INVESCO CAPITAL APPRECIATION FUNDS INC, 485BPOS, 1998-08-28

INVESCO CAPITAL APPRECIATION FUNDS INC
485BPOS, 1998-08-28

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File No. 2-26125

As filed on ^ August 28, 1998

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1933 X
--
Pre-Effective Amendment No. ________
--
Post-Effective Amendment No. ^ 49 X
--

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
--
Amendment No. ^ 23 X
----------- --

^ INVESCO EQUITY FUNDS, INC.
(formerly, INVESCO Capital Appreciation Funds, Inc.)
(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. Feiman, Esq.
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 September 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 _______________, 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 April 30, 1998, ^ was
filed on or about July 20, 1998.

Page 1 of 120
Exhibit index is located at page 115

<PAGE>

NOTE

This Post-Effective Amendment (Form N-1A) is being filed to ^ provide annual
update information for two series of the Registrant: INVESCO Dynamics Fund and
INVESCO Growth & Income Fund and does not affect the other ^ series of the
Registrant: INVESCO ^ Endeavor Fund.

<PAGE>

INVESCO CAPITAL APPRECIATION FUNDS, INC.
-----------------------------

CROSS-REFERENCE SHEET

Form N-1A
Item Caption

Part A Prospectus

1....................... Cover Page

2....................... Annual Fund Expenses; Essential
Information

3....................... Financial Highlights; Fund Price
and Performance

4....................... Investment Objective and Strategy;
Investment Policies and Risks; The
Fund and Its Management

5....................... The Fund and Its Management

5A...................... Not Applicable

6....................... Fund Services; Taxes, Dividends and
^ Other Distributions; Additional
Information

7....................... How to Buy Shares; Fund Price and
Performance; Fund Services; The
Fund and Its Management

8....................... Fund Services; How to Sell Shares

9....................... Not Applicable

Part B Statement of Additional Information

10....................... Cover Page

11....................... Table of Contents

12....................... The Funds and Their Management

-i-

<PAGE>

Form N-1A
Item Caption

13....................... Investment Practices; Investment
Policies and Restrictions

14....................... The Funds and Their Management

15....................... The Funds and Their Management;
Additional Information

16....................... The Funds and Their Management;
Additional Information

17....................... Investment Practices; Investment
Policies and Restrictions

18....................... Additional Information

19....................... How Shares Can Be Purchased; How
Shares Are Valued; Services
Provided by the Fund; Tax-Deferred
Retirement Plans; How to Redeem
Shares

20....................... Dividends, Capital Gains
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-

<PAGE>

PROSPECTUS
^ September 1, 1998

INVESCO DYNAMICS FUND

INVESCO Dynamics Fund (the "Fund") is actively and aggressively managed to
seek appreciation of capital. Most of its investments are in U.S. common stocks,
but the Fund has the flexibility to invest in other types of securities.

The Fund is a series of INVESCO Equity Funds, Inc. (formerly, INVESCO
Capital Appreciation Funds, Inc.) (the "Company"), a diversified, managed
no-load mutual fund, consisting of two separate portfolios of investments. A
separate prospectus is available upon request from INVESCO Distributors, Inc.
for the Company's other fund, INVESCO Growth & Income Fund. Investors may
purchase shares of either or both of the Funds. Additional funds may be offered
in the future.

This Prospectus ^ provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated ^ September 1, 1998, has been filed with the Securities
and Exchange Commission and is incorporated by reference into this ^ Prospectus.
To ^ request 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.

<PAGE>

TABLE OF CONTENTS
Page

ESSENTIAL INFORMATION..........................................................7

ANNUAL FUND EXPENSES...........................................................8

FINANCIAL HIGHLIGHTS..........................................................10

INVESTMENT OBJECTIVE AND STRATEGY.............................................12

INVESTMENT POLICIES AND RISKS.................................................12

THE FUND AND ITS MANAGEMENT...................................................14

FUND PRICE AND PERFORMANCE....................................................17

HOW TO BUY SHARES.............................................................17

FUND SERVICES.................................................................22

HOW TO SELL SHARES............................................................23

TAXES, DIVIDENDS AND ^ OTHER DISTRIBUTIONS....................................25

ADDITIONAL INFORMATION........................................................27

<PAGE>

ESSENTIAL INFORMATION

Investment Goal And Strategy. INVESCO Dynamics Fund is a diversified mutual
fund that seeks appreciation of capital through aggressive investment policies.
It invests primarily in common stocks of U.S. companies traded on national
securities exchanges and over-the-counter. There is no guarantee that the Fund
will meet its objective. See "Investment Objective And Strategy^" and
"Investment Policies And Risks."

^ Designed For: Investors seeking capital growth over the long term. While
not intended as a complete investment program, the Fund may be a valuable
element of your investment portfolio. You also may wish to consider the Fund as
part of a Uniform Gift/Transfer To Minors Act Account or systematic investing
strategy. The Fund may be a suitable investment for many types of retirement
programs, including ^ various Individual Retirement Accounts ("IRAs"), 401(k),
Profit Sharing, Money Purchase Pension, and 403(b) plans.

Time Horizon. Potential shareholders should consider this a long-term
investment due to the volatility of the securities held by the Fund.

Risks. The Fund uses an aggressive investment strategy, which at times may
include holdings in foreign securities and rapid portfolio turnover. The returns
on foreign investments may be influenced by currency fluctuations and other
risks of investing overseas. Rapid portfolio turnover may result in higher
brokerage commissions and the acceleration of taxable capital gains. These
policies make the Fund unsuitable for that portion of your savings dedicated to
current income or preservation of capital over the short term. See "Investment
Objective And Strategy" and "Investment Policies And Risks."

Organization and Management. The Fund is a series of ^ the Company. The
Fund is owned by its shareholders. It employs INVESCO Funds Group, Inc.
^("INVESCO"), founded in 1932, to serve as investment adviser, administrator^
and transfer agent. INVESCO ^ Distributors, Inc. ("IDI"), founded in 1997 as a
wholly-owned subsidiary of INVESCO, is the Fund's distributor.

^ The Fund's investments are selected by two members of INVESCO's Growth
Team, which is headed by Tim Miller. See "The Fund And Its Management.^"

^ INVESCO ^ and IDI are subsidiaries of AMVESCAP PLC, an international
investment management company, that ^ managed approximately ^ $261 billion in
assets as of June 30, 1998. AMVESCAP PLC is based in London, with money managers
located in Europe, North America and the Far East.

This Fund offers all of the following services at no charge:
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans, such as EasiVest (the Fund's automatic monthly
investment program), Direct Payroll Purchase, and Automatic Monthly
Exchange
Periodic withdrawal plans

See "How To Buy Shares" and "How To Sell Shares."
<PAGE>

Minimum Initial Investment: $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans.

Minimum Subsequent Investment: $50 (Minimums are lower for certain
retirement plans.)

ANNUAL FUND EXPENSES

The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund is authorized to pay a Rule 12b-1 distribution fee of one
quarter of one percent of the Fund's average net assets each year. (See "How To
Buy Shares --Distribution Expenses.")

Like any company, the Fund has operating expenses, such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts^ and other expenses. These expenses are paid from the Fund's assets.
Lower expenses therefore benefit investors by increasing the Fund's total
return.

