INVESCO BOND FUNDS, INC.
                             INVESCO High Yield Fund
                           INVESCO Select Income Fund
                     INVESCO U.S. Government Securities Fund

                 Supplement to Prospectus Dated January 1, 1999


The section of the above named Funds' Prospectus entitled "Annual Fund Expenses"
is  amended  to (1) delete the first  sentence  of the first  paragraph  and (2)
substitute the following sentences in its place:

      Each Fund is no-load. For the Select Income and U.S. Government Securities
      Funds there are no fees to purchase,  exchange or redeem  shares.  For the
      High Yield Fund there are no fees to exchange or redeem  shares other than
      fees to redeem or exchange shares held three months or less.

In  addition,  the  section  of the  Funds'  Prospectus  entitled  "Annual  Fund
Expenses"  is  amended  to add the  following  section  after the table  heading
"Annual Fund Operating  Expenses (as a percentage of average net assets)" to the
table following paragraph three:

      Shareholder Transaction Expenses (High Yield Fund only)

      Sales load "charge" on purchases                      None
      Sales load "charge" on reinvested dividends           None
      Redemption fees                                       2.00%*
      Exchange fees                                         2.00%*

In  addition,  the  section  of the  Funds'  Prospectus  entitled  "Annual  Fund
Expenses"  is  amended  to add the  following  immediately  after  the table and
footnotes:

      * A 2% fee shall be imposed on  redemptions  or  exchanges  of shares held
      three months or less.

The section of the Funds'  Prospectus  entitled  "Fund Price and  Performance  -
Performance  Data" is  amended  to add the  following  sentence  after the third
sentence of the first paragraph:

      The Fund  charges  no sales  loads  that  would  affect  the total  return
      computation. However, with regard to the High Yield Fund, the total return
      computation  may be affected as a result of the redemption or exchange fee
      which is retained by the High Yield Fund to offset  transaction  costs and
      other expenses associated with short-term  redemptions and exchanges. A 2%
      fee shall be imposed on  redemptions  or  exchanges  of shares  held three
      months or less.

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The section of the Funds' Prospectus  entitled "How to Buy Shares" is amended to
(1) delete the third  sentence of the first  paragraph  and (2)  substitute  the
following in its place:

      With the  exception of the High Yield Fund,  there is no charge to invest,
      exchange or redeem  shares  when you make  transactions  directly  through
      INVESCO.  With regard to the High Yield Fund, there is no charge to invest
      when you make  transactions  directly  through INVESCO.  However,  upon an
      exchange of shares held three  months or less (other than shares  acquired
      through reinvestment of dividends or other distributions),  a fee of 2% of
      the current net asset value of the shares being exchanged will be assessed
      and  retained by the Fund for the benefit of the  remaining  shareholders.
      This fee is intended to encourage  long-term  investment  in the Fund,  to
      avoid transaction and other expenses caused by early  redemptions,  and to
      facilitate  portfolio   management.   The  fee  is  currently  waived  for
      institutional,  qualified retirement plan and other shareholders investing
      through omnibus accounts,  due to certain economies  associated with these
      accounts.  However,  the Fund reserves the right to impose redemption fees
      on shares held by such shareholders at any time if warranted by the Fund's
      future cost of processing redemptions.  The redemption fee may be modified
      or  discontinued  at any  time or from  time to  time.  This  fee is not a
      deferred sales charge,  is not a commission paid to INVESCO,  and does not
      benefit  INVESCO in any way. The fee applies to redemptions  from the High
      Yield Fund and exchanges  into any of the other no-load mutual funds which
      are also  advised by INVESCO and  distributed  by IDI. The High Yield Fund
      will use the "first-in, first-out" method to determine the holding period.
      Under this method,  the date of  redemption  or exchange  will be compared
      with the earliest  purchase  date of shares held in the  account.  If this
      holding  period is less than three months,  the  redemption/  exchange fee
      will be assessed on the current net asset value of those shares.

The section of the Funds' Prospectus entitled "How To Sell Shares" is amended to
add the following at the end of the first paragraph:

      With regard to the High Yield Fund,  upon an  exchange  or  redemption  of
      shares  held three  months or less (other  than  shares  acquired  through
      reinvestment  of  dividends  or other  distributions),  a fee of 2% of the
      current net asset value of the shares being  exchanged or redeemed will be
      assessed  and  retained  by the High  Yield  Fund for the  benefit  of the
      remaining  shareholders.  This  fee is  intended  to  encourage  long-term
      investment in the High Yield Fund, to avoid transaction and other expenses
      caused by early redemptions,  and to facilitate portfolio management.  The
      fee is currently waived for institutional,  qualified  retirement plan and
      other  shareholders  investing  through omnibus  accounts,  due to certain
      economies  associated with these accounts.  However, the Fund reserves the
      right to impose redemption fees on shares held by such shareholders at any
      time if warranted by the Fund's future cost of processing redemptions. The
      redemption fee may be modified or discontinued at any time or from time to
      time. This fee is not a deferred sales charge, is not a commission paid to
      INVESCO,  and does not  benefit  INVESCO  in any way.  The fee  applies to
      redemptions  from the High Yield Fund and exchanges  into any of the other
      no-load mutual funds which are also advised by INVESCO and  distributed by
      IDI.  The High Yield  Fund will use the  "first-in,  first-out"  method to

<PAGE>

      determine the holding period. Under this method, the date of redemption or
      exchange will be compared  with the earliest  purchase date of shares held
      in the account.  If this  holding  period is less than three  months,  the
      redemption/exchange fee will be assessed on the current net asset value of
      those shares.


This Supplement supersedes the Supplement dated April 22, 1999.

The date of this Supplement is September 10, 1999.

