained herein shall affect any rights to indemnification to which personnel of the trust other than Trustees and officers may be entitled by contract or otherwise under law. (d) Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding of the character described in paragraph (a) of this Section 5.3 may be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he is not entitled to indemnification under this Section 5.3 provided that either: (i) such undertaking is secured by a surety bond or some other appropriate security provided by the recipient, or the Trust shall be insured against losses arising out of any such advances; or (ii) a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees act on the matter) or an independent legal counsel in a written opinion shall determine, based upon a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the recipient ultimately will be found entitled to indemnification. As used in this Section 5.3, a "Disinterested Trustee" is one who is not (i) an "Interested Person" of the Trust (including anyone who has been exempted from being an "Interested Person" by any rule, regulation or order of the Commission), or (ii) involved in the claim, action, suit or proceeding. 5.4. No Bond Required of Trustees. No Trustee shall, as such, be obligated to give any bond or security or other security for the performance of any of his duties hereunder. 5.5. No Duty of Investigation; Notice in Trust Instruments, etc. No purchaser, lender, transfer agent or other Person dealing with the Trustees or any officer, employee or agent of the Trust shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent. Every obligation, contract, undertaking, instrument, certificate, Share, other security of the Trust or any Series, and every other act or thing whatsoever executed in connection with the Trust or any Series shall be conclusively taken to have been executed or done by the executors thereof only in their capacity as Trustees under this Declaration of Trust or in their capacity as officer, employees or agents of the Trust. Every written obligation, contract, undertaking, instrument, certificate, Share, other security of the Trust or any Series made or issued by the Trustees or by any officers, employees or agents of the Trust, in their capacity as such may contain an appropriate recital to the effect that the Shareholders, Trustees, officers, employees and agents of the Trust shall not personally be bound by or liable thereunder, nor shall resort be had to their private property for the satisfaction of any obligation or claim thereunder, and appropriate references shall be made therein to the Declaration of Trust, and may contain any further recital which they may deem appropriate, but the omission of such recital shall not operate to impose personal liability on any of the Trustees, Shareholders, officers, employees or agents of the Trust. The Trustees may maintain insurance for the protection of the Trust Property, its Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the Trustees in their sole judgment shall deem advisable. 5.6. Reliance on Experts, etc. Each Trustee and officer or employee of the Trust shall, in the performance of his duties, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust, upon an opinion of counsel, or upon reports made to the Trust by any of its officers or employees or by any advisor, administrator, manager, distributor, selected dealer, accountant, appraiser or other expert or consultant selected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or expert may also be a Trustee. ARTICLE VI Shares of Beneficial Interest 6.1. Beneficial Interest. The interest of the beneficiaries hereunder shall be divided into transferable Shares of beneficial interest. The number of such Shares of beneficial interest authorized hereunder is unlimited. All Shares issued hereunder including, without limitation, Shares issued in connection with a dividend in Shares or a split of Shares, shall be fully paid and nonassessable. 6.2. Series Designation. The Trustees, in their discretion from time to time, may authorize the division of Shares into two or more Series, each Series relating to a separate portfolio of investments (each such portfolio being referred to herein as a "Fund"). The different Series shall be established and designated and the variations in the relative rights and preferences as between the different Series shall be fixed and determined, by the Trustees; provided, that all Shares shall be identical except that there may be variations between different Series as to purchase price, determination of net asset value, the price, terms and manner of redemption, special and relative rights as to dividends and on liquidation, conversion rights, and conditions under which the several Series shall have separate voting rights. All referenced to Shares in this Declaration shall be deemed to be Shares of any or all Series as the context may require. 6.2.1 Initial Series. Initially, the Trust shall be divided into the following four Series: (a) INVESCO Institutional Equity Series. Substantially all of the INVESCO Institutional Equity Series (the "Equity Fund") will be invested in common stocks and, to a lesser extent, securities convertible into common stocks. Such securities will, generally, be issued by companies which are listed on a national securities exchange such as the New York Stock Exchange and which usually pay regular dividends. During normal market conditions, at least 65% of the Equity Fund's investments will consist of equity securities. Subject to its Fundamental Policies, the investment standards of the Equity Fund will be determined by the Trustees or any investment adviser to the Equity Fund appointed and given such authority by the Trustees pursuant to the provisions of Article IV hereof. (b) INVESCO Institutional International Series. The INVESCO Institutional International Series (the "International Fund") will have under normal circumstances at least 65% of the value of its assets invested in foreign securities. The term "foreign securities" refers to securities of issuers, wherever organized, which in the judgment of the Trustees or any investment adviser to the International Fund appointed by the Trustees, have their principal business activities outside of the United States. Subject to its Fundamental Policies, the International Fund's investment standards will be determined, and all investments of the International Fund will be at the sole discretion of the Trustees or any investment adviser to the International Fund appointed and given such authority by the Trustees pursuant to the provisions of Article IV hereof. Accordingly, the International Fund from time to time may be invested in domestic securities. (c) INVESCO Institutional Flex Fund. The INVESCO Institutional Flex Fund (the "Flex Fund") will invest in a combination of equity securities, similar to those which would be acquired by the Equity Fund and fixed and variable income securities, similar to those which would be acquired by the INVESCO Institutional Income Fund (described below). Subject to its Fundamental Policies, the Flex Fund's investment standards will be established and all investments of the Flex Fund will be made at the discretion of the Trustees or any investment adviser to the Flex Fund appointed and given such authority by the Trustees pursuant to the provisions of Article IV hereof. (d) INVESCO Institutional Income Fund. The INVESCO Institutional Income Fund (the "Income Fund") will invest primarily in fixed and variable income corporate obligations. The Income Fund will invest only in those corporate obligations which in the opinion of the Trustees, or the opinion of any investment adviser to the Income Fund appointed by the Trustees, have the investment characteristics described by Moody's in rating corporate obligations within its four highest ratings of Aaa, Aa, A and Baa and by Standard & Poor's in rating corporate obligations within its four highest ratings of AAA, AA, A and BBB. Investments in government obligations will include direct obligations of the U.S. government, such as U.S. Treasury bills, notes and bonds, and notes, bonds and other obligations of U.S. government authorities, agencies and instrumentalities, such as the Federal National Mortgage Association, Federal Home Loan Bank, Federal Financing Bank and Federal Farm Credit Bank. The Trust does not require that the Income Fund's investments in corporate obligations actually be rated by Moody's or Standard & Poor's, and it may acquire obligations which have been rated lower than Baa by Moody's or lower than BBB by Standard & Poor's if in the opinion of the Trustees or any investment adviser to the Income fund appointed by the trustees, such obligations are of a quality at least equal to a rating of Baa by Moody's or BBB by Standard & Poor's. Notwithstanding anything to the contrary herein, the Income Fund may be otherwise invested if in the discretion of the Trustees or any investment adviser to the Income Fund appointed by the Trustees, such other investments are prudent because of market conditions and other factors which the Trustees or such investment adviser deem to be significant. 6.2.2 Series Operation. The following provisions shall be applicable to each Series provided for herein and any additional Series that is added to the Trust, as determined by the Trustees, from time to time: (a) The number of Shares of each Series that may be issued shall be unlimited. The Trustees may classify or reclassify any unissued Shares or any Shares previously issued and reacquired from any Series into one or more Series that may be established and designated from time to time. The Trustees may hold as treasury Shares (of the same or some other Series), reissue for such consideration and on such terms as they may determine, or cancel any Shares of any Series reacquired by the Trust at their discretion from time to time. (b) The power of the Trustees to invest and reinvest the Trust Property of each Series that may be established shall be governed by Section 3.2 of this Declaration. (c) All consideration received by the Trust for the issue or sale of Shares of a particular Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funs or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to that Series for all purposes, subject only to the rights of creditors, and shall be so recorded upon the books of account of the Trust. In the event that there are any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular Series, the Trustees shall allocate them among any one or more of the Series established and designated from time to time in such manner and on such basis as they, in their sole discretion, deem fair and equitable. Each such allocation by the Trustees shall be conclusive and binding upon the Shareholders of all Series for all purposes. (d) The assets belonging to each particular Series shall be charged with the liabilities of the Trust in respect of that Series and all expenses, costs, charges and reserves attributable to that Series, and any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as belonging to any particular Series shall be allocated and charged by the Trustees to and among any one or more of the Series established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the holders of all Series for all purposes. The Trustees shall have full discretion, to the extent not inconsistent with the 1940 Act, to determine which items shall be treated as income and which items as capital, and each such determination and allocation shall be conclusive and binding upon the Shareholders. The assets of a particular Series of the Trust shall, under no circumstances, be charged with liabilities attributable to any other Series of the Trust. All persons extending credit to, or contracting with or having any claim against a particular Series of the Trust shall look only to the assets of that particular Series for payment of such credit, contract or claim. No Shareholder or former Shareholder of any Series shall have any claim on or right to any assets allocated or belonging to any other Series. (e) Each Share of a Series of the Trust shall represent a beneficial interest in the net assets of such Series. Each holder of Shares of a Series shall be entitled to receive his pro rata share of distributions of income and capital gains made with respect to such Series. Upon redemption of his Shares or indemnification for liabilities incurred by reason of his being or