We calculate annual operating expenses as a percentage of the Fund's
average annual net assets. To keep expenses competitive, the Fund's ^ adviser
voluntarily reimburses the Fund for ^ certain expenses in excess of 1.21%
(excluding excess amounts that have been offset by the expense offset
arrangements described below) of the Fund's average net assets.

Annual Fund Operating Expenses
(as a percentage of average net assets)

Management Fee ^ 0.55%
12b-1 Fees 0.25%
Other Expenses(1) ^ 0.28%
Total Fund Operating Expenses(1) ^ 1.08%

(1) 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 ^ expense offset ^ arrangements. However, as a result of ^ an SEC
requirement, the figures shown above ^ DO NOT reflect these reductions. In
comparing expenses for different years, please note that the ^ Ratios of
Expenses to Average Net Assets shown under "Financial Highlights" ^ DO reflect
any reductions for periods prior to the fiscal year ended April 30, 1996. See
"The Fund and Its Management."

Example

A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
the Fund's assets and are deducted from the amount of income available for
distribution to shareholders; they are not charged directly to shareholder
accounts.)

<PAGE>

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
^ $11 $35 $60 $132

The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE, AND ACTUAL
ANNUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For more
information on the Fund's expenses, see "The Fund and Its Management" and "How ^
To Buy Shares - Distribution Expenses."

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.

<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)

The following information has been audited by ^ PricewaterhouseCoopers LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the Report of Independent Accountants thereon
appearing in the ^ Company's 1998 Annual Report to Shareholders which is
incorporated by reference into the Statement of Additional Information. Both are
available without charge by contacting ^ IDI at the address or telephone number
on the cover of this ^ Prospectus. The Annual Report also contains more
information about the Fund's performance.

<TABLE>
<CAPTION>
Year Ended April 30

^ 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
^
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.02 $13.61 $11.38 $10.15 $10.89 $ 9.57 $ 8.50 $ 7.39 $ 7.14 $ 6.65

^ INCOME FROM INVESTMENT

OPERATIONS

Net Investment Income ^(Loss) (0.05) (0.04) 0.02 0.03 (0.02) (0.03) (0.02) 0.05 0.13 0.13
^

Net Gains or (Losses)
on Securities

(Both Realized and ^ Unrealized) 6.39 (0.19) 3.94 1.34 1.99 1.64 2.05 1.64 0.54 0.48
^
Total from Investment ^ Operations 6.34 (0.23) 3.96 1.37 1.97 1.61 2.03 1.69 0.67 0.61
^

LESS DISTRIBUTIONS

Dividends from Net ^ Investment
Income+ 0.00 0.00 0.02 0.03 0.00 0.00 0.00 0.05 0.13 0.12
^
Distributions from ^ Capital Gains 1.95 1.36 1.71 0.11 2.71 0.29 0.96 0.53 0.29 0.00
^
Total Distributions 1.95 1.36 1.73 0.14 2.71 0.29 0.96 0.58 0.42 0.12

<PAGE>

^ Net Asset Value _ End of Period $16.41 $12.02 $13.61 $11.38 $10.15 $10.89 $ 9.57 $ 8.50 $ 7.39 $ 7.14

^ TOTAL RETURN 56.42% (2.34%) 36.32% 13.57% 17.86% 16.80% 23.47% 23.11% 9.29% 9.20%^

RATIOS

Net Assets _^ End of Period
($000 Omitted) $1,340,299 $762,396 $778,416 $421,600 $287,293 $231,100 $153,956 $100,860 $ 60,817 $ 89,755
^
Ratio of Expenses ^ to Average
Net Assets ^ 1.08%@ 1.16%@ 1.14%@ 1.20%# 1.17% 1.20% 1.18% 1.15% 0.98% 0.98%
^
Ratio of Net Investment
Income (Loss) to ^ Average Net
Assets ^(0.43%) (0.31%) 0.16% 0.33%# (0.37%) (0.38%) (0.17%) 0.59% 1.47% 1.77%
^
Portfolio Turnover Rate 178% 204% 196% 176% 169% 144% 174% 243% 225% 237%
^
</TABLE>

+ Distributions in excess of net investment income for the year ended April
30, 1996, aggregated less than $0.01 on a per share basis.

# Various expenses of the Fund were voluntarily absorbed by ^ INVESCO for the
year ended April 30, 1995. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 1.22% and
ratio of net investment income to average net assets would have been 0.31%.

@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.

<PAGE>

INVESTMENT OBJECTIVE AND STRATEGY

The Fund seeks appreciation of capital through aggressive investment
policies. This investment objective is fundamental and may not be changed
without the approval of the Fund's shareholders. The Fund seeks to achieve this
objective through the investment of its assets in a variety of securities that
are believed to present opportunities for capital enhancement. We're primarily
looking for common stocks of companies traded on U.S. securities exchanges, as
well as over-the-counter. The Fund also has the flexibility to invest in
preferred stocks and convertible or straight issues of debentures, as well as
foreign securities. There is no assurance that the Fund's investment objective
will be met.

The Fund's investment portfolio is actively traded. Because our strategy
highlights many short-term factors -- current information about a company,
investor interest, price movements of the company's securities and general
market and monetary conditions -- securities may be bought and sold relatively
frequently. The Fund's portfolio turnover rate may be higher than many other
mutual funds, and may exceed 200%; this turnover also may result in greater
brokerage commissions and acceleration of capital gains which are taxable when
distributed to shareholders. The Statement of Additional Information includes an
expanded discussion of the Fund's portfolio turnover rate, its brokerage
practices and certain federal income tax matters.

When we believe market or economic conditions are unfavorable, the Fund may
assume a defensive position by temporarily investing up to 100% of its assets in
high-quality money market instruments, such as short-term U.S. government
obligations, commercial paper or repurchase agreements, seeking to protect its
assets until conditions stabilize.

INVESTMENT POLICIES AND RISKS

Investors generally should expect to see their price per share vary with
movements in the stock market, changes in economic conditions and other factors.
The Fund invests in many different ^ securities and industries; this
diversification ^ may help reduce the Fund's ^ exposure to particular investment
and market risks but cannot eliminate these risks.

Year 2000 Computer Issue. Due to the fact that many computer systems in use
today cannot recognize the Year 2000, but will, unless corrected, revert to 1900
or 1980 or cease to function at that time, the markets for securities in which
the Fund invests may be detrimentally affected by computer failures affecting
portfolio investments or trading of securities beginning January 1, 2000.
Improperly functioning trading systems may result in settlement problems and
liquidity issues. In addition, corporate and governmental data processing errors
may result in production issues for individual companies and overall economic
uncertainties. Earnings of individual issuers will be affected by remediation
costs, which may be substantial. The Fund's investments may be adversely
affected.

<PAGE>

Foreign Securities. Up to 25% of the Fund's total assets, measured at the
time of purchase, may be invested directly in foreign equity and corporate debt
securities. Securities of Canadian issuers and American Depository Receipts
("ADRs") are not subject to this 25% limitation. ADRs are receipts representing
shares of a foreign corporation held by a U.S. bank that entitle the holder to
all dividends and capital gains. ADRs are denominated in U.S. dollars and trade
in the U.S. securities markets.

For U.S. investors, the returns on foreign securities are influenced not
only by the returns on the foreign investments themselves, but also by currency
fluctuations. That is, when the U.S. dollar generally rises against a foreign ^
currency, returns ^ for a U.S. investor on foreign securities denominated in
that foreign currency may decrease. By contrast, in a period when the U.S.
dollar generally declines, those returns may increase.