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                            INVESCO BOND FUNDS, INC.
                           INVESCO Tax-Free Bond Fund


                Supplement to Statement of Additional Information
                              Dated August 13, 1999

The  section  of the  Company's  Statement  of  Additional  Information  ("SAI")
entitled "Investment Policies and Restrictions - Other Permissible  Investments"
is amended to add the following section after "Temporary Investments":

      Illiquid and 144A Securities.  The Fund may invest in illiquid securities,
      including restricted securities and other investments that are not readily
      marketable.  Restricted  securities  are  securities  which are subject to
      restrictions on their resale because they have not been  registered  under
      the  Securities Act of 1933 (the "1933 Act").  However,  the Fund will not
      purchase any such security if the purchase  would cause the Fund to invest
      more than 15% of its net  assets,  measured  at the time of  purchase,  in
      illiquid  securities.  Repurchase  agreements  maturing in more than seven
      days will be  considered  as illiquid  for  purposes of this  restriction.
      Investments  in illiquid  securities  involve  certain risks to the extent
      that the Fund may be  unable to  dispose  of such a  security  at the time
      desired  or at a  reasonable  price.  In  addition,  in order to  resell a
      restricted security, the Fund might have to bear the expense and incur the
      delays associated with effecting registration.

      The Fund also may invest in restricted  securities,  including  restricted
      securities that can be resold to institutional  investors pursuant to Rule
      144A under the 1933 Act ("Rule 144A Securities") if a liquid institutional
      trading market exists.

      In recent years, a large institutional  market has developed for Rule 144A
      Securities.  Institutional investors generally will not seek to sell these
      instruments  to the  general  public but instead  will often  depend on an
      efficient  institutional  market in which Rule 144A Securities can readily
      be resold  or on an  issuer's  ability  to honor a demand  for  repayment.
      Therefore,  the fact that there are  contractual or legal  restrictions on
      resale to the general public or certain institutions is not dispositive of
      the liquidity of such investments.

      Rule  144A  under  the  1933  Act  establishes  a "safe  harbor"  from the
      registration   requirements  of  the  1933  Act  for  resales  of  certain
      securities to qualified  institutional  buyers.  Institutional markets for
      Rule 144A  Securities  may provide both readily  ascertainable  values for
      Rule 144A  Securities  and the ability to liquidate an investment in order
      to satisfy share redemption  orders.  An insufficient  number of qualified
      institutional buyers interested in purchasing a Rule 144A Security held by
      the Fund,  however,  could  adversely  affect  the  marketability  of such
      security,  and the Fund  might  be  unable  to  dispose  of such  security
      promptly or at reasonable prices.

<PAGE>

The section of the Company's SAI entitled  "Investment Policies and Restrictions
- Other  Permissible  Investments"  is amended  to (1)  delete  the  subsections
entitled  "Futures  Contracts  and Options on Futures"  and  "Options on Futures
Contracts" and (2) substitute the following in their place:

      FUTURES, OPTIONS AND OTHER FINANCIAL INSTRUMENTS
      General. As discussed in the Prospectus, the adviser and/or subadviser may
      use various types of financial instruments, some of which are derivatives,
      to attempt to manage  the risk of the  Fund's  investments  or, in certain
      circumstances,  for  investment  (e.g.,  as a substitute  for investing in
      securities).   These  financial   instruments  include  options,   futures
      contracts (sometimes referred to as "futures"),  forward contracts, swaps,
      caps,  floors and collars  (collectively,  "Financial  Instruments").  The
      policies  in this  section  do not  apply  to other  types of  instruments
      sometimes  referred  to  as  derivatives,   such  as  indexed  securities,
      mortgage-backed and other asset-backed  securities,  and stripped interest
      and principal of debt.

      Generally, the Fund is authorized to use any type of Financial Instrument.
      However, as a non-fundamental  policy, the Fund will only use a particular
      Financial Instrument (other than those related to foreign currency) if the
      Fund is  authorized  to take a position  in the type of asset to which the
      return on, or value of, the  Financial  Instrument  is primarily  related.
      Therefore,  for  example,  if  the  Fund  is  authorized  to  invest  in a
      particular type of security (such as an equity security),  it could take a
      position in an option on an index relating to equity securities.

      Hedging strategies can be broadly categorized as "short" hedges and "long"
      or  "anticipatory"  hedges.  A short hedge involves the use of a Financial
      Instrument in order to partially or fully offset  potential  variations in
      the value of one or more investments held in the Fund's portfolio.  A long
      or anticipatory hedge involves the use of a Financial  Instrument in order
      to partially or fully offset  potential  increases in the acquisition cost
      of one or more  investments  that  the  Fund  intends  to  acquire.  In an
      anticipatory  hedge   transaction,   the  Fund  does  not  already  own  a
      corresponding  security.  Rather,  it  relates  to a  security  or type of
      security that the Fund intends to acquire.  If the Fund does not eliminate
      the hedge by  purchasing  the security as  anticipated,  the effect on the
      Fund's  portfolio is the same as if a long  position  were  entered  into.
      Financial  Instruments  may also be used,  in certain  circumstances,  for
      investment (e.g., as a substitute for investing in securities).

      Financial  Instruments  on  individual  securities  generally  are used to
      attempt  to  hedge  against  price  movements  in one or  more  particular
      securities  positions  that the Fund  already  owns or intends to acquire.
      Financial  Instruments  on indexes,  in  contrast,  generally  are used to
      attempt to hedge all or a portion of a portfolio  against price  movements
      of the securities within a market sector in which the Fund has invested or
      expects to invest.

<PAGE>

      The use of Financial Instruments are subject to applicable  regulations of
      the Securities and Exchange Commission ("SEC"), the several exchanges upon
      which  they are  traded,  and the  Commodity  Futures  Trading  Commission
      ("CFTC").  In addition,  the Fund's  ability to use Financial  Instruments
      will be limited by tax considerations.
      See "Tax Consequences of Owning Shares of the Funds."

      In addition to the instruments and strategies described below, the adviser
      and/or  sub-adviser  and/or  sub-adviser  may use other similar or related
      techniques  to the  extent  that  they  are  consistent  with  the  Fund's
      investment  objective and permitted by the Fund's  investment  limitations
      and applicable regulatory authorities.  The Fund's Prospectus or Statement
      of Additional  Information ("SAI") will be supplemented to the extent that
      new products or techniques become employed involving  materially different
      risks than those described below or in the Prospectus.

      Special Risks. Financial  Instruments  and  their  use  involve special
      considerations and risks, certain of which are described below.