having been a Shareholder of a Series, such shareholder shall be paid solely out of the funds and property of such Series of the Trust. Upon liquidation or termination of a Series of the Trust, Shareholders of such Series shall be entitled to receive a pro rata share of the net assets of such Series. A Shareholder of a particular Series of the Trust shall not be entitled to participate in a derivative or class action on behalf of any other Series or the Shareholders of any other Series of the Trust. (f) The Power of the Trustees to pay dividends and make distributions with respect to any one or more Series shall be governed by Article X of this Trust. Dividends and distributions on Shares of a particular Series may be paid with such frequency as the Trustees may determine, which may be daily or otherwise, pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine from time to time, to the holders of Shares of that Series, from such of the income and capital gains, accrued or realized, from the assets belonging to that Series, as the Trustees may determine, after providing for actual and accrued liabilities belonging to that Series. All dividends and distributions on Shares of a particular Series shall be distributed pro rata to the holders of that Series in proportion to the number of Shares of that Series held by such holders at the date and time of record established for the payment of such dividends or distributions. (g) Notwithstanding any other provision hereof, on any matter submitted to a vote of Shareholders of the Trust, Shareholders of each Series shall vote separately as a class on any matter to the extent required by, and any matter shall be deemed to have been effectively acted upon with respect to any Series as provided in, Rule 18f-2, as from time to time in effect, under the 1940 Act, or any successor rule. The establishment and designation of any Series of Shares other than those herein designated shall be effective upon the execution by a majority of the then Trustees of an instrument setting forth the establishment and designation of such Series. Such instrument shall also set forth any rights and preferences of such Series which are in addition to the rights and preferences of Shares set forth in this Declaration. At any time that there are no Shares outstanding of any particular Series previously established and designated, the Trustees may be an instrument executed by a majority of their number abolish that Series and the establishment and designation thereof. Each instrument referred to in this paragraph shall have the status of an amendment to this Declaration. 6.3. Rights of Shareholders. Every Shareholder, by virtue of having become a Shareholder, shall be held to have expressly assented and agreed to the terms hereof and to have become a party hereto. The ownership of the Trust Property of every description and the right to conduct any business hereinbefore described are vested exclusively in the Trustees, and the Shareholders shall have no interest therein other than the beneficial interest conferred by their Shares with respect to a particular Series, and they shall have no right to call for any partition or division of any property, profits, rights or interests of the Trust nor can they be called upon to share or assume any losses of the Trust or suffer an assessment of any kind by virtue of their ownership of Shares. The Shares shall be personal property giving only the rights in this Declaration specifically set forth. The Shares shall not entitle the holder to preference, preemptive, appraisal, conversion or exchange rights (except for rights of appraisal specified in Section 12.4). 6.4. Trust Only. It is the intention of the Trustees to create only the relationship of Trustee and beneficiary between the Trustees and each Shareholder from time to time. It is not the intention of the Trustees to create a general partnership, limited partnership, joint stock association, corporation, bailment or any form of legal relationship other than a trust. Nothing in this Declaration of Trust shall be construed to make the Shareholders, either by themselves or with the trustees, partners or members of a joint stock association. 6.5. Issuance of Shares. The Trustees in their discretion may from time to time, without vote of the Shareholders, issue Shares with respect to any Series that may have been established pursuant to Section 6.2, 6.2.1, or 6.2.2 in addition to the then issued and outstanding Shares and Shares held in the treasury, to such party or parties and for such amount and type of consideration, including cash or property, at such time or times (including, without limitation, each business day in accordance with the maintenance of a net asset value per share as set forth in Section 9.1 hereof), and on such terms as the Trustees may deem best, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with the assumption of, liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares. The Trustees may from time to time divide or combine the Shares of any Series into a greater or lesser number without thereby changing the proportionate beneficial interest in such Series of the Trust. Reductions in the number of outstanding Shares may be made pursuant to the net asset value per share formula set forth in Section 9.2. Contributions to the Trust may be accepted for, and Shares shall be redeemed as, whole shares and/or fractions of a Share or multiples thereof. 6.6. Register of Shares. A register shall be kept by the Trust or any transfer agent duly appointed by the Trustees under the direction of the Trustees which shall contain the names and addresses of the Shareholders and the number of Shares (with respect to each Series that may have been established) held by them respectively and a record of all transfers thereof. Separate registers shall be established and maintained for each Series of the Trust. Each such register shall be conclusive as to who are the holders of the Shares of the applicable Series and who shall be entitled to receive dividends or distributions or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive payment of any dividend or distribution, nor to have notice given to him as herein provided, until he has given his address to a transfer agent or such other officer or agent of the Trustees as shall keep the register for entry thereon. It is not contemplated that certificates will be issued for the Shares; however, the Trustees, in their discretion, may authorize the issuance of share certificates and promulgate appropriate rules and regulations as to their use. 6.7. Transfer Agent and Registrar. The Trustees shall have power to employ a transfer agent or transfer agents, and a registrar or registrars, with respect to the Shares of the various Series. The transfer agent or transfer agents may keep on the applicable register and record therein the original issues and transfers, if any, of the said Shares of the applicable Series. Any such transfer agent and registrars shall perform the duties usually performed by transfer agents and registrars of certificates of stock in a corporation, except as modified by the Trustees. 6.8. Transfer of Shares. Shares shall be transferable on the records of the trust only by the record holder thereof or by his agent thereto duly authorized in writing, upon delivery to the Trustees or a transfer agent of the Trust of a duly executed instrument of transfer, together with such evidence of the genuineness of each such execution and authorization and of other matters as may reasonably be required. Upon such delivery the transfer shall be recorded on the applicable register of the Trust. Until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereof and neither the Trustees nor any transfer agent or registrar nor any officer, employee or agent of the Trust shall be affected by any notice of the proposed transfer. Any person becoming entitled to any Shares in consequence of the death, bankruptcy, or incompetence of any Shareholder, or otherwise by operation of law, shall be recorded on the applicable register of Shares as the holder of such Shares upon production of the proper evidence thereof to the Trustees or a transfer agent of the Trust, but until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereof and neither the Trustees nor any transfer agent or registrar nor any officer or agent of the Trust shall be affected by any notice of such death, bankruptcy or incompetence, or other operation of law. 6.9. Notices. Any and all notices to which any Shareholder hereunder may be entitled and any and all communications shall be deemed duly served or given if mailed, postage prepaid, addressed to any Shareholder of record at his last known address as recorded on the applicable register of the Trust. Annual reports and proxy statements need not be sent to a Shareholder if (i) an annual report and a proxy statement for two consecutive annual meetings or (ii) all, and at least two, checks (if sent by first class mail) in payment of dividends on interest or shares during a twelve (12) month period have been mailed to such Shareholder's address and have been returned undelivered. However, delivery of such annual reports and proxy statements shall resume once the Shareholder's current address is determined. ARTICLE VII Custodians 7.1. Appointment and Duties. The Trustees shall at all times employ a custodian or custodians, meeting the qualifications for custodians for portfolio securities of investment companies contained in the 1940 Act, as custodian with respect to each Series of the Trust. It is contemplated that separate custodians may be employed for the different Series of the Trust. Any custodian, acting with respect to one or more Series, shall have authority as agent of the Trust or the Series with respect to which it is acting, but subject to such restrictions, limitations and other requirements, if any, as may be contained in the ByLaws of the trust and the 1940 Act: (1) to hold the securities owned by the Trust or the Series and deliver the same upon written order; (2) to receive and receipt for any moneys due to the Trust or the Series and deposit the same in its own banking department (if a bank) or elsewhere as the Trustees may direct; (3) to disburse such funds upon orders or vouchers; (4) if authorized by the Trustees, to keep the books and accounts of the Trust or the series and furnish clerical and accounting services; and (5) if authorized to do so by the Trustees, to compute the net income and net aset value of the Trust or the Series, all upon such basis of compensation as may be agreed upon between the Trustees and the custodian. If so directed by a Majority Shareholder Vote of the Series with respect to which the custodian is acting, the custodian shall deliver and pay over all property of such Series held by it as specified in such vote. The Trustees may also authorize each custodian to employ one or more sub-custodians from time to time to perform such of the acts and services of the custodian and upon such terms and conditions, as may be agreed upon between the custodian and such sub-custodian and approved by the Trustees, provided that in every case such sub-custodian shall meet the qualifications for custodians contained in the 1940 Act. 7.2. Central Certificate System. Subject to such rules, regulations and orders as the Commission may adopt, the Trustees may direct or permit the custodian to deposit all or any part of the securities owned by the Trust or the Series in a system for the central handling of securities established by a national securities exchange or a national securities association registered with the Commission under the Securities Exchange Act of 1934, as amended, or such other person as may be permitted by the Commission, or otherwise in accordance with the 1940 Act, pursuant to which system all securities of any particular class or series of any issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of such securities, provided that all such deposits shall be subject to withdrawal only upon the order of the Trust. ARTICLE VIII Redemption 8.1. Redemptions. All outstanding Shares of any Series of the Trust may be redeemed at the option of the holders thereof, upon and subject to the terms and conditions provided in this Article VIII. The Trust shall, upon application of any Shareholder or pursuant to authorization from any Shareholder of a particular Series, redeem from such Shareholder outstanding Shares of such Series for an amount per share