Other aspects of international investing to consider include:

-less publicly available information than is generally available about U.S.
issuers;

-differences in accounting, auditing and financial reporting standards;

-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;

-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and

-^ investment income on certain foreign securities may be subject to
foreign withholding taxes, which may reduce dividend income or capital gains
payable to shareholders.

There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility ^ the Fund ^ may experience difficulties in pursuing legal
remedies and collecting judgments.

ADRs are subject to some of the same risks as direct investments in foreign
securities, including the risk that material information about the issuer may
not be disclosed in the United States and the risk that currency fluctuations
may adversely affect the value of the ADR.

Illiquid/Rule 144A Securities. The Fund may invest in illiquid securities,
including securities that are subject to restrictions on resale and securities
that are not readily marketable. The Fund may also invest in restricted
securities that may be resold to institutional investors, known as "Rule 144A
Securities." For more information concerning illiquid and Rule 144A Securities,
see "Investment Policies and Restrictions" in the Statement of Additional
Information.

<PAGE>

Repurchase Agreements. The Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, the Fund buys a
debt instrument, agreeing simultaneously to sell it back to the prior owner at
an agreed-upon price and date. The Fund could incur costs or delays in seeking
to sell the security if the prior owner defaults on its repurchase obligation.
To reduce that risk, the securities ^ that are the subject of the repurchase
agreement will be maintained with the Fund's custodian in an amount at least
equal to the repurchase price under the agreement (including accrued interest).
These agreements are entered into only with member banks of the Federal Reserve
System, registered broker-dealers^ and registered U.S. government securities
dealers that are deemed creditworthy under standards established by the ^
Company's board of directors.

Securities Lending. The Fund may seek to earn additional income by lending
securities to qualified brokers, dealers, banks, or other financial
institutions, on a fully collateralized basis. For further information on this
policy, see "Investment Policies ^ And Restrictions" in the Statement of
Additional Information.

For a further discussion of risks associated with an investment in the
Fund, see "Investment Policies ^ And Restrictions" and "Investment Practices" in
the Statement of Additional Information.

Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, may not be altered without the approval of
the Fund's shareholders. For example, the Fund limits to 5% the portion of its
total assets that may be invested in any one issuer, and to 25% the portion of
its total assets that may be invested in any one industry.

THE FUND AND ITS MANAGEMENT

The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as a diversified, open-end, management investment company.
It was incorporated as INVESCO Dynamics Fund, Inc. on February 17, 1967 under
the laws of Colorado and was reorganized as a Maryland corporation on July 1,
1993. The name of the Company was changed to INVESCO Capital Appreciation Funds,
Inc. on June 26, 1997. On August 28, 1998, the name of the Company was changed
to INVESCO Equity Funds, Inc.

The Company's board of directors has responsibility for overall supervision
of the Fund, and reviews the services provided by the adviser ^. Under an
agreement with the Company, ^ INVESCO, 7800 E. Union Avenue, Denver, Colorado
80237, serves as the Fund's investment ^ adviser; it is primarily responsible
for providing the Fund with portfolio management and various administrative
services.

<PAGE>

^ INVESCO 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. INVESCO
continued to operate under its existing name. AMVESCAP PLC has approximately
$261 billion in assets under management as of June 30, 1998. INVESCO was
established in 1932 and, as of April 30, 1998, managed 14 mutual funds,
consisting of 48 separate portfolios, with combined assets of approximately
$19.3 billion on behalf of 1,492,189 shareholders.

Prior to February 3, 1998, Institutional Trust Company ("ITC") (formerly,
INVESCO Trust Company) provided sub-advisory services to the Fund; termination
of its sub-advisory services in no way changed the basis upon which investment
advice is provided to the Fund, the cost of those services to the Fund or the
persons actually performing the investment advisory and other services
previously provided by ITC. INVESCO provides such day-to-day portfolio
management services as the investment adviser to the Fund.

The Fund is managed by two members of INVESCO's Growth Team, which is
headed by Timothy J. Miller. The following individuals are primarily responsible
for ^ the day-to-day management of the Fund's portfolio holdings:

Timothy J. Miller, ^ a Chartered Financial Analyst, has been the lead
portfolio manager of the Fund since October 1997 and portfolio manager of the ^
Fund since 1993. Mr. Miller is also lead portfolio manager of INVESCO
VIF-Dynamics Fund and co-manages INVESCO Small Company Growth Fund ^, INVESCO
VIF-Small Company Growth Fund, INVESCO Growth Fund, and INVESCO VIF-Growth Fund.
Mr. Miller is a senior vice president ^ of INVESCO Funds Group, Inc. Mr. Miller
was previously an analyst and portfolio manager with Mississippi Valley
Advisors^ from 1979 to 1992. Mr. Miller received an M.B.A. from the University
of Missouri^-St Louis and a B.S.B.A. from St. Louis University.

^ Tom Wald has been a co-portfolio manager of the Fund since October 1997.
Mr. Wald also co-manages INVESCO VIF-Dynamics Fund. Mr. Wald was previously the
senior health care analyst with Munder Capital Management. Mr. Wald has also
worked for Duff & Phelps and Prudential Investment Corp. Mr. Wald received an
M.B.A. from the Wharton School at the University of Pennsylvania and a B.A. from
Tulane University.

INVESCO 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 ^ INVESCO's personnel to conduct their
personal investment activities in a manner that ^ INVESCO believes is not
detrimental to the Fund or ^ INVESCO's other advisory clients. See the Statement
of Additional Information for more detailed information.

The Fund pays ^ INVESCO a monthly management fee which is based upon a
percentage of the Fund's average net assets determined daily. The management fee
is computed at the annual rate of 0.60% on the first $350 million of the Fund's
average net assets; 0.55% on the next $350 million of the Fund's average net
assets; and 0.50% on the Fund's average net assets over $700 million. For the
fiscal year ended April 30, ^ 1998, investment management fees paid by the Fund
amounted to ^ 0.55% of the Fund's average net assets.

<PAGE>

^ Under a Distribution Agreement effective September 30, 1997, IDI provides
services relating to the distribution and sale of the Fund's shares. IDI,
established in 1997, is a registered broker-dealer that acts as distributor for
all retail funds advised by INVESCO. Prior to September 30, 1997, INVESCO served
as the Fund's distributor.

Under a Transfer Agency Agreement, ^ INVESCO acts as registrar, transfer
agent, and dividend disbursing agent for the Fund. The Fund pays an annual fee
of $20.00 per shareholder account, or, where applicable, per participant in an
omnibus account ^. Registered broker-dealers, third party administrators of
tax-qualified retirement plans and other entities, including affiliates of
INVESCO, may provide equivalent services to the Fund. In these cases, ^ INVESCO
may pay, out of the fee it receives from the Fund, an annual sub-transfer agency
fee or recordkeeping fee to the third party.

^ Under an Administrative Services Agreement, ^ INVESCO handles additional
administrative, ^ recordkeeping, and internal sub-accounting services for the
Fund. For the fiscal year ended April 30, ^ 1998, the Fund paid ^ INVESCO a fee
for these services in an amount equal to 0.02% of the Fund's average net assets.