      (1) If the adviser and/or sub-adviser employs a Financial  Instrument that
      correlates  imperfectly with the Fund's investments,  a loss could result,
      regardless  of whether or not the  intent  was to manage  risk.  Financial
      Instruments  may increase the  volatility of the Fund. In addition,  these
      techniques could result in a loss if there is not a liquid market to close
      out a position that the Fund has entered.

      (2) There might be  imperfect  correlation  between  price  movements of a
      Financial  Instrument and price movements of the investments being hedged.
      For example, if the value of a Financial  Instrument used in a short hedge
      increased by less than the decline in value of the hedged investment,  the
      hedge would not be fully successful. This might be caused by certain kinds
      of trading  activity that distorts the normal price  relationship  between
      the security  being hedged and the Financial  Instrument.  Similarly,  the
      effectiveness of hedges using Financial Instruments on indexes will depend
      on the degree of  correlation  between  price  movements  in the index and
      price movements in the securities being hedged.

      The Fund is  authorized  to use options and futures  contracts  related to
      securities  with issuers,  maturities or other  characteristics  different
      from the  securities in which it typically  invests.  This involves a risk
      that the options or futures position will not track the performance of the
      Fund's portfolio investments.

      The direction of options and futures price movements can also diverge from
      the  direction  of  the  movements  of  the  prices  of  their  underlying
      instruments,   even  if  the  underlying   instruments  match  the  Fund's
      investments well.  Options and futures prices are affected by such factors
      as  current  and  anticipated   short-term  interest  rates,   changes  in
      volatility of the  underlying  instrument,  and the time  remaining  until
      expiration of the contract,  which may not affect security prices the same
      way. Imperfect correlation may also result from differing levels of demand

<PAGE>

      in the options  and  futures  markets  and the  securities  markets,  from
      structural  differences  in how options and  futures  and  securities  are
      traded,  or from imposition of daily price  fluctuation  limits or trading
      halts. The Fund may take positions in options and futures contracts with a
      greater or lesser  face value  than the  securities  it wishes to hedge or
      intends to purchase in order to attempt to compensate  for  differences in
      volatility between the contract and the securities,  although this may not
      be successful in all cases.

      (3) If successful,  the above-discussed hedging strategies can reduce risk
      of  loss  by  wholly  or  partially  offsetting  the  negative  effect  of
      unfavorable  price  movements  of  portfolio  securities.   However,  such
      strategies can also reduce opportunity for gain by offsetting the positive
      effect of favorable price movements. For example, if the Fund entered into
      a short hedge because the adviser and/or  sub-adviser  projected a decline
      in the price of a security in the Fund's portfolio,  and the price of that
      security  increased  instead,  the gain from that increase would likely be
      wholly or partially offset by a decline in the value of the short position
      in the  Financial  Instrument.  Moreover,  if the  price of the  Financial
      Instrument  declined  by  more  than  the  increase  in the  price  of the
      security, the Fund could suffer a loss.

      (4) The  Fund's  ability  to close out a  position  in an  exchange-traded
      Financial Instrument prior to expiration or maturity depends on the degree
      of liquidity of the market.

      (5) As  described  below,  the Fund is  required  to  maintain  assets  as
      "cover,"  maintain  segregated  accounts or make margin  payments  when it
      takes positions in Financial  Instruments  involving  obligations to third
      parties (i.e., Financial Instruments other than purchased options). If the
      Fund were unable to close out its positions in such Financial Instruments,
      it might be required to  continue  to maintain  such assets or  segregated
      accounts  or  make  such  payments  until  the  position  expired.   These
      requirements  might impair the Fund's ability to sell a portfolio security
      or make an investment at a time when it would otherwise be favorable to do
      so,  or  require   that  the  Fund  sell  a   portfolio   security   at  a
      disadvantageous time.

      Cover. Positions in Financial  Instruments,  other than purchased options,
      expose the Fund to an obligation to another party. The Fund will not enter
      into any such  transactions  unless it owns (1) an offsetting  ("covered")
      position in securities,  currencies or other options, futures contracts or
      forward   contracts,   or  (2)  cash  and  liquid  assets  with  a  value,
      marked-to-market  daily, sufficient to cover its obligations to the extent
      not  covered as  provided  in (1)  above.  The Fund will  comply  with SEC
      guidelines  regarding  cover  for  these  instruments  and  will,  if  the
      guidelines  so require,  designate  cash or liquid assets as segregated in
      the prescribed amount as determined daily.

      Assets  used as cover  or held as  segregated  cannot  be sold  while  the
      position in the corresponding Financial Instrument is open unless they are

<PAGE>
      replaced with other appropriate  assets. As a result,  the commitment of a
      large portion of the Fund's assets to cover or as segregated  could impede
      portfolio  management or the Fund's ability to meet redemption requests or
      other current obligations.

      Options.  The Fund may engage in certain  strategies  involving options to
      attempt   to  manage   the  risk  of  its   investments   or,  in  certain
      circumstances,  for  investment  (e.g.,  as a substitute  for investing in
      securities).  A call  option  gives the  purchaser  the right to buy,  and
      obligates the writer to sell, the underlying investment at the agreed-upon
      exercise price during the option period.  A put option gives the purchaser
      the  right to sell,  and  obligates  the  writer  to buy,  the  underlying
      investment at the  agreed-upon  exercise  price during the option  period.
      Purchasers  of options  pay an amount,  known as a premium,  to the option
      writer in exchange for the right under the option  contract.  See "Options
      on Indexes"  below with regard to cash  settlement of option  contracts on
      index values.

      The purchase of call options can serve as a hedge  against a price rise of
      the underlier and the purchase of put options can serve as a hedge against
      a price  decline of the  underlier.  Writing  call  options can serve as a
      limited short hedge because declines in the value of the hedged investment
      would be offset to the extent of the  premium  received  for  writing  the
      option. However, if the security or currency appreciates to a price higher
      than the exercise  price of the call option,  it can be expected  that the
      option  will be  exercised  and the  Fund  will be  obligated  to sell the
      security or currency at less than its market value.