determined by the application of a formula adopted for such purpose by the Trustees with respect to such Series (which formula shall be consistent with the 1940 Act); provided that (a) such amount per Share shall not exceed the cash equivalent of the proportionate interest of such Share in the assets of the Series of the Trust at the time of the redmepiton and (b) if so authorized by the Trustees, the Trust may, at any time and from time to time, charge fees for effecting such redemption, at such rates as the Trustees may establish, as and to the extent permitted under the 1940 Act, and may, at any time and from time to time, pursuant to such Act, suspend such right of redemption. The procedures for effecting redemption shall be as set forth in the Prospectus with respect to the applicable Series from time to time. 8.2. Redemption of Shares; Disclosure of Holding. If the Trustees shall, at any time and in good faith, be of the opinion that direct or indirect ownership of Shares or other securities of the Trust has or may become concentrated in any Person to an extent which would disqualify the Trust as a regulated investment company under the Internal Revenue Code, then the Trustees shall have the power to redeem from any such Person a number, or principal amount, of Shares or other securities of the Trust sufficient, in the opinion of the Trustees, to maintain or bring the direct or indirect ownership fo Shares or other securities of the Trust into conformity with the requirements for such qualification and (ii) to refuse to transfer or issue Shares or other securities of the Trust to any Person whose acquisition of the Shares or other securities of the Trust in question would in the opinion of the Trustees result in such disqualification. The redemption shall be effected at a redemption price determined in accordance with Section 8.1. The holders of Shares of other securities of the Trust shall upon demand disclose to the trustees in writing such information with respect to direct and indirect ownership of Shares or other securities of the Trust as the Trustees deem necessary to comply with the provisions of the Internal Revenue Code, or to comply with the requirements of applicable securities laws, any other authority, or any other applicable state or federal laws, rules or regulations. 8.3. Redemptions of Accounts of Less than $10,000. Due to the relatively high cost of maintaining investment accounts of less than $10,000, the Trustees shall have the power to redeem shares held in any account at a redemption price determined in accordance with Section 8.1 if at any time the total investment in such account does not have a value of at least $10,000; provided, however, that the Trustees may not exercise such power with respect to Shares of any Series if the Prospectus of such Series does not describe such power. In the event the Trustees determine to exercise their power to redeem Shares provided in this Section 8.3, shareholders shall be notified that the value of their account is less than $10,000 and allowed 60 days to make an additional investment before redemption is processed. ARTICLE IX Determination of Net Asset Value 9.1. Net Asset Value. The net asst value of each Share of each Series shall be computed on such days, in such manner and at such time or times as shall be determined by the Trustees from time to time, in accordance with the 1940 Act, with regard to each Series. Each day on which the net asset value of each Share of each Series is computed is referred to as a "Valuation Date." The net asset value per Share of each Series shall be determined by dividing the net asset value of such Series as of such time by the number of Shares then outstanding in such Series. 9.2. Calculation of Net Asset Value. The net asset value of each Series of the trust shall be an amount which reflects calculations made in good faith by or under the direction of the Trustees in accordance with Section 2(a)(41) of the 1940 Act and applicable rules and regulations thereunder, and except to the extent that they are in conflict with the above, in accordance with the following provisions on each Valuation Date: (a) A security which is reported on the NYSE Composite Transactions list shall be valued at the last sales price reported for such security on that list for such Valuation Date. (b) A security not reported on the NYSE Composite Transactions list but which is listed or admitted to trading on a natinoal stock exchange shall be valued at the last sales price on the exchagne on which the security is principally traded if sales are reported for the Valuation Date. If such a security is listed on two or more national stock exchanges, one of which is either the New York Stock Exchange or the American Stock Exchange, the prices or quotations on the New York or the American Stock Exchange, whichever is applicable, shall be used. If no sales are reported for such Valuation Date, the security shall be valued at the mean between the most recent bid price and asked price available on the applicable exchange for such security on such Valuation Date. (c) A security which is not listed on a national stock exchange but which is traded in the over-the-counter market shall be valued at the mean between the most recent bid and asked prices on the valuation Date (or on the next preceding date for which such prices are available if not available for the Valuation Date), but a security for which a valuation is obtained from the NASDAQ national market quotation system for securities (which may include subsystems for particular types of securities with unique trading characteristics) shall be valued at the last sales price indicated by said system on the Valuation Date (or on the next preceding date for which such prices are available if not available for the Valuation Date.) (d) Every other asset of each Series of the Trust shall be valued in good faith by or under the direction of the Trustees, determined either by reference (i) to values supplied by a generally accepted pricing or quotation service or by taking into consideration quotations furnished by one or more reputable sources, such as pricing or quotation services, securities dealers, brokers or investment bankers, or (ii) to values of comparable property, appraisals or such other information or circumstances as the Trustees shall consider relevant, unless otherwise required by law or this Declaration. (e) An investment purchased and awaiting payment against delivery shall be included for valuation purposes as a security held, and an account payable shall be set up to reflect the purchase price, including brokers' commissions and other expenses incurred in the purchase thereof but not disbursed as of the Valuation Date. (f) An investment sold but not delivered pending receipt of proceeds shall not be included for valuation purposes as a security sold, and an account receivable shall be set up to reflect the net sales price. (g) Brokers' commissions, taxes and other expenses which may be incurred in connection with the future purchase or sale of portfolio securities as a result of investments or redemptions of Shares of a Series occurring as of the Valuation Date shall not be considered in valuing the assets of such Series as of such Valuation Date. (h) Uninvested cash shall be valued at its face amount. (i) The value of any dividends, including stock dividends, or rights which may have been declared on securities in the portfolio but not received by a Series as of the Valuation Date shall be included as an asset of such Series if the security upon which such dividends or rights were declared is included and is valued ex-dividend or ex-rights. (j) Interest accrued on any interest-bearing security in the portfolio shall be included as an asset of the appropriate Series of the Trust if such accrued interest is not otherwise included in the valuation of the underlying security. Other accrued income shall also be included to the date of calculation. (k) All reserves, liabilities, expenses, taxes and other charges due or accrued which in the discretion of the Trustees are reasonably and properly chargeable to any Series of the Trust up to the date of calculation shall be deducted. An estimate of the fees chargeable by any investment adviser, custodian, distributor or others for their services as accrued to date shall be included as expenses. (l) Each redemption of Shares of a Series shall be reflected no later than in the calculation of net asset value as of the first Valuation Date following the Valuation Date as of which such redemption takes place, but no such redemption taking place as of the Valuation Date shall be taken into consideration in the calculation of the net asset value per share for such Valuation Date. ARTICLE X Dividends and Distributions 10.1. Dividends. The Trustees may from time to time declare and pay dividends with the amount, source and payment thereof to be within the discretion of the Trustees. 10.2. Distributions. It shall be the policy of the Trustees to distribute each year substantially all of the net income (including the excess, if any, of the net short-term capital gain over net long-term capital loss) of each Series of the Trust. 10.3. Distributions of Investment Income. Distributions from net investment income, if any, shall be made ratably among the Shareholders of any Series at least quarterly. The record date and date of payment shall be designated by the Trustees. If required by the law, all such distributions shall be accompanies by a written statement which adequately discloses the source or sources of such distribution. 10.4. Distributions of Capital Gain. Distributions of net long-term or short-term capital gains realized from the sale of securities of any Series in the Trust shall be made to Shareholders of such Series, ratably on their Shares, on an annual basis; provided that the Trust shall not distribute long-term capital gains more than once every twelve months, except as may be permitted by the 1940 Act. 10.5. Discretionary Distributions. The Trustees shall have the power, in their absolute discretion, to distribute for any year as ordinary dividends and as capital gains distributions, amounts sufficient to enable each Series of the Trust to qualify as a "regulated investment company" under the Internal Revenue Code and to avoid any liability for each Series for federal income tax in respect of that year. ARTICLE XI Shareholders 11.1. Voting Powers. The Shareholders shall have power to vote (i) for the removal of Trustees as provided in Section 2.3, (ii) with respect to any advisory or management contract as provided in Section 4.1, (iii) with respect to the amendment of this Declaration as provided in Section 12.3, and (iv) with respect to such additional matters relating to the Trust as may be required or authorized by the 1940 Act, the laws of the Commonwealth of Massachusetts or other applicable law or by this Declaration or by the By-Laws of the Trust. Any matter affecting a particular Series in any manner different from any other Series, including without limitation matters affecting the advisory or management arrangements or investment policies or restrictions of a Series shall not be deemed to have been effectively acted upon unless approved by the required vote of the Shareholders of such Series. Notwithstanding the foregoing, to the extent permitted by the 1940 Act, each Series shall not be required to vote separately on the selection of independent public accountants, the election of Trustees and any submission with respect to a contract with a principal underwriter or distributor. 11.2. Meetings of Shareholders. Special meetings of the Shareholders may be called at any time by a majority of the Trustees and shall be called by any Trustee upon written request of Shareholders of any Series holding in the aggregate not less than 10% of the outstanding Shares of such Series having voting rights, such request specifying the purpose or purposes for which such meeting is to be called. Any such meeting shall be held within or without the Commonwealth of Massachusetts on such day and at such time as the Trustees shall designate. The holders of a majority of outstanding Shares of each Series present in person or by proxy shall constitute a quorum for the transaction of any business, except as may otherwise be required by the 1940 Act, or other applicable law or by this Declaration or the By-Laws of the Trust. If a quorum is present at a meeting of a particular Series, the affirmative vote of a majority of the Shares of such Series represented at the meeting constitutes the action of the Shareholders holding Shares of such Series, unless the 1940 Act, or other applicable law, this Declaration or the By-Laws of the Trust requires a greater number of affirmative votes. 