The management and custodial services provided to the Fund by INVESCO and
the Fund's custodian, and the services provided to shareholders by INVESCO and
IDI, depend on the continued functioning of their computer systems. Many
computer systems in use today cannot recognize the Year 2000, but will revert to
1900 or 1980 or will cease to function due to the manner in which dates were
encoded and are calculated. That failure could have a negative impact on the
handling of the Fund's securities trades, its share pricing and its account
services. The Fund and its service providers have been actively working on
necessary changes to their computer systems to deal with the Year 2000 issue and
expect that their systems will be adapted before that date, but there can be no
assurance that they will be successful. Furthermore, services may be impaired at
that time as a result of the interaction of their systems with noncomplying
computer systems of others. INVESCO plans to test as many such interactions as
practicable prior to December 31, 1999 and to develop contingency plans for
reasonably anticipated failures.

The Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of the Fund (prior to any
expense offset arrangements) for the fiscal year ended April 30, ^ 1998,
including investment ^ advisory fees (but excluding brokerage commissions, which
are a cost of acquiring securities), amounted to ^ 1.08% of the Fund's average
net assets. If necessary, certain Fund expenses will be absorbed voluntarily by
^ INVESCO in order to ensure that the Fund's total operating expenses will not
exceed 1.21% of the Fund's average net assets. This commitment may be changed
following consultation with the Company's board of directors.

INVESCO ^ places orders for the purchase and sale of portfolio securities
with brokers and dealers based upon ^ INVESCO's evaluation of ^ such brokers'
and dealers' financial responsibility coupled with their ability to effect
transactions at the best available prices. As discussed under "How ^ To Buy
Shares Distribution Expenses," the Fund may market its shares through
intermediary brokers or dealers that have entered into Dealer Agreements with ^
INVESCO or IDI, as the Fund's distributor. 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 ^ INVESCO 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.
^

<PAGE>

FUND PRICE AND PERFORMANCE

Determining Price. The value of your investment in the Fund will vary
daily. The price per share is also known as the Net Asset Value ^("NAV").
INVESCO prices the Fund every day that the New York Stock Exchange is open, as
of the close of regular trading ^(generally, 4:00 p.m., New York time). NAV is
calculated by adding together the current market value of all of the Fund's
assets, including accrued interest and dividends; ^ subtracting liabilities,
including accrued expenses; and ^ dividing that dollar amount by the total
number of Fund shares outstanding.

Performance Data. To keep shareholders and potential investors informed, we
will occasionally advertise the Fund's total return for one-, five-, and
ten-year periods. Total return figures show the rate of return on a $1,000
investment in the Fund, assuming reinvestment of all dividends and capital gain
distributions for the periods cited. Cumulative total return shows the actual
rate of return on an investment for the period cited; average annual total
return represents the average annual percentage change in the value of an
investment. Both cumulative and average annual total returns tend to "smooth
out" fluctuations in the Fund's investment results, because they do not ^ show
the interim variations in performance over the periods cited. More information
about the Fund's recent and historical performance is contained in the ^
Company's Annual Report to Shareholders. You can get a free copy by calling or
writing to ^ IDI using the phone number or address on the back of this ^
Prospectus.

When we quote mutual fund rankings published by Lipper Analytical Services,
Inc., we may compare the ^ Fund to others in its category of Capital
Appreciation Funds, as well as the broad-based Lipper general fund groupings.
These rankings allow you to compare the Fund to its peers. Other independent
financial media also produce performance- or service-related comparisons, which
you may see in our promotional materials. For more information see "Fund
Performance" in the Statement of Additional Information.

Performance figures are based on historical ^ investment results and are
not intended to suggest future performance.

HOW TO BUY SHARES

The ^ chart on page 19 shows several convenient ways to invest in the Fund.
Your new Fund shares will be priced at the NAV next determined after your order
is received in proper form. There is no charge to invest, exchange, or redeem
shares when you make transactions directly through ^ INVESCO. However, if you
invest in the Fund through a securities broker, you may be charged a commission
or transaction fee. INVESCO may from time to time make payments from its
revenues to securities dealers and other financial institutions that provide
distribution-related and/or administrative services for the Fund. For all new
accounts, please send a completed application form. Please specify which Fund
whose shares you wish to purchase.

<PAGE>

^ INVESCO reserves the right to increase, reduce or waive the minimum
investment requirements in its sole discretion, where it determines this action
is in the best interests of the Fund. Further, ^ INVESCO reserves the right in
its sole discretion to reject any order for the purchase of Fund shares
(including purchases by exchange) when, in its judgment, such rejection is in
the Fund's best interests.

Exchange ^ Policy. You may exchange your shares in this Fund for those in
another INVESCO fund on the basis of their respective net asset values at the
time of the exchange. Before making any exchange, be sure to review the
prospectuses of the funds involved and consider their differences.

Please note these policies regarding exchanges of fund shares:

1) The fund accounts must be identically registered.

2) You may make up to four exchanges out of each fund during each
calendar year.

3) An exchange is the redemption of shares from one fund followed by the
purchase of shares in another. Therefore, any gain or loss realized on
the exchange is recognizable for federal income tax purposes (unless,
of course, your account is tax-deferred).

4) The Fund reserves the right to reject any exchange request, or to
modify or terminate the exchange ^ policy, when it is in the best
interests of the Fund and its shareholders. Notice of all such
modifications or termination will be given at least 60 days prior to
the effective date of the change in ^ policy, except ^ in unusual
instances (such as when redemptions of the exchanged shares are
suspended under Section 22(e) of the Investment Company Act of 1940,
or when sales of the fund into which you are exchanging are
temporarily stopped).

<PAGE>

HOW TO BUY SHARES

================================================================================
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
By Check
Mail to: $1,000 for regular If your check does
INVESCO Funds account; not clear, you will
Group, Inc. $250 for an ^ IRA; be responsible for
P.O. Box 173706 $50 minimum for any related loss
Denver, CO each subsequent the Fund or ^
80217-3706. investment. INVESCO incurs. If
Or you may send you are already a
your check by shareholder in the
overnight courier INVESCO funds, the
to: 7800 E. Union Fund may seek
Ave., Denver, CO reimbursement from
80237. your existing
account(s) for any
loss incurred.

- --------------------------------------------------------------------------------
By Telephone or
Wire

Call 1-800-525-8085 $1,000. Payment must be
to request your received within 3
purchase. Then send business days, or
your check by the transaction may
overnight courier be ^ canceled. If a
to our street purchase is ^
address: canceled due to
7800 E. Union Ave., nonpayment, you
Denver, CO 80237. will be responsible
Or you may transmit for any related
your payment by loss the Fund or ^
bank wire (call ^ INVESCO incurs. If
INVESCO for you are already a
instructions). shareholder in the
INVESCO funds, the
Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------

<PAGE>
================================================================================
With EasiVest or
Direct Payroll
Purchase

You may enroll on $50 per month for Like all regular
the fund EasiVest; $50 per investment plans,
application, or pay period for neither EasiVest
call us for the Direct Payroll nor Direct Payroll
correct form and Purchase. You may Purchase ensures a
more details. start or stop your profit or protects
Investing the same regular investment against loss in a
amount on a monthly plan at any time, falling market.
basis allows you to with two weeks' Because you'll
buy more shares notice to ^ invest continually,
when prices are low INVESCO. regardless of
and fewer shares varying price
when prices are levels, consider
high. This your financial
"dollar-cost ability to keep
averaging" may help buying through low
offset market price levels. And
fluctuations. Over remember that you
a period of time, will lose money if
your average cost you redeem your
per share may be shares when the
less than the market value of all
actual average your shares is less
price per share. than their cost.