      Writing  put  options can serve as a limited  long or  anticipatory  hedge
      because increases in the value of the hedged investment would be offset to
      the extent of the premium received for writing the option. However, if the
      security or currency  depreciates to a price lower than the exercise price
      of the  put  option,  it can be  expected  that  the  put  option  will be
      exercised  and the Fund will be  obligated  to  purchase  the  security or
      currency at more than its market  value.  The value of an option  position
      will  reflect,  among  other  things,  the  current  market  value  of the
      underlying   investment,   the  time  remaining  until   expiration,   the
      relationship  of the exercise  price to the market price of the underlying
      investment,  the price volatility of the underlying investment and general
      market and interest rate conditions.  Options that expire unexercised have
      no value.

      The Fund may effectively terminate its right or obligation under an option
      by  entering  into a  closing  transaction.  For  example,  the  Fund  may
      terminate its obligation under a call or put option that it had written by
      purchasing  an  identical  call or put option;  this is known as a closing
      purchase transaction.  Conversely,  the Fund may terminate a position in a
      put or call option it had  purchased by writing an  identical  put or call
      option; this is known as a closing sale transaction.  Closing transactions
      permit the Fund to realize  profits or limit losses on an option  position
      prior to its exercise or expiration.

<PAGE>

      Risks of Options on Securities.  Options  embody the  possibility of large
      amounts of exposure, which will result in the Fund's net asset value being
      more sensitive to changes in the value of the related investment.

      The Fund's ability to establish and close out positions in exchange-listed
      options  depends on the existence of a liquid  market.  If the Fund is not
      able to enter into an offsetting  closing  transaction on an option it has
      written,  it will be required to maintain  the  securities  subject to the
      call or the  liquid  assets  underlying  the put until a closing  purchase
      transaction can be entered into or the option expires.  However, there can
      be no assurance that such a market will exist at any particular time.

      If the Fund were unable to effect a closing  transaction  for an option it
      had purchased, it would have to exercise the option to realize any profit.
      The inability to enter into a closing  purchase  transaction for a covered
      call option  written by the Fund could cause  material  losses because the
      Fund would be unable to sell the investment  used as cover for the written
      option until the option expires or is exercised.

      Options  on  Indexes.  Puts and calls on indexes  are  similar to puts and
      calls on securities or futures  contracts  except that all settlements are
      in cash and changes in value  depend on changes in the index in  question.
      When the Fund writes a call on an index,  it receives a premium and agrees
      that,  prior to the  expiration  date,  upon  exercise  of the  call,  the
      purchaser  will  receive  from the  Fund an  amount  of cash  equal to the
      positive  difference  between  the  closing  price  of the  index  and the
      exercise  price of the call  times a  specified  multiple  ("multiplier"),
      which determines the total dollar value for each point of such difference.
      When the Fund buys a call on an index,  it pays a premium and has the same
      rights as to such call as are indicated above. When the Fund buys a put on
      an index,  it pays a premium  and has the right,  prior to the  expiration
      date, to require the seller of the put to deliver to the Fund an amount of
      cash equal to the positive  difference  between the exercise  price of the
      put and the closing price of the index times the multiplier. When the Fund
      writes a put on an index,  it receives a premium and the  purchaser of the
      put has the right,  prior to the  expiration  date, to require the Fund to
      deliver to it an amount of cash equal to the positive  difference  between
      the exercise price of the put and the closing level of the index times the
      multiplier.

      The risks of purchasing and selling options on indexes may be greater than
      options on securities. Because index options are settled in cash, when the
      Fund writes a call on an index it cannot fulfill its potential  settlement
      obligations by delivering the underlying  securities.  The Fund can offset
      some of the risk of writing a call index  option by holding a  diversified
      portfolio of securities  similar to those on which the underlying index is
      based. However, the Fund cannot, as a practical matter, acquire and hold a
      portfolio  containing  exactly the same  securities  as underlie the index
      and, as a result,  bears a risk that the value of the securities held will
      vary from the value of the index.

<PAGE>

      Even if the Fund could  assemble a portfolio  that exactly  reproduced the
      composition of the underlying  index,  it still would not be fully covered
      from a risk  standpoint  because of the "timing risk"  inherent in writing
      index options. When an index option is exercised,  the amount of cash that
      the holder is entitled to receive is determined by the difference  between
      the exercise  price and the closing  index  level.  As with other kinds of
      options, the Fund as the call writer will not learn that the Fund has been
      assigned  until the next business  day. The time lag between  exercise and
      notice of  assignment  poses no risk for the writer of a covered call on a
      specific underlying  security,  such as common stock, because in that case
      the writer's obligation is to deliver the underlying security,  not to pay
      its value as of a moment in the past. In contrast,  the writer of an index
      call will be  required  to pay cash in an amount  based on the  difference
      between the  closing  index value on the  exercise  date and the  exercise
      price. By the time it learns that it has been assigned, the index may have
      declined.  This "timing risk" is an inherent  limitation on the ability of
      index call writers to cover their risk exposure.

      If the Fund has  purchased  an index  option and  exercises  it before the
      closing index value for that day is  available,  it runs the risk that the
      level of the underlying  index may subsequently  change.  If such a change
      causes  the   exercised   option  to  fall   out-of-the-money,   the  Fund
      nevertheless  will be required to pay the  difference  between the closing
      index value and the  exercise  price of the option  (times the  applicable
      multiplier) to the assigned writer.

      Futures  Contracts  and  Options  on  Futures  Contracts.  When  the  Fund
      purchases  or  sells  a  futures   contract,   it  incurs  an   obligation
      respectively  to  take or  make  delivery  of a  specified  amount  of the
      obligation underlying the contract at a specified time and price. When the
      Fund  writes an option on a futures  contract,  it  becomes  obligated  to
      assume a position in the futures contract at a specified exercise price at
      any time  during the term of the  option.  If the Fund  writes a call,  on
      exercise  it  assumes a short  futures  position.  If it writes a put,  on
      exercise it assumes a long futures position.