11.3. Notice of Meetings. Notice of all meetings of the Shareholders, stating the time, place and purposes of the meeting, shall be given by the Trustees by mail to each Shareholder at his registered address, mailed at least 10 days and not more than 60 days before the meeting. Only the business stated in the notice of the meeting shall be considered at such meeting. Any adjourned meeting may be held as adjourned without further notice. Notice of any meeting of Shareholders shall not be required to be given to any Shareholder who, in person or by proxy either before or after such meeting, shall waive such notice. Attendance of a Shareholder at a meeting, either in person or by proxy, shall of itself constitute waiver of notice and waiver of any and all objections to the place of the meeting, the time of the meeting, and the manner in which it has been called or convened, except when a Shareholder attends a meeting solely for the purpose of stating, at the beginning of the meeting, any such objection or objections to the transaction of business. 11.4. Record Date for Meetings. For the purpose of determining the Shareholders who are entitled to notice of and to vote at any meeting, or to participate in any distribution, or for the purpose of any other action, the Trustees may from time to time close the transfer books for such period, not exceeding 30 days, as the Trustees may determine, or without closing the transfer books the Trustees may fix a date not more than 60 days prior to the date of any meeting of Shareholders or other action as a record date for the determination of the Persons to be treated as Shareholders of record for such purposes, except for dividend payments which shall be governed by Article X hereof. 11.5. Proxies, etc. At a meeting of Shareholders, any holder of Shares entitled to vote may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Secretary, or with such other officer or agent of the Trust as the Secretary may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a resolution of a majority of the Trustees, proxies may be solicited in the name of one or more Trustees or one or more of the offices of the Trust. Only Shareholders of record shall be entitled to vote. Each full Share shall be entitled to one vote and fractional Shares shall be entitled to a vote of such fraction. When any Share is held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Share, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, no vote shall be counted in respect of their Share. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. If the holder of any such Share is a minor or a person of unsound mind, and subject to guardianship or to the legal control of any other person with regard to such Share, he may vote by his guardian or such other person appointed or having such control, and such vote may be given in person or by proxy. 11.6. Reports. The trustees shall cause to be prepared with respect to each Series at least annually a report of operations containing a balance sheet and statement of income and undistributed income of the applicable Series of the Trust prepared in conformity with generally accepted accounting principles and an opinion of an independent public accountant on such financial statements. It is contemplated that separate reports may be prepared for the various Series. Copies of such reports shall be mailed to all Shareholders of record of the applicable Series within the time required by the 1940 Act. The Trustees shall, in addition, furnish to the Shareholders such interim reports as may be required to be furnished to Shareholders by the 1940 Act. 11.7. Inspection of Records. The records of the trust shall be open to inspection by Shareholders to the same extent as is permitted shareholders of a Massachusetts business corporation. 11.8. Shareholder Action by Written Consent. Any action which may be taken by Shareholders may be taken without a meeting if a majority of Shareholders of each Series entitled to vote on the matter (or such larger proportion thereof as shall e required by any express provision of this Declaration) consent to the action in writing and the written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. ARTICLE XII Duration; Termination of Trust Amendment; Mergers, Etc. 12.1. Duration. The trust shall continue without limitation of time but subject to the provisions of Section 12.2 hereof. 12.2. Termination. (a) The Trust may be terminated by the affirmative vote of the holders of not less than two-thirds of the Shares of each Series of the Trust at any meeting of Shareholders or by an instrument in writing, without a meeting, signed by a majority of the Trustees and consented to be the holders of not less than two-thirds of such Shares of each Series. Any Series may be so terminated by vote or written consent of not less than two-thirds of the Shares of such Series. Upon the termination of the Trust or any Series, (i) Neither the Trust nor any terminated Series within the Trust shall carry on any business except for the purpose of winding up its affairs. (ii) The Trustees shall proceed to wind up the affairs of the Trust or such terminated Series and all of the powers of the Trustees under this Declaration shall continue until the affairs of the Trust or such Series shall have been wound up, including the power to fulfill or discharge the contracts of the Trust or such Series, collet its assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining Trust Property to one or more persons at public or private sale for consideration which may consist in whole or in part of cash, securities or other property of any kind, discharge or pay its liabilities, and do all other acts appropriate to liquidate its business; provided that any sale, conveyance, assignment, exchange, transfer or other disposition of all or substantially all the Trust Property shall require approval of the principal terms of the transaction and the nature and amount of the consideration by vote or consent of the holders of a majority of the Shares entitled to vote. (iii) After paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agreements, as they deem necessary for their protection, the Trustees may distribute the remaining Trust Property of any terminated Series, in cash or in kind or partly each, among the Shareholders of such Series according to their respective rights. (b) After termination of the Trust or any Series and distribution to the Shareholders as herein provided, a majority of the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination. Upon termination of the Trust, the Trustees shall thereupon be discharged from all further liabilities and duties hereunder, and the rights and interests of all Shareholders shall thereupon cease. Upon termination of any Series, the Trustees shall thereunder by discharged from all further liabilities and duties with respect to such Series, and the rights and interest of all Shareholders of such Series shall thereupon cease. 12.3. Amendment Procedure. (a) This Declaration may be amended by the affirmative vote of the holders of not less than a majority of the Shares at any meeting of Shareholders or by an instrument in writing, without a meeting, signed by a majority of the Trustees and consented to by the holders of not less than a majority of the Shares of the Trust. The Shareholders of each Series shall have the right to vote separately on amendments to this Declaration to the extent provided by Section 11.1. The Trustees may also amend this Declaration without the vote or consent of Shareholders pursuant to Sections 1.1 and 6.2.2(g) or if they deem it necessary to conform this Declaration to the requirements of applicable federal or state laws or regulations or the requirements of the regulated investment company provisions of the Internal Revenue Code, but the Trustees shall not be liable for failing to do so. Amendments shall be effective upon the taking of action as provided in this Section 12.3(a). (b) No amendment may be made under Section 12.3(a) above which would change any rights with respect to any Shares of the Trust by reducing the amount payable thereon upon liquidation of the Trust or by diminishing or eliminating any voting rights pertaining thereto, except with the vote or consent of the holders of two-thirds of the Shares of each Series. Nothing contained in this Declaration shall permit the amendment of this Declaration to impair the exemption from personal liability of the Shareholders, Trustees, officers, employees and agents of the Trust or to permit assessments upon Shareholders. (c) A certification in recordable form signed by a majority of the Trustees setting froth an amendment and reciting that it was duly adopted by the Shareholders or by the Trustees as aforesaid or a copy of the Declaration, as amended, in recordable form, and executed by a majority of the Trustees, shall be conclusive evidence of such amendment when lodged among the records of the Trust. Notwithstanding any other provision hereof, until such time as a Registration Statement under the Securities Act of 1933, as amended, covering the first public offering of Shares of the Trust shall have become effective, this Declaration of Trust may be terminated or amended in any respect by the affirmative vote of a majority of the Trustees or by an instrument signed by a majority of the Trustees. 12.4. Merger, Consolidation and Sale of Assets. The Trust may merge or consolidate with any other corporation, association, trust or other organization or may sell, lease or exchange all or substantially all of the Trust Property, including its good will, upon such terms and conditions and for such consideration when and as authorized at any meeting of Shareholders called for that purpose by the affirmative vote of the holders of not less than two-thirds of the Shares of each Series, or by an instrument or instruments in writing without a meeting, consented to by the holders of not less than two-thirds of such Shares of each Series. Any Series may so merge, consolidate or effect a sale or exchange of assets by the vote or written consent of not less than two-thirds of the Shares of such Series. 12.5 Incorporation. With the approval of the holders of a majority of the Shares, the Trustees may cause to be organized or assist in organizing a corporation or corporations under the laws of any jurisdiction or any other trust, partnership, association or other organization to take over all of the Trust Property or to carry on any business in which the trust shall directly or indirectly have any interest, and to sell, convey and transfer the Trust Property to any such corporation, trust, association or organization in exchange for the securities thereof or otherwise, and to lend money to, subscribe for the securities of, and enter into any contracts with any such corporation, trust, partnership, association or organization, or any corporation, partnership, trust, association or organization in which the Trust holds or is about to acquire securities or any other interest. The Trustees may also cause a merger or consolidation between the Trust or any successor thereto and any such corporation, trust, partnership, association or other organization if and to the extent permitted by law, as provided under the law then in effect. Nothing contained herein shall be construed as requiring approval of Shareholders for the Trustees to organize or assist in organizing one or more corporations, trusts, partnerships, associations or other organizations and selling, conveying or transferring a portion of the Trust Property to such organizations or entities. ARTICLE XIII Miscellaneous 13.1. Filing. This Declaration and any amendment hereto shall be filed in the office of the Secretary of the Commonwealth of Massachusetts and in such other places as may be required under the laws of Massachusetts and may also be filed or recorded in such other placed as the Trustees deem appropriate. Each amendment so filed shall be accompanies by certificate signed and acknowledged by a Trustee stating that such action was duly taken in a manner provided herein. A restated Declaration, containing the original Declaration and all amendments theretofore or therein made, may be executed from time to time by a majority of the Trustees and shall, upon filing with the Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all amendments contained therein and may thereafter be referred to in lieu of the original Declaration and the various amendments thereto. 