- --------------------------------------------------------------------------------
By PAL

Your "Personal $1,000; $250 for an Be sure to write
Account Line" is IRA. down the
available for confirmation number
subsequent provided by PAL.
purchases and Payment must be
exchanges 24 hours received within 3
a day. Simply call business days, or
1-800-424-8085. the transaction may
be cancelled. If a
purchase is cancelled due
to nonpayment, you will
be responsible for any
related loss the Fund or
^ INVESCO incurs. If you
are already a shareholder
in the INVESCO funds, the
Fund may seek
reimbursement from your
existing account(s) for
any loss incurred.

- --------------------------------------------------------------------------------

<PAGE>
- --------------------------------------------------------------------------------
By Exchange

Between this and $1,000 to open a See "Exchange ^
another of the new account; $50 Policy," page ^ 18.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
Automatic Monthly minimum is $250 for
Exchange service exchanges requested
between two INVESCO by telephone.)
funds; call ^
INVESCO for further
details and the

correct form.
================================================================================

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. 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
directors of the Company 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 ^
INVESCO- and 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,
^ 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 ^ Company and its board of directors 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 ^ INVESCO, IDI or
^ their affiliates or by third parties.

Under the Plan, the ^ Fund's payments to ^ IDI are limited to an amount
computed at an annual rate of 0.25% of the Fund's average net 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 ^ INVESCO or IDI whose primary responsibilities
involve marketing shares of the INVESCO funds, including the Fund. Payment
amounts by the Fund under the Plan, for any month, may 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 limitation described above will

<PAGE>

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 ^
their 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 the Plan's termination. ^ Payments made by the Fund may not be used to
finance directly the distribution of shares of any other fund of the Company or
other mutual fund advised by ^ INVESCO and distributed by IDI. However, payments
received by IDI which are not used to finance the distribution of shares of the
Fund become part of IDI's revenues and may be used by IDI for activities that
promote distribution of any of the mutual funds advised by INVESCO. Subject to
review by the Company's directors, 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
distributions which may result from IDI's use of its own resources, providing
that such fees are legitimate and not excessive. For more information see "How
Shares Can Be Purchased -Distribution Plan" in the Statement of Additional
Information.

FUND SERVICES

Shareholder Accounts. ^ INVESCO will maintain a share account that reflects
your current holdings. Share certificates will be issued only upon specific
request. You will have greater flexibility to conduct transactions if you do not
request certificates.

Transaction Confirmations. You will receive detailed confirmations of
individual purchases, exchanges, and redemptions. If you choose certain
recurring transaction plans (for instance, EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.

Investment Summaries. Each calendar quarter, shareholders receive a written
statement which consolidates and summarizes account activity and value at the
beginning and end of the period for each of their INVESCO funds.

Reinvestment of Distributions. Dividends and capital gain distributions
are automatically ^ reinvested in additional Fund shares at the NAV on the
ex-dividend or ex-distribution date, unless you choose to have dividends and/or
^ distributions automatically reinvested in another INVESCO fund or paid by
check (minimum of $10.00).

Telephone Transactions. All shareholders may exchange and redeem Fund
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application, a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Fund has
followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephoned instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.

<PAGE>

Retirement Plans and IRAs. Fund shares may be purchased for ^ IRAs and many
types of tax-deferred retirement plans. ^ INVESCO can supply you with
information and forms to establish or transfer your existing plan or account.

HOW TO SELL SHARES

The ^ chart on page 23 shows several convenient ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at the current NAV next
determined after a request in proper form is received at the Fund's office. The
NAV at the time of the redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance.

Please specify from which fund you wish to redeem shares. Shareholders have
a separate account for each fund in which they invest.

While the Fund will attempt to process telephone redemptions promptly,
there may be times -- particularly in periods of severe economic or market
disruption -- when you may experience delays in redeeming shares by phone.

HOW TO SELL SHARES
================================================================================
Method Minimum Redemption Please Remember
- --------------------------------------------------------------------------------

By Telephone
Call us toll-free $250 (or, if less, This option is not
at 1-800-525-8085. full liquidation of available for
the account) for a shares held in ^
redemption check; IRAs.
$1,000 for a wire
to bank of record.
The maximum amount
which may be
redeemed by
telephone is
generally $25,000.
These telephone
redemption
privileges may be
modified or
terminated in the
future at ^
INVESCO's
discretion.

- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
In Writing

Mail your request Any amount. The If the shares to be
to INVESCO Funds redemption request redeemed are
Group, Inc., P.O. must be signed by represented by
Box 173706 all registered stock certificates,
Denver, CO owners of the the certificates
80217-3706. You may account. Payment must be sent to ^
also send your will be mailed to INVESCO.
request by your address of
overnight courier record, or to a
to 7800 E. Union designated bank.

Ave., Denver, CO
80237.
- --------------------------------------------------------------------------------
By Exchange

Between this and $1,000 to open a See "Exchange ^
another of the new account; $50 Policy," page ^ 18.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
automatic monthly minimum is $250 for
exchange service exchanges requested
between two INVESCO by telephone.)
funds; call ^
INVESCO for further
details and the
correct form.

- --------------------------------------------------------------------------------
Periodic Withdrawal
Plan
You may call us to $100 per payment on You must have at
request the a monthly or least $10,000 total
appropriate form quarterly basis. invested with the
and more The redemption INVESCO funds, with
information at check may be made at least $5,000 of
1-800-525-8085. payable to any that total invested
party you in the fund from
designate. which withdrawals
will be made.
- --------------------------------------------------------------------------------
Payment To Third
Party
Mail your request Any amount. All registered
to INVESCO Funds owners of the
Group, Inc., P.O. account must sign
Box 173706 the request, with a
Denver, CO signature guarantee
80217-3706. from an eligible
guarantor financial
institution, such
as a commercial
bank or a
recognized national
or regional
securities firm.
================================================================================
<PAGE>

Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances --for instance, if normal trading is not
taking place on the New York Stock Exchange, or during an emergency as defined
by the Securities and Exchange Commission. If your shares were purchased by a
check which has not yet cleared, payment will be made promptly upon clearance of
the purchase check (which will take up to 15 days).

If you participate in EasiVest, the Fund's automatic monthly investment
program, and redeem all of the shares in your account, we will terminate any
further EasiVest purchases unless you instruct us otherwise.

Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Fund reserves the right to involuntarily redeem all shares in such
account, in which case the account would be liquidated and the proceeds
forwarded to the shareholder. Prior to any such redemption, a shareholder will
be notified and given 60 days to increase the value of the account to $250 or
more.

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^. Distribution of all net investment income to shareholders
allows the Fund to maintain its tax status as a regulated investment company. ^
The Fund does not expect to pay any federal income or excise taxes because of
its tax status as a regulated investment company.