      The  purchase of futures or call options on futures can serve as a long or
      an  anticipatory  hedge,  and the sale of futures or the  purchase  of put
      options on futures can serve as a short  hedge.  Writing  call  options on
      futures  contracts  can serve as a limited  short hedge,  using a strategy
      similar to that used for writing  call options on  securities  or indexes.
      Similarly, writing put options on futures contracts can serve as a limited
      long or anticipatory hedge.

      In addition,  futures  strategies can be used to manage the "duration" ( a
      measure of anticipated  sensitivity to changes in interest rates, which is
      sometimes  related to the weighted  average  maturity of a portfolio)  and
      associated interest rate risk of the Fund's fixed-income portfolio. If the
      adviser  and/or  sub-adviser  wishes to shorten the duration of the Fund's
      fixed-income  portfolio (i.e., reduce anticipated  sensitivity),  the Fund
      may sell an appropriate debt futures contract or a call option thereon, or

<PAGE>

      purchase a put option on that  futures  contract.  If the  adviser  and/or
      sub-adviser  wishes to lengthen  the  duration of the Fund's  fixed-income
      portfolio (i.e.,  increase anticipated  sensitivity),  the Fund may buy an
      appropriate debt futures contract or a call option thereon,  or sell a put
      option thereon.

      At the  inception of a futures  contract,  the Fund is required to deposit
      "initial  margin"  in an  amount  generally  equal  to 10% or  less of the
      contract value.  Initial margin must also be deposited when writing a call
      or put  option  on a  futures  contract,  in  accordance  with  applicable
      exchange rules.  Subsequent  "variation  margin"  payments are made to and
      from the  futures  broker  daily as the value of the  futures  or  written
      option position  varies,  a process known as  "marking-to-market."  Unlike
      margin in securities transactions, initial margin on futures contracts and
      written  options on futures  contracts  does not  represent a borrowing on
      margin,  but rather is in the nature of a  performance  bond or good-faith
      deposit that is returned to the Fund at the termination of the transaction
      if  all  contractual  obligations  have  been  satisfied.   Under  certain
      circumstances,  such  as  periods  of high  volatility,  the  Fund  may be
      required to increase the level of initial margin payments. If the Fund has
      insufficient  cash to meet daily variation margin  requirements,  it might
      need to sell  securities  in order to do so at a time when such  sales are
      disadvantageous.

      Purchasers  and  sellers of futures  contracts  and options on futures can
      enter   into   offsetting   closing   transactions,   similar  to  closing
      transactions  on  options,  by selling  or  purchasing,  respectively,  an
      instrument  identical to the  instrument  purchased or sold.  Positions in
      futures and  options on futures  used by the Fund may be closed only on an
      exchange or board of trade that provides a market.  However,  there can be
      no assurance that a liquid market will exist for a particular  contract at
      a  particular  time.  In such  event,  it may not be  possible  to close a
      futures contract or options position.

      Under certain circumstances,  futures exchanges may establish daily limits
      on the  amount  that the  price of a  futures  contract  or an option on a
      futures contract can vary from the previous day's settlement  price;  once
      that limit is  reached,  no trades may be made that day at a price  beyond
      the limit. Daily price limits do not limit potential losses because prices
      could move to the daily limit for several  consecutive days with little or
      no trading, thereby preventing liquidation of unfavorable positions.

      If the Fund was unable to  liquidate a futures  contract or an option on a
      futures  contract  position  due to the absence of a liquid  market or the
      imposition of price limits,  it could incur substantial  losses.  The Fund
      would  continue to be subject to market risk with respect to the position.
      In  addition,  except in the case of  purchased  options,  the Fund  would
      continue to be required to make daily variation  margin payments and might
      be  required to continue to  maintain  the  position  being  hedged by the
      futures  contract or option or to continue to maintain  cash or securities
      in a segregated account.

<PAGE>

      To the extent  that the Fund  enters into  futures  contracts,  options on
      futures   contracts  and  options  on  foreign   currencies  traded  on  a
      CFTC-regulated  exchange,  in each case that is not for bona fide  hedging
      purposes  (as  defined  by the CFTC),  the  aggregate  initial  margin and
      premiums  required to establish these  positions  (excluding the amount by
      which options are  "in-the-money"  at the time of purchase) may not exceed
      5% of the  liquidation  value of the Fund's  portfolio,  after taking into
      account unrealized profits and unrealized losses on any contracts the Fund
      has entered into.  This policy does not limit to 5% the  percentage of the
      Fund's  assets that are at risk in futures  contracts,  options on futures
      contracts and currency options.

      Risks of Futures Contracts and Options Thereon.  The ordinary spreads at a
      given time between prices in the cash and futures  markets  (including the
      options on futures  markets),  due to  differences in the natures of those
      markets, are subject to the following factors.  First, all participants in
      the  futures  market  are  subject  to  margin  deposit  and   maintenance
      requirements.  Rather than meeting additional margin deposit requirements,
      investors may close futures  contracts  through  offsetting  transactions,
      which could distort the normal  relationship  between the cash and futures
      markets.   Second,   the  liquidity  of  the  futures  market  depends  on
      participants  entering into offsetting  transactions rather than making or
      taking  delivery.  To the  extent  participants  decide  to  make  or take
      delivery, liquidity in the futures market could be reduced, thus producing
      distortion.  Due to the  possibility  of  distortion,  a hedge  may not be
      successful.   Additionally,  Fund  Management  may  be  incorrect  in  its
      expectations as to the extent of various interest rate,  currency exchange
      rate or stock market movements or the time span within which the movements
      take place.

      Index Futures. The risk of imperfect  correlation between movements in the
      price of index futures and movements in the price of the  securities  that
      are the  subject of a hedge  increases  as the  composition  of the Fund's
      portfolio diverges from the index. The price of the index futures may move
      proportionately  more than or less than the price of the securities  being
      hedged. If the price of the index futures moves  proportionately less than
      the price of the securities  that are the subject of the hedge,  the hedge
      will not be fully  effective.  Assuming the price of the securities  being
      hedged has moved in an  unfavorable  direction,  as  anticipated  when the
      hedge was put into place,  the Fund would be in a better  position than if
      it had not  hedged  at all,  but not as good as if the  price of the index
      futures  moved  in  full  proportion  to that  of the  hedged  securities.
      However,  if the  price of the  securities  being  hedged  has  moved in a
      favorable  direction,  this advantage will be partially offset by movement
      of the price of the futures contract. If the price of the futures contract
      moves  more than the  price of the  securities,  the Fund will  experience
      either  a loss  or a  gain  on  the  futures  contract  that  will  not be
      completely offset by movements in the price of the securities that are the
      subject of the hedge.