13.2. Resident Agent. The Trust shall maintain a resident agent in the Commonwealth of Massachusetts, which agent shall initially be CT Corporation System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees may designate a successor resident agent, provide, however, that such appointment shall not become effective until written notice thereof is delivered to the office of the Secretary of the Commonwealth. 13.3. Governing Law. This Declaration is executed by the Trustees and delivered in the Commonwealth of Massachusetts and with reference to the laws thereof, and the rights of all parties and the validity and construction of every provision hereof shall be subject to and construed according to the laws of said State. 13.4. Counterparts. This Declaration may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts, together, shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart. 13.5. Reliance by Third Parties. Any certificate executed by an individual who, according to the records of the Trust, or of any recording office in which this Declaration may be recorded, appears to be a Trustee hereunder, certifying to: (a) the number or identity of Trustees or Shareholders, (b) the name of the Trust or any Series thereof, (c) the establishment of any Series, (d) the due authorization of the execution of any instrument or writing, (e) the results of any vote taken at a meeting of Trustees or Shareholders, (f) the fact that the number of Trustees or Shareholders present at any meeting or executing any written instrument satisfies the requirements of this Declaration, (g) the form of any By-Laws adopted by or the identity of any officers elected by the Trustees, or (h) the existence of any fact or facts which in any manner relate to the affairs of the Trust or any Series, shall be conclusive evidence as to the matters so certified in favor of any person dealing with the Trustees and their successors. 13.6. Provisions in Conflict With Law or Regulations. (a) The provisions of this Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 At, the regulated investment company provisions of the Internal Revenue Code or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Declaration; provide, however, that such determination shall not affect any of the remaining provisions of this Declaration or render invalid or improper any action taken or omitted prior to such determination. (b) If any provision of this Declaration shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of this Declaration in any jurisdiction. 13.7. Provisions in Conflict with By-Laws. In the event that any provisions of this Declaration are contrary to or inconsistent with any provisions of the By-laws of the Trust, from time to time, the provisions contained in this Declaration shall control. IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day and year first above written. /s/ Charles W. Brady --------------------------------- Charles W. Brady, as Trustee and not individually /s/ John B. Rofrano --------------------------------- John B. Rofrano, as Trustee and not individually /s/ Victor L. Andrews --------------------------------- Victor L. Andrews, as Trustee and not individually /s/ Edward S. Croft --------------------------------- Edward S. Croft, Jr., as Trustee and not individually /s/ Ernest B. Davis --------------------------------- Ernest B. Davis, as Trustee and not individually THE COMMONWEALTH OF MASSACHUSETTS County of Suffolk July 9, 1987 Then personally appeared before the above-named John B. Rofrano, Trustee of INVESCO Institutional Series Trust, and acknowledged the foregoing instrument to be his free act and deed. Before me, /s/ Sheldon A. Jones --------------------------------- Notary Public My commission expires: January 21, 1994 legal\ivt\dec-trst.87 EX-99.1BAMDDECLAR 3 AMENDED DECLARATION OF TRUST OF INVESCO INSTITUTIONAL SERIES TRUST INVESCO INSTITUTIONAL SERIES TRUST, a Massachusetts Business Trust (hereinafter referred to as the "Trust"), hereby certifies that: FIRST: The name of the Trust is INVESCO INSTITUTIONAL SERIES TRUST. SECOND: The Declaration of Trust is hereby amended by striking in its entirety Article I, Section 1.1 and Article VI, Section 6.2.1 and by substituting in lieu thereof the following: ARTICLE I The Trust 1.1 Name. The name of the trust created hereby (the "Trust," which term shall be deemed to include any Series of the Trust when the context requires) shall be "Financial Series Trust," and so far as may be practicable the Trustees shall conduct the activities of the Trust and execute all documents under that name, which name (and the word "Trust" wherever hereinafter used) shall refer to the Trustees as Trustees, and not individually, and shall not refer to the officers, agents, employees or Shareholders of the Trust or any Series thereof. Each Series of the Trust which shall be established and designated pursuant to Sections 6.2, 6.2.1, or 6.2.2 shall conduct its activities under such name as the Trustees shall determine and set forth in the instruments establishing such Series. Should the Trustees determine that the use of the name of the Trust or any Series is not advisable, they may select such other name for the Trust or such Series as they deem proper and the Trust or Series may conduct its activities under such other name. Any name change shall be effective upon the execution by a majority of the then Trustees of an instrument setting forth the new name. Any such instrument shall have the status of an amendment to this Declaration. ARTICLE VI Shares of Beneficial Interest 6.2.1 Series. The Trust currently shall be divided into the following four Series: (a) Financial Equity Series. Substantially all of the Financial Equity Series (the "Equity Fund") will be invested in common stocks and, to a lesser extent, securities convertible into common stocks. Such securities will, generally, be issued by companies which are listed on a national securities exchange such as the New York Stock Exchange and which usually pay regular dividends. During normal market conditions, at least 65% of the Equity Fund's investments will consist of equity securities. Subject to its Fundamental Policies, the investment standards of the Equity Fund will be determined by the Trustees or any investment adviser to the Equity Fund appointed and given such authority by the Trustees pursuant to the provisions of Article IV hereof. (b) Financial International Growth Series. The Financial International Growth Series (the "International Fund") will have under normal circumstances at least 65% of the value of its assets invested in foreign securities. The term "foreign securities" refers to securities of issuers, wherever organized, which in the judgment of the Trustees or any investment adviser to the International Fund appointed by the Trustees, have their principal business activities outside of the United States. Subject to its Fundamental Policies, the International Fund's investment standards will be determined, and all investment of the International Fund will be at the sole discretion of the Trustees or any investment adviser to the International Fund appointed and given such authority by the Trustees pursuant to the provisions of Article IV hereof. Accordingly, the International Fund from time to time may be invested in domestic securities. (c) Financial Flex Fund. The Financial Flex Fund (the "Flex Fund") will invest in a combination of equity securities, similar to those which would be acquired by the Equity Fund and fixed and variable income securities, similar to those which would be acquired by the Financial Intermediate Government Bond Fund (described below). Subject to its Fundamental Policies, the Flex Fund's investment standards will be established and all investments of the Flex Fund will be made at the discretion of the Trustees of any investment adviser to the Flex Fund appointed and given such authority by the Trustees pursuant to the provisions of Article IV hereof. (d) Financial Intermediate Government Bond Fund. The Financial Intermediate Government Bond Fund (the "Intermediate Fund") will invest primarily in fixed and variable income corporate obligations. The Income Fund will invest only in those corporate obligations which in the opinion of the Trustees or the opinion of any investment adviser to the Income Fund appointed by the Trustees, have the investment characteristics described by Moody's in rating corporate obligations within its highest ratings of Aaa, Aa, A and Baa and by Standard & Poor's in rating corporate obligations within its highest ratings of AAA, AA, A and BBB. Investments in government obligations will include direct obligations of the U.S. government, such as U.S. Treasury bills, notes and bonds, and notes, bonds and other obligations of U.S. government authorities, agencies and instrumentalities, such as the Federal National Mortgage Association, Federal Home Loan Bank, Federal Financing Bank and Federal Farm Credit Bank. The Trust does not require that the Intermediate Fund's investments in corporate obligations actually be rated by Moody's or Standard & Poor's, and it may acquire obligations which have been rated lower than Baa by Moody's or lower than BBB by Standard & Poor's if in the opinion of the Trustees or any investment adviser to the Intermediate Fund appointed by the Trustees, such obligations are of a quality at least equal to a rating of Baa by Moody's or BBB by Standard & Poor's. Notwithstanding anything to the contrary herein, the Intermediate Fund may be otherwise invested if in the discretion of the Trustees or any investment adviser to the Intermediate Fund appointed by the Trustees, such other investments are prudent because of market conditions and other factors which the Trustees or such investment adviser deem to be significant. THIRD: The amendment was adopted by resolution of the Board of Trustees of the Trust, pursuant to and in accordance with Chapter 182 of the Massachusetts General Laws on the 16th day of October, 1990 (see copy attached hereto). FOURTH: The amendment is not required to be adopted by the shareholders of the Trust pursuant to Article XII, Section 12.3 of the Declaration of Trust. IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as of the 28th day of December 1990, which signature shall constitute the necessary certificate pursuant to Article XIII, Section 13.1 of the Declaration of Trust. /s/ John M. Butler -------------------------------- John M. Butler, as Trustee STATE OF COLORADO ) ) ss. CITY/COUNTY OF DENVER ) The foregoing Amended Declaration of Trust was signed before me by John M. Butler, as Trustee of INVESCO INSTITUTIONAL SERIES TRUST, who, under oath, stated that the matters and facts set forth therein with respect to authorization and approval are true in all material respects to the best of his knowledge and belief. Dated this 28th day of December, 1990. /s/ Johanna Masters -------------------------------- Notary Public My Commission Expires: My Commission Expires Dec. 19, 1991 [A segment from the minutes of the quarterly meeting of the Director/Trustees of INVESCO Institutional Series Trust, October 16, 1990] A reorganization of certain of the Funds is required in order to package these Funds for the 401(k) market. As part of the reorganization, Mr. Rofrano requested that the trustees of INVESCO Institutional Series Trust consider the following name changes: INVESCO Institutional Series Trust will change its name to Financial Series Trust; Institutional Equity Fund will become Financial Equity Fund; Institutional Income Fund will become Financial Intermediate Government Bond Fund; Institutional Flex Fund will become Financial Flex Fund; and Institutional International Fund will become Financial International Growth Fund. Upon motion by Mr. Budner, seconded by Mr. King, the following resolutions were unanimously approved: RESOLVED, that the Directors hereby approve the following name changes: INVESCO Institutional Series Trust to Financial Series Trust; Institutional Equity Fund to Financial Equity Fund; Institutional Income Fund to Financial Intermediate Government Bond Fund; Institutional Flex Fund to Financial Flex Fund; and Institutional International