Shareholders^ must include all dividends and ^ other distributions ^ as
taxable income for federal, state^ and local income tax purposes, unless they
are exempt from income taxes. 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. Long-term gains realized between July 29, 1997 and December
31, 1997 on the sale of securities held for more than 18 months are taxable at a
maximum rate of 20% (depending on the shareholder's marginal tax rate).
Beginning January 1, 1998, the IRS Restructuring and Reform Act of 1998, signed
into effect on July 24, 1998, lowers the holding period for long-term capital
gains entitled to the 20% capital gains tax rate from 18 months to 12 months.
Accordingly, all long-term gains realized after December 31, 1997 on the sale of
securities held for more than 12 months will be taxable at a maximum 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 adviser as to the effect of distributions by the Fund.

Shareholders may realize capital gains or losses when they sell their
shares at more or less than the price originally paid. Capital gains on shares
held for more than one year will be long-term capital gain, in which event they
will be subject to federal income tax at the rates indicted above.

The Fund may be subject to ^ withholding of foreign taxes on dividends or
interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund ^.

<PAGE>

^ Individuals and certain other non-corporate shareholders may be subject
to backup withholding of 31% on dividends, capital ^ gains and other
distributions and redemption proceeds. ^ You can avoid backup withholding on
your ^ account by ensuring that we have a correct, certified tax identification
number, unless you are subject to backup withholding for other reasons.^

^ 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 and dividends on investments.
Dividends paid by the Fund will be based solely on the net investment income
earned by it. The Fund's policy is to distribute substantially all of this
income, less ^ expenses, to shareholders on an annual ^ basis, at the discretion
of the ^ Company's board of directors. 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 or derivatives 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 realized on foreign currency transactions, if any, 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 shareholders who hold
shares on the record date of the distribution, regardless of how long the 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.

^ Master/Feeder Option. As a matter of fundamental policy, the Company may,
in the future, seek to achieve the Fund's investment objective by investing all
of the Fund's assets in another investment company having substantially the same
fundamental investment objective, policies and limitations. It is expected that
any such investment company would be managed by INVESCO in substantially the
same manner as the Fund. If permitted by applicable law, any such investment may
be made in the sole discretion of the Company's board of directors without a
vote of the Fund's shareholders. However, shareholders will be given at least 30
days prior notice of any such investment. Such an investment would be made only
if the board of directors determines it to be in the best interests of the Fund
and its shareholders based on potential cost savings, operational efficiencies
or other factors. No assurance can be given that costs would be materially
reduced if this option were implemented.

<PAGE>

ADDITIONAL INFORMATION

Voting Rights. All shares of the Company have equal voting rights based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. The Company is not generally required and does not
expect to hold regular annual meetings of shareholders. However, when requested
to do so in writing by the holders of 10% or more of the outstanding shares of
the ^ Fund or as may be required by applicable law or the Company's Articles of
Incorporation, the board of directors will call special meetings of
shareholders. Directors may be removed by action of the holders of a majority of
the outstanding shares of the Company. The ^ Company will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.

<PAGE>

INVESCO DYNAMICS FUND
A no-load mutual fund
seeking capital
appreciation through
aggressive investment
policies.

PROSPECTUS
^ September 1, 1998

INVESCO FUNDS

INVESCO Distributors, Inc. (SM)
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 ^ Company with the
Securities ^ & Exchange Commission
can be located on a ^ Web site
maintained by the Commission at
http://www.sec.gov.

<PAGE>

PROSPECTUS
^ September 1, 1998

INVESCO GROWTH & INCOME FUND

INVESCO Growth & Income Fund (the "Fund") is actively managed to seek high
total return through a combination of capital appreciation and current income.
The Fund invests primarily in common stocks, preferred stocks and securities
convertible into common stocks of companies which offer growth of earnings and
the payment of current dividends. The Fund may also purchase securities which do
not pay current dividends but which offer prospects for growth of capital and
future income.

The Fund is a series of INVESCO Equity Funds, Inc. (formerly, INVESCO
Capital Appreciation Funds, Inc.) (the "Company"), a diversified, managed
no-load mutual fund, consisting of two separate portfolios of investments. A
separate prospectus is available upon request from INVESCO Distributors, Inc.
for the Company's other Fund, INVESCO Dynamics Fund. Investors may purchase
shares of either or both Funds.

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 ^ September 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.

THE FUND MAY INVEST IN LOWER-RATED BONDS AND FOREIGN DEBT SECURITIES,
COMMONLY KNOWN AS "JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO GREATER
RISKS, INCLUDING DEFAULT RISKS, THAN THOSE FOUND IN HIGHER RATED SECURITIES.
PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN
THIS FUND. SEE " ^ INVESTMENT POLICIES AND RISKS."

<PAGE>

TABLE OF CONTENTS
Page

ESSENTIAL INFORMATION.......................................................31

ANNUAL FUND EXPENSES........................................................32

INVESTMENT OBJECTIVE AND STRATEGY...........................................33

INVESTMENT POLICIES AND RISKS...............................................34

THE FUND AND ITS MANAGEMENT.................................................39

FUND PRICE AND PERFORMANCE..................................................41

HOW TO BUY SHARES...........................................................42

FUND SERVICES...............................................................46

HOW TO SELL SHARES..........................................................47

TAXES, DIVIDENDS AND ^ OTHER DISTRIBUTIONS..................................49

ADDITIONAL INFORMATION......................................................51

<PAGE>

ESSENTIAL INFORMATION

Investment Goal And Strategy. The Fund is actively managed to seek high
total return through a combination of capital appreciation and current income.
The Fund invests primarily in common stocks, preferred stocks and securities
convertible into common stocks of companies which offer growth of earnings and
the payment of current dividends. The Fund may also purchase securities which do
not pay current dividends but which offer prospects for growth of capital and
future income. There is no guarantee that the Fund will meet its objective. See
"Investment Objective ^ And Strategy."

Designed For: Investors seeking a combination of capital growth over the
long term and current income. While not intended as a complete investment
program, the Fund may be a valuable element of your investment portfolio. You
also may wish to consider the Fund as part of a Uniform Gift/Transfer To Minors
Act Account or systematic investing strategy. The Fund may be a suitable
investment option for many types of retirement programs, including various
Individual Retirement Accounts ("IRAs"), 401(k), Profit Sharing, Money Purchase
Pension, and 403(b) plans.

Time Horizon. Because the value of its holdings varies, the Fund's price
per share will fluctuate. Investors should consider this a medium- to long-term
investment.

Risks. The Fund uses an investment strategy which at times may include
purchasing securities rated below investment grade and foreign debt securities^.
The Fund may experience relatively rapid portfolio turnover. The Fund's
investments in debt securities are subject to credit risk and market risk, both
of which are increased by investing in lower rated securities. The returns on
foreign investments may be influenced by the risks of investing overseas. Rapid
portfolio turnover may result in higher brokerage commissions and the
acceleration of taxable capital gains. These policies make the Fund unsuitable
for that portion of your savings dedicated to preservation of capital over the
short-term. See "Investment Objective And Strategy" and "Investment Policies ^
And Risks."

Organization and Management. The Fund is a series of ^ the Company. The
Fund is owned by its shareholders. It employs INVESCO Funds Group, Inc.
^("INVESCO"), founded in 1932, to serve as investment adviser, administrator and
transfer agent. INVESCO Distributors, Inc. ("IDI"), founded in 1997 as a
wholly-owned subsidiary of ^ INVESCO, is the Fund's distributor.

The ^ Fund's investments are selected by two ^ members of INVESCO's Growth
Team which is headed by Tim Miller. See "The Fund And Its Management."