<PAGE>

      Where index futures are purchased in an anticipatory hedge, it is possible
      that the market  may  decline  instead.  If the Fund then  decides  not to
      invest in the  securities  at that time  because of concern as to possible
      further market decline or for other reasons, it will realize a loss on the
      futures  contract  that is not offset by a  reduction  in the price of the
      securities it had anticipated purchasing.

      Foreign Currency Hedging Strategies--Special  Considerations. The Fund may
      use options and futures  contracts  on foreign  currencies,  as  mentioned
      previously, and forward currency contracts, as described below, to attempt
      to hedge  against  movements  in the values of the foreign  currencies  in
      which the Fund's securities are denominated or, in certain  circumstances,
      for  investment  (e.g.,  as  a  substitute  for  investing  in  securities
      denominated  in foreign  currency).  Currency  hedges can protect  against
      price  movements  in a  security  that the Fund owns or intends to acquire
      that are  attributable to changes in the value of the currency in which it
      is denominated.

      The Fund might seek to hedge against  changes in the value of a particular
      currency when no Financial  Instruments  on that currency are available or
      such Financial Instruments are more expensive than certain other Financial
      Instruments.  In such  cases,  the Fund may  seek to hedge  against  price
      movements in that currency by entering into  transactions  using Financial
      Instruments on another  currency or a basket of  currencies,  the value of
      which the adviser and/or  sub-adviser  believes will have a high degree of
      positive  correlation to the value of the currency being hedged.  The risk
      that movements in the price of the Financial Instrument will not correlate
      perfectly  with  movements  in the price of the  currency  subject  to the
      hedging transaction may be increased when this strategy is used.

      The value of Financial  Instruments on foreign  currencies  depends on the
      value of the  underlying  currency  relative to the U.S.  dollar.  Because
      foreign  currency  transactions  occurring in the  interbank  market might
      involve  substantially  larger  amounts than those  involved in the use of
      such Financial  Instruments,  the Fund could be disadvantaged by having to
      deal in the odd-lot market  (generally  consisting of transactions of less
      than $1 million) for the underlying  foreign currencies at prices that are
      less favorable than for round lots.

      There is no  systematic  reporting  of last sale  information  for foreign
      currencies or any regulatory requirement that quotations available through
      dealers or other  market  sources  be firm or  revised on a timely  basis.
      Quotation   information   generally  is   representative   of  very  large
      transactions  in the interbank  market and thus might not reflect  odd-lot
      transactions where rates might be less favorable.  The interbank market in
      foreign currencies is a global,  round-the-clock market. To the extent the
      U.S.  options or futures  markets  are closed  while the  markets  for the
      underlying  currencies  remain open,  significant price and rate movements
      might take place in the underlying markets that cannot be reflected in the
      markets for the Financial Instruments until they reopen.

<PAGE>

      Settlement of hedging  transactions  involving foreign currencies might be
      required to take place within the country issuing the underlying currency.
      Thus,  the Fund  might be  required  to  accept  or make  delivery  of the
      underlying  foreign  currency  in  accordance  with  any U.S.  or  foreign
      regulations  regarding the maintenance of foreign banking  arrangements by
      U.S.  residents  and might be required to pay any fees,  taxes and charges
      associated with such delivery assessed in the issuing country.

      Forward  Currency  Contracts and Foreign Currency  Deposits.  The Fund may
      enter  into  forward  currency  contracts  to  purchase  or  sell  foreign
      currencies for a fixed amount of U.S. dollars or another foreign currency.
      A forward currency  contract  involves an obligation to purchase or sell a
      specific  currency at a future date, which may be any fixed number of days
      (term) from the date of the forward  currency  contract agreed upon by the
      parties,  at a price  set at the time the  forward  currency  contract  is
      entered.  Forward  currency  contracts  are  negotiated  directly  between
      currency traders (usually large commercial banks) and their customers.

      Such transactions may serve as long or anticipatory  hedges;  for example,
      the Fund may  purchase  a forward  currency  contract  to lock in the U.S.
      dollar price of a security denominated in a foreign currency that the Fund
      intends to acquire.  Forward  currency  contracts  may also serve as short
      hedges; for example, the Fund may sell a forward currency contract to lock
      in the U.S. dollar equivalent of the proceeds from the anticipated sale of
      a security  or a dividend  or interest  payment  denominated  in a foreign
      currency.

      The Fund may  also use  forward  currency  contracts  to hedge  against  a
      decline  in the  value of  existing  investments  denominated  in  foreign
      currency.  Such a hedge would tend to offset both  positive  and  negative
      currency  fluctuations,  but would not offset  changes in security  values
      caused  by other  factors.  The Fund  could  also  hedge the  position  by
      entering  into a  forward  currency  contract  to  sell  another  currency
      expected to perform similarly to the currency in which the Fund's existing
      investments are denominated.  This type of hedge could offer advantages in
      terms of cost, yield or efficiency, but may not hedge currency exposure as
      effectively as a simple hedge against U.S. dollars. This type of hedge may
      result in losses if the currency used to hedge does not perform  similarly
      to the currency in which the hedged securities are denominated.

      The Fund may also use  forward  currency  contracts  in one  currency or a
      basket of currencies to attempt to hedge against fluctuations in the value
      of securities  denominated  in a different  currency if the adviser and/or
      sub-adviser  anticipates that there will be a positive correlation between
      the two currencies.

      The cost to the Fund of engaging in forward currency contracts varies with
      factors such as the currency  involved,  the length of the contract period
      and the  market  conditions  then  prevailing.  Because  forward  currency

<PAGE>

      contracts  are  usually  entered  into on a  principal  basis,  no fees or
      commissions  are  involved.  When the Fund enters into a forward  currency
      contract,  it relies on the  counterparty  to make or take delivery of the
      underlying  currency  at the  maturity  of the  contract.  Failure  by the
      counterparty  to do so  would  result  in the  loss  of some or all of any
      expected benefit of the transaction.