Fund to Financial International Growth Fund; and FURTHER RESOLVED, that the above name changes will be effective if and when the shareholders of INVESCO Institutional Series Trust approve new investment advisory and sub-advisory agreements with Financial Programs, Inc., INVESCO Capital Management, Inc. And INVESCO MIM International, Ltd.; and FURTHER RESOLVED, that the Directors hereby authorize the filing of an Amended Declaration of Trust in accordance with the Massachusetts General Laws to reflect such name changes, if and when the shareholders of INVESCO Institutional Series Trust approve new investment advisory and sub-advisory agreements with Financial Programs, Inc., INVESCO Capital Management, Inc. And INVESCO MIM International, Ltd. EX-99.1CAMDDECLAR 4 AMENDMENT TO DECLARATION OF TRUST OF FINANCIAL SERIES TRUST FINANCIAL SERIES TRUST, a Massachusetts Business Trust (hereinafter referred to as the "Trust"), hereby certifies that: FIRST: The name of the Trust is FINANCIAL SERIES TRUST. SECOND: The Declaration of Trust is hereby amended by striking in its entirety Article I, Section 1.1 and Article VI, Section 6.2.1, and by substituting in lieu thereof the following: ARTICLE I The Trust 1.1 Name. The name of the trust created hereby (the "Trust,") which term shall be deemed to include any Series of the Trust when the context requires) shall be "INVESCO Value Trust," and so far as may be practicable the Trustees shall conduct the activities of the Trust and execute all documents under that name, which name (and the word "Trust" wherever hereinafter used) shall refer to the Trustees as Trustees, and not individually, and shall not refer to the officers, agents, employees or Shareholders of the Trust or any Series thereof. Each Series of the Trust which shall be established and designated pursuant to Sections 6.2, 6.2.1, or 6.2.2 shall conduct its activities under such name as the Trustees shall determine and set forth in the instruments establishing such Series. Should the Trustees determine that the use of the name of the Trust or any Series is not advisable, they may select such other name for the Trust or such Series as they deem proper and the Trust or Series may conduct its activities under such other name. Any name change shall be effective upon the execution by a majority of the then Trustees of an instrument setting forth the new name. Any such instrument shall have the status of an amendment to this Declaration. ARTICLE VI Shares of Beneficial Interest 6.2.1 Series. The Trust currently shall be divided into the following three Series: (a) INVESCO Value Equity Fund. Substantially all of the INVESCO Value Equity Fund (the "Equity Fund") will be invested in common stocks and, to a lesser extent, securities convertible into common stocks. Such securities will, generally, be issued by companies which are listed on a national securities exchange such as the New York Stock Exchange and which usually pay regular dividends. During normal market conditions, at least 65% of the Equity Fund's investments will consist of equity securities. Subject to its Fundamental Policies, the investment standards of the Equity Fund will be determined by the Trustees or any investment adviser to the Equity Fund appointed and given such authority by the Trustees pursuant to the provisions of Article IV hereof. (b) INVESCO Total Return Fund. The INVESCO Total Return Fund (the "Total Return Fund") will invest in a combination of equity securities, similar to those which would be acquired by the Equity Fund, and fixed and variable income securities, similar to those which would be acquired by the INVESCO Intermediate Government Bond Fund (described below). Subject to its Fundamental Policies, the Total Return Fund's investment standards will be established and all investments of the Total Return Fund will be made at the discretion of the Trustees or any investment adviser to the Total Return Fund appointed and given such authority by the Trustees pursuant to the provisions of Article IV hereof. (c) INVESCO Intermediate Government Bond Fund. The INVESCO Intermediate Government Bond Fund (the "Intermediate Fund") will invest primarily in obligations of the United States Government and Government Agencies maturing in three to five years. Investments in government obligations will include direct obligations of the U.S. government, such as U.S. Treasury bills, notes and bonds, and notes, bonds and other obligations of U.S. government authorities, agencies and instrumentalities, such as the Federal National Mortgage Association, Federal Home Loan Bank, Federal Financing Bank and Federal Farm Credit Bank. Under normal circumstances, at least 65 percent of the Intermediate Fund's total assets will be invested in the above obligations. The remaining 35 percent of this Fund's total assets, under normal circumstances, will be invested in corporate obligations which, in the investment adviser's opinion, have the investment characteristics described by Moody's in rating corporate obligations within its four highest ratings of Aaa, Aa, A and Baa and by Standard & Poor's in rating corporate obligations within its four highest ratings of AAA, AA, A and BBB. The dollar weighted average maturity of this Fund's investments will be from three to ten years. Notwithstanding anything to the contrary herein, the Intermediate Fund may be otherwise invested if in the discretion of the Trustees or any investment adviser to the Intermediate Fund appointed by the Trustees, such other investments are prudent because of market conditions and other factors which the Trustees or such investment adviser deem to be significant. THIRD: This amendment was adopted by resolution of the Board of Trustees of the Trust, pursuant to and in accordance with Chapter 182 of the Massachusetts General Laws, on the 20th day of January, 1993, to be effective on and after July 1, 1993. FOURTH: This amendment is not required to be adopted by the shareholders of the Trust, pursuant to Article XII, Section 12.3 of the Declaration of Trust. IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as of the 20th day of June, 1993, which signature shall constitute the necessary certificate pursuant to Article XIII, Section 13.1 of the Declaration of Trust. /s/ John M. Butler ------------------------------ John M. Butler, as Trustee STATE OF COLORADO ) ) ss. CITY AND COUNTY OF DENVER ) The foregoing Amended Declaration of Trust was signed before me by John M. Butler, as Trustee of FINANCIAL SERIES TRUST, who, under oath, stated that the matters and facts set forth therein with respect to the authorization and approval are true in all material respects to the best of his knowledge and belief. Dated this 20th day of June, 1993. /s/ Cheryl K. Howlett ------------------------------ Notary Public My Commission Expires: February 22, 1995 EX-99.2BYLAWS 5 AMENDED BY-LAWS OF FINANCIAL SERIES TRUST AS OF JANUARY 22, 1992 ARTICLE ONE DEFINITIONS 1.1 The terms "Commission," "Declaration," "Majority Shareholder Vote," "1940 Act," "Series," "Shareholders," "Shares," "Trust," "Trust Property," and "Trustees" have the respective meanings given them in the Amended and Restated Declaration of Trust of Financial Series Trust dated December 28, 1990, as amended from time to time. ARTICLE TWO OFFICES 2.1 The address of the principal office of Financial Series Trust (the "Trust") is 7800 East Union Avenue, Denver, Colorado 80237. 2.2 The Trust may have other offices at such place or places (within or without the Commonwealth of Massachusetts) as the Trustees may from time to time designate or the business of the Trust may require or make desirable. ARTICLE THREE SHAREHOLDERS MEETINGS 3.1 All meetings of the Shareholders shall be writing or without the Commonwealth of Massachusetts as may be determined by the Chairman or the President. 3.2 Meetings of Shareholders of the Trust, for any purpose or purposes, unless otherwise prescribed by statute or the Declaration, may be called at any time by a majority of the Trustees and shall be called by any Trustee upon written request of Shareholders of any Series holding in the aggregate not less than 10% of the outstanding Shares of such Series having voting rights, such request specifying the purpose of purposes for which such meeting is to be called. 3.3 Except as otherwise required by statute or the Declaration, written notice of each meeting of the Shareholders shall be served, either personally or by first class mail, upon each Shareholder of record entitled to vote at such meeting, not less than ten (10) nor more than sixty (60) days before such meeting. If mailed, such notice shall be directed to a Shareholder at his address last shown on the stock transfer books of the Trust. The notice of any special meting of the Shareholders shall state the purpose or purposes for which the meeting is called. Notice of any meeting of Shareholders shall not be required to be given to any Shareholder who, in person or by proxy, either before or after such meeting, shall waive such notice. Attendance of a Shareholder at a meeting, either in person or by proxy, shall of itself constitute waiver of notice and waiver of any and all objections to the place of the meeting, the time of the meeting, and the manner in which it has been called or convened, except when a Shareholder attends a meeting solely for the purpose of stating, at the beginning of the meeting, any such objection or objections to the transaction of business. Notice of any adjourned meeting need not be given if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken. 3.4 The holders of a majority of the Shares issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the Shareholders for the transaction of business, except as otherwise provided by law, by the Declaration, or by these By-Laws. If, however, such a majority shall not be present or represented at any meeting of the Shareholders, the Shareholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of voting Shares shall be present. At any such adjourned meeting at which a quorum shall be present in person or by proxy, any business may be transacted that might have been transacted at the meeting as originally called. 3.5 At every meeting of the Shareholders, any Shareholder having the right to vote shall be entitled to vote in person or by proxy. Each Shareholder shall have one vote for each Share having voting power registered in the name of such Shareholder on the books of the Trust. 3.6 Any action to be taken at a meeting of the Shareholders, or any action that may be taken at a meeting of the Shareholders, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by a majority of the Shareholders entitled to vote with respect to the subject matter thereof and any further requirements of law pertaining to such consents have been complied with. ARTICLE FOUR TRUSTEES 4.1 Meetings of the Trustees. The Trustees may in their discretion provide for regular or special meetings of the Trustees. 4.2 Telephone Meetings. Any Trustee or any member or members of any committee designated by the Trustees, may participate in a meeting of the Trustees, or any such committee, as the case may be, by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at the meeting. 4.3 Quorum, Voting and Adjournment of Meetings. At all meetings of the Trustees, a majority of the Trustees shall be requisite to and shall constitute a quorum for the transaction of business. If a quorum is present, the affirmative vote of a majority of the Trustees present shall be the act of the Trustees, unless the concurrence of a greater proportion is expressly required for such action by law, the Declaration or these By-Laws. If there is less than a quorum present at any meeting of the Trustees, the Trustees present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall have been obtained. 4.4 Action by Trustees Without Meeting. The provisions of these By-Laws covering notices and meetings to the contrary notwithstanding, and except as required by law, any action required or permitted to be taken at any meeting of the Trustees may be taken without a meting if a consent in writing setting forth the action shall be signed by a majority of the Trustees entitled to vote upon the action and such written consent is filed with the minutes of proceedings of the Trustees. 