<PAGE>

^ INVESCO and IDI are subsidiaries of AMVESCAP PLC, an international
investment management company that ^ managed approximately ^ $261 billion in
assets as of June 30, 1998. AMVESCAP PLC is based in London with money managers
located in Europe, North America and the Far East.

See "How To Buy Shares" and "How To Sell Shares."

Minimum Initial Investment: $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans.

Minimum Subsequent Investment: $50 (Minimums are lower for certain
retirement plans.)

ANNUAL FUND EXPENSES

Like any company, the Fund has operating expenses, such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts, and other expenses. These expenses are paid from the Fund's assets.
Lower expenses therefore benefit investors by increasing the Fund's total
return.

We calculate annual operating expenses as a percentage of the Fund's
estimated expenses for the current fiscal year. To keep expenses competitive,
the adviser voluntarily reimburses the Fund for certain expenses in excess of
1.50% of the Fund's average net assets.

Annual Fund Operating Expenses
(as a percentage of average net assets)

Management Fee ^ 0.75%
12b-1 Fees 0.25%
Other Expenses (after expense limitation)(1) ^ 0.50%
Total Fund Operating Expenses (after expense
limitation)(1) ^ 1.50%

<PAGE>

(1) Based on estimated expenses for the current fiscal year which may be more or
less than actual expenses. If necessary, certain Fund expenses will be absorbed
voluntarily by ^ INVESCO for at least the first fiscal year of the Fund's
operations in order to ensure that expenses for the Fund will not exceed 1.50%
of the Fund's average net assets pursuant to an agreement between the Fund and ^
INVESCO. If such voluntary expense limit were not in effect, the Fund's "Other
Expenses" and "Total Fund Operating Expenses" for the fiscal year ending April
30, 1999 are estimated to be ^ 1.18% and ^ 2.18%, respectively, of the Fund's
average net assets. Actual expenses are not provided because the Fund did not
begin a public offering of its securities until June 30, 1998.

Example

1 Year 3 Years
------ -------
$15 $48

The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE ^ EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE, AND
ACTUAL ANNUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For
more information on the Fund's expenses, see "The Fund ^ And Its Management" and
"How ^ To Buy Shares - Distribution Expenses."

INVESTMENT OBJECTIVE AND STRATEGY

The Fund is actively managed to seek high total return through a
combination of capital appreciation and current income. This investment
objective is fundamental and may not be changed without the approval of the
Fund's shareholders. The Fund seeks to achieve its objective through the
investment of its assets in common stocks, preferred stocks and securities
convertible into common stocks that are believed to present opportunities for
capital enhancement and/or current income. The Fund may also invest in
securities which offer prospects for appreciation of capital or future income
such as bonds and debt securities (including high yield debt instruments). There
is no guarantee that the Fund's investment objective will be met.

<PAGE>

The Fund's investment portfolio is actively managed.^ This policy may
result in greater brokerage commissions and acceleration of capital gains which
are taxable when distributed to shareholders. The Statement of Additional
Information includes an expanded discussion of the Fund's portfolio turnover
rate, its brokerage practices and certain federal income tax matters.

When we believe market or economic conditions are ^ unfavorable, the Fund
may assume a defensive position by temporarily investing up to 100% of its
assets in high-quality money market instruments, such as short-term U.S.
government obligations, commercial paper or repurchase agreements, seeking to
protect its assets until conditions stabilize.

INVESTMENT POLICIES AND RISKS

The Fund seeks high total return through a combination of capital
appreciation and current income by investing mainly in equity securities. The
Fund intends to invest the majority of its assets in domestic and foreign equity
securities. Equity securities may include common stocks, preferred stocks and
securities convertible into common stock. The equity securities in which the
Fund invests may be issued by either established, well-capitalized companies or
newly formed small capitalization ("small cap") companies. These securities may
be traded on national, regional or foreign stock exchanges or in the
over-the-counter market. Small cap companies frequently have limited operating
histories, product lines and financial and managerial resources, and may face
intense competitive pressures from larger companies. The market prices of small
cap stocks may be more volatile than the stocks of larger companies both because
they typically trade in lower volumes and because small cap ^ companies may be
more vulnerable to changes in their earnings and prospects. Although equity
securities have a history of long-term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions.

Investors generally should expect to see their price per share and income
levels vary with movements in the stock and fixed-income markets, changes in
economic conditions and other factors. The Fund invests in many different ^
securities and industries; this diversification may help reduce the Fund's
exposure to particular investment and market risks but cannot eliminate these
risks.

<PAGE>

Debt Securities. When we assess an issuer's ability to meet its interest
rate obligations and repay its debt when due, we are referring to "credit risk."
Debt obligations are rated based on their estimated credit risk by independent
services such as Standard & Poor's, a division of the McGraw-Hill Companies
("S&P"), or Moody's Investor Services, Inc. ("Moody's"). "Market risk" for debt
securities principally refers to sensitivity to changes in interest rates. For
instance, when interest rates go up, the market value of a previously issued
bond generally declines; on the other hand, when interest rates go down, bond
prices generally increase.

The lower a bond's quality, the more it is subject to credit risk and
market risk and the more speculative it is. This is also true of most unrated
securities. The Fund may invest in issues rated below investment grade quality
(commonly called "junk bonds," and rated BB or lower by S&P or Ba or lower by
Moody's or, if unrated, are judged by ^ INVESCO to be of equivalent quality).
Such securities held by the Fund generally will be subject to greater credit and
market risks. These securities include issues which are of poorer quality and
may have some speculative characteristics, according to the rating services.
Investments in unrated securities may not exceed 25% of the Fund's total assets,
and the Fund may not invest more than 25% of its total assets in junk bonds.
Never, under any circumstances, is the Fund permitted to invest in bonds that
are in default or are rated CCC or below by S&P or Caa or below by Moody's or,
if unrated, are judged by ^ INVESCO to be of equivalent quality. Bonds rated CCC
or Caa are predominantly speculative and may be in default or may have present
elements of danger with respect to the repayment of principal or interest. While
^ INVESCO continuously monitors all of the debt securities in the Fund's
portfolio for the issuer's ability to make required principal and interest
payments and other quality factors, ^ the Fund may retain a bond whose rating is
changed to one below the minimum rating required for purchase of the security.
The Fund is not required to sell immediately debt securities that go into
default, but may continue to hold such securities until such time as ^ INVESCO
determines it is in the best interests of the Fund to sell the securities.

The Fund's investments in debt securities may include investments in zero
coupon bonds, step-up bonds, mortgage-backed securities and asset-backed
securities. Zero coupon bonds ("zeros") make no periodic interest payments.
Instead, they are sold at a discount from their face value. The buyer of the
zero receives the rate of return by the gradual appreciation in the price of the
security, which is redeemed at face value at maturity. Step-up bonds initially
make no (or low) cash interest payments but begin paying interest (or a higher
rate of interest) at a fixed time after issuance of the bond. Being extremely
responsive to changes in interest rates, the market prices of both zeros and
step-up bonds may be more volatile than other bonds. The Fund may be required to
distribute income recognized on these bonds, even though no cash interest
payments may be received, which could reduce the amount of cash available for
investment by the Fund.