      As is the case with futures  contracts,  purchasers and sellers of forward
      currency contracts can enter into offsetting closing transactions, similar
      to closing  transactions on futures  contracts,  by selling or purchasing,
      respectively, an instrument identical to the instrument purchased or sold.
      Secondary markets  generally do not exist for forward currency  contracts,
      with  the  result  that  closing  transactions  generally  can be made for
      forward  currency   contracts  only  by  negotiating   directly  with  the
      counterparty.  Thus,  there can be no assurance that the Fund will in fact
      be able to close out a forward  currency  contract  at a  favorable  price
      prior  to  maturity.  In  addition,  in the  event  of  insolvency  of the
      counterparty,  the Fund  might be unable  to close out a forward  currency
      contract. In either event, the Fund would continue to be subject to market
      risk with respect to the  position,  and would  continue to be required to
      maintain a position in securities  denominated in the foreign  currency or
      to maintain cash or liquid assets in a segregated account.

      The precise matching of forward currency contract amounts and the value of
      the securities, dividends or interest payments involved generally will not
      be possible  because the value of such  securities,  dividends or interest
      payments,  measured in the foreign currency, will change after the forward
      currency  contract  has been  established.  Thus,  the Fund  might need to
      purchase  or sell  foreign  currencies  in the spot  (cash)  market to the
      extent  such  foreign  currencies  are not  covered  by  forward  currency
      contracts.  The  projection of  short-term  currency  market  movements is
      extremely difficult,  and the successful execution of a short-term hedging
      strategy is highly uncertain.

      Forward currency contracts may substantially  change the Fund's investment
      exposure to changes in currency  exchange rates and could result in losses
      to the Fund if currencies do not perform as the adviser and/or sub-adviser
      anticipates. There is no assurance that the adviser's and/or sub-adviser's
      use of forward currency contracts will be advantageous to the Fund or that
      it will hedge at an appropriate time.

      The Fund may also purchase and sell foreign currency and invest in foreign
      currency deposits.  Currency  conversion involves dealer spreads and other
      costs, although commissions usually are not charged.

      Combined Positions.  The Fund may purchase and write options or futures in
      combination  with each other,  or in  combination  with futures or forward
      currency contracts,  to manage the risk and return  characteristics of its
      overall  position.  For  example,  the Fund may  purchase a put option and

<PAGE>

      write a call  option  on the  same  underlying  instrument,  in  order  to
      construct a combined  position whose risk and return  characteristics  are
      similar to selling a futures contract.  Another possible combined position
      would involve  writing a call option at one strike price and buying a call
      option at a lower  price,  in order to reduce the risk of the written call
      option in the event of a  substantial  price  increase.  Because  combined
      options  positions   involve  multiple  trades,   they  result  in  higher
      transaction costs.

      Turnover.  The  Fund's  options  and  futures  activities  may  affect its
      turnover rate and brokerage commission payments.  The exercise of calls or
      puts written by the Fund,  and the sale or purchase of futures  contracts,
      may cause it to sell or purchase related investments,  thus increasing its
      turnover rate.  Once the Fund has received an exercise notice on an option
      it has  written,  it  cannot  effect  a  closing  transaction  in order to
      terminate its obligation  under the option and must deliver or receive the
      underlying  securities  at  the  exercise  price.  The  exercise  of  puts
      purchased by the Fund may also cause the sale of related investments, also
      increasing turnover;  although such exercise is within the Fund's control,
      holding a  protective  put might cause it to sell the related  investments
      for reasons  that would not exist in the absence of the put. The Fund will
      pay a  brokerage  commission  each  time it buys or sells a put or call or
      purchases or sells a futures contract. Such commissions may be higher than
      those that would apply to direct purchases or sales.

      Swaps,  Caps,  Floors and Collars.  The Fund is  authorized  to enter into
      swaps,  caps,  floors and  collars.  However,  these  instruments  are not
      exchange-traded  and the Fund  presently has a  non-fundamental  policy to
      utilize only exchange-traded Financial Instruments.

      Swaps  involve  the  exchange  by one party  with  another  party of their
      respective  commitments to pay or receive cash flows, e.g., an exchange of
      floating rate payments for fixed rate payments. The purchase of a cap or a
      floor entitles the purchaser, to the extent that a specified index exceeds
      in the  case  of a  cap,  or  falls  below  in  the  case  of a  floor,  a
      predetermined  value, to receive  payments on a notional  principal amount
      from the party  selling such  instrument.  A collar  combines  elements of
      buying a cap and selling a floor.

The section of the Company's SAI entitled  "Investment Policies And Restrictions
-  Other  Permissible  Investments"  is  amended  to add the  following  to that
section:

      Investment Company Securities.  To manage their daily cash positions, the
      Fund may invest in securities issued by other investment companies that
      invest in short-term debt securities and seek to maintain a net asset
      value of $1.00 per share ("money market funds").  The Fund also may invest
      in Standard & Poor's Depository Receipts ("SPDRs") and shares of other
      investment companies.  SPDRs are investment companies whose portfolios
      mirror the compositions of specific S&P indices, such as S&P 500 and the
      S&P 400.  SPDRs are traded on the American Stock Exchange.  SPDR holders
      such as the Fund are paid a "Dividend Equivalent Amount" that corresponds
      to the amount of cash dividends accruing to the securities held by the
      SPDR Trust, net of certain fees and expenses.  The Investment Company Act
      of 1940 limits investments in securities of other investment companies,

<PAGE>

      such as the  SPDR  Trust.  These  limitations  include,  among
      others,  that,  subject  to  certain  exceptions,  no more than 10% of the
      Fund's  total  assets may be invested in  securities  of other  investment
      companies,  and no more than 5% of its total assets may be invested in the
      securities of any one  investment  company.  As a  shareholder  of another
      investment company,  the Fund would bear its pro rata portion of the other
      investment company's expenses, including advisory fees, in addition to the
      expenses the Fund bears directly in connection with its own operations.