4.5 Expenses and Fees. Trustees shall be entitled to receive such compensation from the Trust for their services as may from time to time be voted by the board of trustees. All trustees shall be reimbursed for their reasonable expenses of attendance, if any, at trustee and committee meetings. Any trustee of the Trust may also serve the Trust in any other capacity and receive compensation therefor. 4.6 Execution of Instruments and Documents and Signing of Checks and Other Obligations and Transfers. All instruments, documents and other papers shall be executed in the name or on behalf of the Trust or any Series thereof and all checks, notes, drafts and other obligations for the payment of money by the Trust or any Series thereof shall be signed, and all transfers of securities standing in the name of the Trust or any Series thereof shall be executed, by the Chairman, President, any Vice President or the Treasurer or any one or more officers or agents of the Trust as shall be designated for that purpose by vote of the Trustees. ARTICLE FIVE COMMITTEES 5.1 Executive and Other Committees. The Trustees, by resolution adopted by a majority of the Trustees, may designate an Executive Committee and/or other committees, each committee to consist of two (2) or more of the Trustees of the Trust and may delegate to such committees, in the intervals between meetings of the Trustees, any or all of the powers of the Trustees in the management of the business and affairs of the Trust. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a Trustee to act in place of such absent member. Each such committee shall keep a record of its proceedings. The Executive Committee and any other committee shall fix its own rules of procedure, but the presence of at least a majority of the members of the whole committee shall in each case be necessary to constitute a quorum of the committee and the affirmative vote of the majority of the members of the committee present at the meeting shall be necessary to take action. All actions of the Executive Committee shall be reported to the Trustees at the next meeting. 5.2 Advisory Committee. The Trustees may appoint an advisory committee which shall be composed of persons who do not serve the Trust or any Series thereof in any other capacity and which shall have advisory functions with respect to the investments of the Trust or any Series thereof but which shall have no power to determine that any security or other investment shall be purchased, sold or otherwise disposed of by the Trust or any Series thereof. The number of persons constituting any such advisory committee shall be determined from time to time by the Trustees or any Series thereof. The members of any such advisory committee may receive compensation for their services and may be allowed such fees and expenses for the attendance at meetings as the Trustees may from time to time determine to be appropriate. 5.3 Committee Action Without Meeting. The provisions of these By-Laws covering notices and meetings to the contrary notwithstanding, and except as required by law, any action required or permitted to be taken at any meeting of any committee of the Trustees appointed pursuant to Section 5.1 of these By-laws may be taken without a meeting if a consent in writing setting forth the action shall be signed by a majority of the members of the committee entitled to vote upon the action and such written consent is filed with the records of the proceedings of the committee. ARTICLE SIX OFFICERS 6.1 The Trustees shall annually elect the following officers: Chairman, President, Secretary and Treasurer. The Trustees may elect or appoint or request the Chairman or President to appoint such other officers or agents with such powers as the Trustees may deem to be advisable, including one or more Vice- Presidents, Assistant Treasurers and Assistant Secretaries, who shall hold their offices for such terms as shall be specified by the President and shall exercise such powers and perform such duties as shall be determined from time to time by the President. The Chairman and the President shall be and any other officer may, but need not, be a Trustee. 6.2 Any person may hold any two or more offices. 6.3 The salaries of the officers of the Trust shall be fixed by the Trustees, except that the Trustees may delegate to any officer or officers the power to fix the compensation of any officer appointed in accordance with the second sentence of Section 6.1 of these By-Laws. 6.4 Each officer of the Trust shall hold office until his successor is chosen or until his earlier resignation, death or removal, or the termination of his office. Any officer may be removed by the Trustees, with or without cause, whenever in their judgment the best interests of the Trust will be served thereby. Any officer appointed other than by the Trustees or by the Shareholders may be removed with or without cause at any time by an officer having authority to appoint the officer being removed if such superior officer, in his absolute discretion, shall consider that the best interests of the Trust will be served thereby. 6.5 The Chairman. The Chairman shall preside at all meetings of the Shareholders and of the Trustees, may be a signatory on all Annual and Semi-Annual Reports as may be sent to Shareholders, and shall perform such other duties as the Trustees may from time to time prescribe. 6.6 President. The President shall be the chief executive officer o the Trust and shall have general and active management of the business of the Trust. The President shall also have such powers and perform such duties as are specifically imposed upon him by law and as may be assigned to him by the Trustees. The President shall be ex officio a member of all standing committees, unless otherwise provided in the resolution appointing the same. 6.7 Vice Presidents. The Vice-Presidents, if any, shall perform such duties as are generally performed by vice-presidents. The Vice-Presidents shall perform such other duties and exercise such other powers as the Trustees shall request or delegate. 6.8 Secretary. The Secretary shall attend all sessions of the Trustees and all meetings of the Shareholders and record all votes and the minutes of all proceedings in books to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, any notice required to be given of any meetings of the Shareholders and of the Trustees, and shall perform such other duties as may be prescribed by the Trustees, Chairman or the President. The Assistant Secretary or Assistant Secretaries shall, in the absence or disability of the Secretary, or at his request, perform his duties and exercise his powers and authority. 6.9 Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Trust and each Series thereunder, and shall deposit, or cause to be deposited, in the name of the Trust or the appropriate Series, all monies or other valuable effects, in such banks, trust companies or other depositories as shall, from time to time, be selected by the Trustees; he shall render to the Chairman, President and to the Trustees, whenever requested, an account of the financial condition of the Trust or any Series thereof, and in general, he shall perform all the duties incident to the office of a Treasurer of a business corporation, and such other duties as may be assigned to him by the Trustees, Chairman or the President. 6.10 In case of the absence of any officer of the Trust, or for any other reason that the Trustees may deem sufficient, the Trustees may delegate, on an interim or temporary basis, any or all of the powers or duties of any officer to any other officer or to any Trustee. ARTICLE SEVEN CONTRACTS 7.1 The Trust may from time to time, in the discretion of its Trustees, enter into one or more contracts known generally as investment advisory contracts pursuant to which the other party to the contract shall undertake to furnish to the Trust or any Series thereof and to the Trustees investment advisory services, statistical and research facilities and services and administrative and other services, all on such terms and conditions as the Trustees may in their discretion determine. The initial investment advisory contract and any subsequent investment advisory contracts and any amendments thereof, shall not be effective unless ratified or approved by the Shareholders. The Trust shall enter such contracts only with investment advisers registered as investment advisers under the Investment Advisers Act of 1940, as amended. 7.2 All securities and cash of the Trust shall be held by one or more custodians which shall be banks or trust companies each having capital and unimpaired surplus of not less than two million dollars. The bank or trust company shall act pursuant to one or more agreements in which it shall agree to act as custodian and as agent for the Trust. The custodian agreements shall be in a form satisfactory to the Trustees of the Trust and shall contain provisions which comply with applicable law, including the 1940 Act. 7.3 The Trust may from time to time, in the discretion of its Trustees, enter into one or more contracts with any person, firm or corporation to act as underwriter for the Trust and to perform such other duties and render such other services as the Trustees may in their discretion determine. 7.4 If otherwise allowed by law and applicable rules and regulations, any contract of the character described in Articles 7.1, 7.2 or 7.3 may be entered into with any qualified party although one or more of the members of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder or member of the other party to any of these contracts. None of the contracts shall be invalidated or be void by reason of the existence of any of these relationships, nor shall any person being in these relationships be liable by reason of the relationship for any loss or expense of the Trust under or by reason of any of the contracts or be accountable for any profit realized directly or indirectly therefrom, if the contract entered into was approved by the Shareholders of the Trust. Any individual may be financially interested in or with or otherwise affiliated with persons who are parties to any of these contracts. This Article 7.4 shall not be deemed to protect any officer or Trustee of the Trust against any liability to the Trust or to the holders of the securities to which he would otherwise by subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his duties to the Trust. ARTICLE EIGHT INVESTMENTS 8.1 The authority of the Trustees of the Trust, or its agents or designees, to invest the funds of the Trust shall be subject tot he limitations from time to time included by the Trust in its Registration Statement on Form N-1A, including any amendment thereto filed with the Commission under the Securities Act of 1933, as amended, and under the 1940 Act and said limitations shall not be changed without the approval of Shareholders holding the lesser of (i) sixty-seven per cent (67%) or more of the Shares present at a meeting if the holders of more than fifty per cent (50%) of the outstanding Shares of the Trust are present or represented by proxy, or (ii) more than fifty per cent (50%) of the outstanding voting Shares of the Trust. ARTICLE NINE INTERESTED PERSONS 9.1 No officer or Trustee of the Trust or of the other party to a contract as described in Article Seven shall deal for or on behalf of the Trust with himself, as principal or agent, or with any corporation or other organization in which he may have a financial interest, provide, however, that this prohibition shall not: (a) Prevent officers or Trustees of the Trust from buying, holding or selling Shares of the Trust, or from being partners, officers or directors of or otherwise having a financial interest in the other party to a contract as described in Article Seven; (b) Prevent the purchase or sale of securities or other property, if such transaction is permitted by or is exempt or exempted under applicable provisions of the 1940 Act; or (c) Prevent the employment of legal counsel, registrar, transfer agent, dividend disbursing agent, custodian or trustee who is, or has a partner, shareholder, officer or director who is, an officer or Trustee of the Trust or of any other party to a contract as described in Article Seven if only customary fees are charged for the services to the Trust. ARTICLE TEN NOTICES; WAIVERS OF NOTICE 10.1 Except as otherwise specifically provided by law, the Declaration or these By-Laws, whenever under the provisions of law, the Declaration or of these By-Laws notice is required to be given to any Shareholder, Trustee or officer, it shall not be construed to mean personal notice, but such notice may be given either by personal notice or by mail by depositing the same with the United States Postal Service in a postpaid sealed envelope, addressed to such Shareholder, officer or Trustee at such address as appears on the books of the Trust, and such notice shall be deemed to be given at the time when the same shall be thus sent or mailed. 