The section of the Company's SAI entitled  "Investment Policies and Restrictions
- Other  Permissible  Investments - Investment  Restrictions"  is amended to (1)
delete the section in its entirety,  and (2) substitute the following section in
its place:

      INVESTMENT RESTRICTIONS.  The Fund operates under certain investment
      restrictions.  For purposes of the following restrictions,  all percentage
      limitations apply immediately after a purchase or initial investment.  Any
      subsequent change in a particular  percentage  resulting from fluctuations
      in value does not require elimination of any security from the Fund.

      The following  restrictions  are  fundamental  and may not be changed with
      respect  to  the  Fund  without  prior  approval  of  a  majority  of  the
      outstanding  voting  securities of the Fund, as defined in the  Investment
      Company Act of 1940, as amended (the "1940 Act").  The Fund, unless
      otherwise indicated, may not:

      1. purchase the securities of any issuer (other than securities  issued or
         guraranteed  by  the  U.S.   government  or  any  of  its  agencies  or
         instrumentalities  or municipal  securities) if, as a result, more than
         25% of the Fund's total assets would be invested in the  securities  of
         companies whose principal business activities are in the same industry;

      2. with respect to 75% of the Fund's total assets, purchase the securities
         of any issuer (other than  securities  issued or guaranteed by the U.S.
         government or any of its agencies or  instrumentalities,  or securities
         of other investment companies) if, as a result, (i) more than 5% of the
         Fund's total assets would be invested in the securities of that issuer,
         or (ii) the Fund  would  hold more than 10% of the  outstanding  voting
         securities of that issuer;

      3. underwrite  securities of other  issuers,  except  insofar as it may be
         deemed  to be an  underwriter  under  the  Securities  Act of 1933,  as
         amended,  in connection  with the  disposition of the Fund's  portfolio
         securities;

      4. borrow  money,  except that the Fund may borrow  money in an amount not
         exceeding 33 1/3% of its total assets  (including the amount  borrowed)
         less liabilities (other than borrowings);

      5. issue senior securities, except as permitted under the Investment
         Company Act of 1940;

<PAGE>

      6. lend any  security or make any loan if, as a result,  more than 33 1/3%
         of its total assets would be lent to other parties, but this limitation
         does not apply to the  purchase  of debt  securities  or to  repurchase
         agreements;

      7. purchase or sell physical  commodities;  however, this policy shall not
         prevent the Fund from purchasing and selling foreign currency,  futures
         contracts, options, forward contracts, swaps, caps, floors, collars and
         other financial instruments; or

      8. purchase or sell real estate  unless  acquired as a result of ownership
         of securities or other instruments (but this shall not prevent the Fund
         from investing in securities or other instruments backed by real estate
         or securities of companies engaged in the real estate business).

      9. Each Fund may,  notwithstanding any other fundamental investment policy
         or  limitation,  invest all of its assets in the securities of a single
         open-end management  investment company managed by INVESCO Funds Group,
         Inc. or an affiliate or a successor  thereof,  with  substantially  the
         same fundamental investment objective,  policies and limitations as the
         Fund.

      In addition, the Fund has the following  non-fundamental  policies,  which
      may be changed without shareholder approval:

      A. The Fund may not sell securities short (unless it owns or has the right
         to obtain securities equivalent in kind and amount to the securities
         sold short) or purchase securities on margin, except that (i) this
         policy does not prevent the Fund from entering into short positions in
         foreign currency, futures contracts, options, forward contracts, swaps,
         caps, floors, collars and other financial instruments, (ii) the Fund
         may obtain such short-term credits as are necessary for the clearance
         of transactions, and (iii) the Fund may make margin payments in
         connection with futures contracts, options, forward contracts, swaps,
         caps, floors, collars and other financial instruments.

      B. The  Fund  may  borrow  money  only  from a bank or  from  an  open-end
         management  investment  company managed by INVESCO Funds Group, Inc. or
         an affiliate or a successor thereof for temporary or emergency purposes
         (not for leveraging or investing) or by engaging in reverse  repurchase
         agreements  with  any  party  (reverse  repurchase  agreements  will be
         treated as borrowings for purposes of fundamental limitation (4)).

      C. The Fund does not  currently  intend to purchase  any security if, as a
         result, more than 15% of its net assets would be invested in securities
         that are deemed to be  illiquid  because  they are  subject to legal or
         contractual  restrictions  on resale or because  they cannot be sold or
         disposed of in the  ordinary  course of business at  approximately  the
         prices at which they are valued.

<PAGE>

      D. The Fund may invest in securities issued by other investment  companies
         to the extent  that such  investments  are  consistent  with the Fund's
         investment objective and policies and permissible under the 1940 Act.

      E. With  respect to  fundamental  limitation  (1),  domestic  and  foreign
         banking will be considered to be different industries.

      In  addition,  with  respect  to a  Fund  that  may  invest  in  municipal
      obligations,  the following  non-fundamental  policy applies, which may be
      changed without shareholder approval:

      Each state (including the District of Columbia and Puerto Rico), territory
      and possession of the United States, each political  subdivision,  agency,
      instrumentality  and authority  thereof,  and each  multi-state  agency of
      which a state is a member is a  separate  "issuer."  When the  assets  and
      revenues  of an  agency,  authority,  instrumentality  or other  political
      subdivision are separate from the government  creating the subdivision and
      the  security  is backed only by assets and  revenues of the  subdivision,
      such subdivision would be deemed to be the sole issuer.  Similarly, in the
      case of an Industrial  Development  Bond or Private Activity Bond, if that
      bond is backed  only by the assets and  revenues  of the  non-governmental
      user,  then  that  non-governmental  user  would be  deemed to be the sole
      issuer. However, if the creating government or another entity guarantees a
      security,  then to the extent that the value of all  securities  issued or
      guaranteed by that  government or entity and owned by the Fund exceeds 10%
      of the Fund's total assets,  the guarantee  would be considered a separate
      security and would be treated as issued by that government or entity.


The date of this Supplement is September 10, 1999.