10.2 When any notice whatever is required to be given by law, by the Declaration or by these By-Laws, waiver thereof by the person or persons entitled to said notice given before or after the time stated therein, in writing, shall be deemed equivalent thereto. No notice of any meeting need be given to any person who shall attend such meeting, such attendance constituting a waiver of notice, except when a Shareholder attends a meeting solely for the purpose of stating at the beginning of the meeting any objection to the transaction of business, and so states his objection at the beginning of the meeting. ARTICLE ELEVEN MISCELLANEOUS 11.1 Fiscal Year. The Trust shall be on a fiscal year determined by the Trustees. 11.2 Financial Statements. The Trust shall prepare and distribute to the Shareholders such financial statements and reports, as may from time to time be required by law. 11.3 Appointment of Agents. The Chairman, President or any Vice-President shall be authorized and empowered in the name and as the act and deed of the Trust to name and appoint general and special agents, representatives and attorneys to represent the Trust in the United States or in any foreign country or countries and to name and appoint attorneys and proxies to vote any Shares of stock in any other corporation at any time owned or held of record by the Trust, and to prescribe, limit and define the powers and duties of such agents, representatives, attorneys, and proxies and to make substitution, revocation or cancellation in whole or in part of any power or authority conferred on any such agent, representative, attorney or proxy. All powers of attorney or other instruments under which such agents, representatives, attorneys, or proxies shall be so named and appointed shall be signed and executed by the President or Vice President. Any substitution, revocation or cancellation shall be signed in like manner, provided always that any agent, representative, attorney or proxy when so authorized by the instrument appointing him may substitute or delegate his powers in whole or in part and revoke and cancel such substitutions or delegations. No special authorization by the Trustees shall be necessary in connection with the foregoing, but this By-Law shall be deemed to constitute full and complete authority to the officers above designed to do all the acts and things as they deem necessary or incident thereto or in connection therewith. 11.4 Auditor. An auditor for the Trust shall be selected annually in accordance with the 1940 Act and applicable rules and regulations thereunder. ARTICLE TWELVE AMENDMENTS 12.1 Except as otherwise required by law or by the Declaration, the By-Laws of the Trust may be repealed, amended, adopted or altered by majority vote of the Trustees of the Trust or by majority vote of the Shareholders, provided that the Shareholders may provide by resolution that any By-Law provision repealed, amended, adopted or altered by them may not be repealed, amended, adopted or altered by the Trustee. - -------------------------- The Bylaws, adopted and approved by the Trustees on January 26, 1991, have been revised to reflect amendments through January 22, 1992, as set forth below: Minutes dated January 22, 1992 - Article Four, Section 4.5 EX-99.10OPINCONSCNS 6 KIRKPATRICK & LOCKHART LLP 1800 Massachusetts Avenue, N.W. 2nd Floor Washington, D.C. 20016-1800 Telephone (202) 778-9000 Facsimile (202) 778-9100 December 19, 1997 INVESCO Value Trust. 7800 E. Union Avenue Denver, Colorado 80237 Dear Sir/Madam: INVESCO Value Trust ("Trust") is a business trust organized under the laws of the Commonwealth of Massachusetts on July 9, 1987, as INVESCO Institutional Series Trust. You have requested our opinion regarding certain matters in connection with the Trust's issuance of its shares of beneficial interest (the "Shares"). We have, as counsel, participated in various business and other proceedings relating to the Trust. We have examined copies, either certified or otherwise proved to be genuine, of the Declaration of Trust and By-Laws of the Trust, the minutes of meetings of its board of trustees and other documents relating to its organization and operation, and we are generally familiar with its business affairs. Based upon the foregoing, it is our opinion that the Shares of the Trust may be legally and validly issued in accordance with the Trust's Declaration of Trust and By-Laws and subject to compliance with the Securities Act of 1933, the Investment Company Act of 1940 and applicable state laws regulating the offer and sale of securities; and when so issued, the Shares will be legally issued, fully paid and non-assessable. The Trust is an entity of the type commonly known as a "Massachusetts business trust." Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Trust. The Declaration of Trust states that creditors of, contractors with, and claimants against the Trust or any series shall look only to the assets of the Trust or INVESCO Value Trust December 19, 1997 Page 2 the appropriate series for payment. It also requires that notice of such disclaimer be given in each note, bond, contract, certificate, undertaking or instrument made or issued by the officers or the trustees of the Trust on behalf of the Trust. The Declaration of Trust further provides: (i) for indemnification from the assets of the appropriate series for all loss and expense of any shareholder held personally liable for the obligations of the Trust or any series by virtue of ownership of shares of such series; and (ii) for the appropriate series to assume the defense of any claim against the shareholder for any act or obligation of such series. Thus, the risk of a shareholder's incurring financial loss on account of shareholder liability is limited to circumstances in which the Trust or series would be unable to meet its obligations. We hereby consent to the filing of this opinion in connection with Post-Effective Amendment No. 22 to the Trust's Registration Statement on Form N-1A (File No. 33-3429) to be filed with the Securities and Exchange Commission. We also consent to the reference to our firm under the caption "Legal Counsel" in the Statement of Additional Information filed as part of the Registration Statement. Very truly yours, KIRKPATRICK & LOCKHART LLP /s/ KIRKPATRICK & LOCKHART LLP ------------------------------ EX-99.11PWCONSENT 7 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Prospectuses and Statement of Additional Information constituting parts of this Post-Effective Amendment No. 22 to the registration statement on Form N-1A (the "Registration Statement") of our report dated October 8, 1997, relating to the financial statements and financial highlights appearing in the August 31, 1997 Annual Report to Shareholders of INVESCO Value Trust, which is also incorporated by reference into the Registration Statement. We also consent to the references to us under the healding "Financial Highlights" in the Prospectuses and under the headings "Independent Accountants" and "Financial Statements" in the Statement of Additional Information. /s/ Price Waterhouse LLP - -------------------------- Price Waterhouse LLP Denver, Colorado December, 19, 1997 EX-99.16ASCHCOMPIGB 8 EXHIBIT 16(a) SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA Total return performance for the one-year, five-year, and ten-year periods ended August 31, 1997, was 6.64%, 5.65%, and 7.54%, respectively. Total return performance for each of the periods indicated was computed by finding the average annual compounded rates of return that would equate the initial ammount invested to the ending redeemable value, according to the following formula: P(1 + T)exponent n = ERV where: P = initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of initial payment The total return performance figures shown above were determined by solving the above formula for "T" for each time period and Portfolio indicated. SEC REPORTING TOTAL RETURN Formula in release: P = $1,000 initial payment T = average annual report return n = number of years ERV = ending redeemable value P(1+T)exponent n = ERV The formula given on pages 64 and 65 of the Release is written to solve for Ending Redeemable Value. However, the quantity to be reported is T (Average Annual Total Return). Because P, n, and ERV are known values, we have solved for T as follows: T = nth root of (ERV/P) - 1 and have reported those amounts as the total return. EX-99.16BSCHCOMPVAL 9 EXHIBIT 16(b) SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA Total return performance for the one-year, five-year, and ten-year periods ended August 31, 1997, was 27.01%, 15.38%, and 13.68%, respectively. Total return performance for each of the periods indicated was computed by finding the average annual compounded rates of return that would equate the initial ammount invested to the ending redeemable value, according to the following formula: P(1 + T)exponent n = ERV where: P = initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of initial payment The total return performance figures shown above were determined by solving the above formula for "T" for each time period and Portfolio indicated. SEC REPORTING TOTAL RETURN Formula in release: P = $1,000 initial payment T = average annual report return n = number of years ERV = ending redeemable value P(1+T)exponent n = ERV The formula given on pages 64 and 65 of the Release is written to solve for Ending Redeemable Value. However, the quantity to be reported is T (Average Annual Total Return). Because P, n, and ERV are known values, we have solved for T as follows: T = nth root of (ERV/P) - 1 and have reported those amounts as the total return. EX-99.16CSCHCOMPTRF 10 EXHIBIT 16(c) SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA Total return performance for the one-year, five-year, and ten-year periods ended August 31, 1997, was 32.04%, 17.60%, and 12.74%, respectively. Total return performance for each of the periods indicated was computed by finding the average annual compounded rates of return that would equate the initial ammount invested to the ending redeemable value, according to the following formula: P(1 + T)exponent n = ERV where: P = initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of initial payment The total return performance figures shown above were determined by solving the above formula for "T" for each time period and Portfolio indicated. SEC REPORTING TOTAL RETURN Formula in release: P = $1,000 initial payment T = average annual report return n = number of years ERV = ending redeemable value P(1+T)exponent n = ERV The formula given on pages 64 and 65 of the Release is written to solve for Ending Redeemable Value. However, the quantity to be reported is T (Average Annual Total Return). Because P, n, and ERV are known values, we have solved for T as follows: T = nth root of (ERV/P) - 1 and have reported those amounts as the total return. EX-27.FDSIGB 11
6 1 VALUE EQUITY FUND YEAR AUG-31-1997 AUG-31-1997 266169020 368386557 1991455 44838 448905 370871755 0 0 1106135 1106135 0 249058417 13063984 8994532 17483 0 18472183 0 102217537 369765620 6243692 931093 (50896) 3077733 4046156 20055067 57254344 77309411 0 4071368 5507949 0 20198347 16506962 378067 169719962 42661 3925099 0 0 2250039 0 3111846 295775389 22.24 0.35 6.62 0.35 0.56 0.00 28.30 1 0 0
EX-27.FDSVAL 12
6 2 INTERMEDIATE GOVERNMENT BOND FUND YEAR AUG-31-1997 AUG-31-1997 44417906 44725120 570892 18270 3581 45317863 0 0 877195 877195 0 44705750 3572904 3246858 0 0 (572296) 0 307214 44440668 0 2833739 0 448444 2385295 126618 348594 475212 0 2385295 0 0 2132651 1985434 178829 4492164 0 (503430) 0 0 268593 0 615314 44686922 12.30 0.66 0.14 0.66 0.00 0.00 12.44 1 0 0
EX-27.FDSTRF 13
6 3 TOTAL RETURN FUND YEAR AUG-31-1997 AUG-31-1997 1436182395 1833030425 17234822 122756 479725 1850867728 0 0 5273623 5273623 0 1430960585 66466489 45674707 106017 0 17679473 0 396848030 1845594105 23898737 33302056 (548396) 12155818 44496579 20361309 269713544 290074853 0 44405999 4314901 0 39163785 20216862 1844859 813442947 11343 3552441 0 0 9140227 0 12323091 1418260790 22.60 0.77 5.26 0.77 0.09 0.00 27.77 1 0 0
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