<PAGE>

Mortgage-backed securities represent interests in pools of mortgages.
Asset-backed securities generally represent interests in pools of consumer
loans. Both usually are structured as pass-through securities. Interest and
principal payments ultimately depend on payment of the underlying loans,
although the securities may be supported, at least in part, by letters of credit
or other credit enhancements or, in the case of some mortgage-backed securities,
guarantees by the U.S. government, its agencies or instrumentalities. The
underlying loans are subject to prepayments that may shorten the securities'
weighted average lives and may lower their returns. For more information on debt
securities, see "Investment Policies and Restrictions" in the Statement of
Additional Information.

Foreign Securities. Up to 25% of the Fund's total assets, measured at the
time of purchase, may be invested directly in foreign equity ^ and corporate
debt securities. Securities of Canadian issuers and American Depository Receipts
("ADRs") are not subject to this 25% limitation. ADRs are receipts representing
shares of a foreign corporation held by a U.S. bank that entitle the holder to
all dividends and capital gains. ADRs are denominated in U.S. dollars and trade
in the U.S. securities markets.

For U.S. investors, the returns on foreign securities are influenced not
only by the returns on the foreign investments themselves, but also by currency
fluctuations. That is, when the U.S. dollar generally rises against a foreign
currency, returns for a U.S. investor on foreign securities denominated in that
foreign currency may decrease. By contrast, in a period when the U.S. dollar
generally declines, those returns may increase.

Other aspects of international investing to consider include:

-less publicly available information than is generally available about U.S.
issuers;

-differences in accounting, auditing and financial reporting standards;

-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;

-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and

-investment income on certain foreign securities may be subject to foreign
withholding taxes, which may reduce dividend income or capital gains payable to
shareholders.

There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility the Fund may experience difficulties in pursuing legal remedies
and collecting judgments.

<PAGE>

Rule 144A Securities. The Fund may not purchase securities that are not
readily marketable. However, the Fund may purchase certain securities that are
not registered for sale to the general public but that can be resold to
institutional investors ("Rule 144A Securities"), if a liquid institutional
trading market exists. The ^ Company's board of directors has delegated to ^
INVESCO the authority to determine the liquidity of Rule 144A Securities
pursuant to guidelines approved by the board. In the event that a Rule 144A
Security held by the Fund is subsequently determined to be illiquid, the
security will be sold as soon as that can be done in an orderly fashion
consistent with the best interests of the Fund's shareholders. For more
information concerning Rule 144A Securities, see "Investment Policies And
Restrictions" in the Statement of Additional Information.

Repurchase Agreements. The Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, the Fund buys a
debt instrument, agreeing simultaneously to sell it back to the prior owner at
an agreed-upon price and date. The Fund could incur costs or delays in seeking
to sell the instrument if the prior owner defaults on its repurchase obligation.
To reduce that risk, the securities that are the subject of the repurchase
agreement will be maintained with the Fund's custodian in an amount at least
equal to the repurchase price under the agreement (including accrued interest).
These agreements are entered into only with member banks of the Federal Reserve
System, registered broker-dealers, and registered U.S. government securities
dealers that are deemed creditworthy under standards established by the
Company's board of directors.

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

<PAGE>

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
A therein.

Delayed Delivery or When-Issued Purchases. Debt securities may at times be
purchased or sold by the Fund with settlement taking place in the future. The
Fund may invest up to 10% of its net assets in when-issued securities. The
payment obligation and the interest rate that will be received on the securities
generally are fixed at the time the Fund enters into the commitment. Between the
date of purchase and the settlement date, the value of the securities is subject
to market fluctuations, and no interest is payable to the Fund prior to the
settlement date.

For a further discussion of risks associated with an investment in the
Fund, see "Investment Policies ^ And Restrictions" and "Investment Practices" in
the Statement of Additional Information.

Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, may not be altered without the approval of
the Fund's shareholders. For example, with respect to 75% of the Fund's total
assets, the Fund limits to 5% of its total assets the amount which may be
invested in a single issuer, and to 25% the portion that may be invested in any
one industry. The Fund's ability to borrow money is limited to borrowings from
banks for temporary or emergency purposes in amounts not exceeding ^ 5% of total
net assets.

<PAGE>

Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover. 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 INVESCO, investment considerations warrant such action. As a
result, under certain market conditions, the portfolio turnover rate for the
Fund may exceed 100% and may be higher than that of other investment companies
seeking capital appreciation and current income. Increased portfolio turnover
would cause the Fund to incur greater brokerage costs than would otherwise be
the case and may result in the acceleration of capital gains that are taxable
when distributed to shareholders. The Fund's portfolio turnover rate and the
Company's brokerage allocation policies, are discussed in the Statement of
Additional Information.

THE FUND AND ITS MANAGEMENT

The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as a diversified, open-end, management investment company.
It was incorporated as INVESCO Dynamics Fund, Inc. on February 17, 1967 under
the laws of Colorado and was reorganized as a Maryland corporation on July 1,
1993. On July 3, 1997, the name of the Company was changed to INVESCO Capital
Appreciation Funds, Inc. On August 28, 1998, the name of the Company was changed
to INVESCO Equity Funds, Inc.

The Company's board of directors has responsibility for overall supervision
of the Fund and reviews the services provided by the adviser. Under an agreement
with the Company, ^ INVESCO, 7800 E. Union Avenue, Denver, Colorado 80237,
serves as the Fund's investment adviser; it is primarily responsible for
providing the Fund with investment management and various administrative
services.

^ INVESCO 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 a 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. ^ INVESCO
continues to operate under its existing name. AMVESCAP ^ had approximately ^
$261 billion in assets under management^ as of June 30, 1998. INVESCO was
established in 1932 and, as of ^ April 30, 1998, managed 14 mutual funds,
consisting of ^ 48 separate portfolios, with combined assets of approximately ^
$19.3 billion on behalf of ^ 1,492,189 shareholders.

^ The Fund is managed by two members of INVESCO's Growth Team, which is
headed by Timothy J. Miller. The following individuals are primarily responsible
for the day-to-day management of the Fund's portfolio holdings:

Trent E. May, ^ a Chartered Financial Analyst, has served as the lead
portfolio manager of the Fund since its inception in 1998. He is also ^ lead
portfolio manager of the INVESCO Growth Fund, Inc. ^ and INVESCO VIF-Growth
Portfolio and co-portfolio manager of the INVESCO Small Company Growth Fund ^
and INVESCO VIF-Small Company Growth Portfolio. Mr. May is a vice president of ^
INVESCO. Mr. May began his investment career in 1991 and was most recently a
senior equity fund manager/equity analyst at Munder Capital Management in ^
Detroit. Mr. May received an M.B.A. from Rollins College and a B.S. in
Engineering from the Florida Institute of Technology^.

<PAGE>

Fritz Meyer has served as the co-portfolio manager of the Fund since its
inception in 1998. Mr. Meyer is a vice president of ^ INVESCO. Formerly, he was
an executive vice president and portfolio manager with Nelson, Benson & Zellmer,
Inc. in Denver, Colorado. ^ Mr. Meyer received an M.B.A from Amos Tuck
School-Dartmouth College and an A.B. with a distinction in Economics from
Dartmouth College. Mr. Meyer began his investment career in 1976.

INVESCO^ 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 ^ INVESCO's personnel to conduct their
personal investment activities in a manner that ^ INVESCO believes is not
detrimental to the Fund or ^ INVESCO's other advisory clients. See the Statement
of Additional Information for more detailed information.

Under a Distribution Agreement effective September 30, 1997, IDI ^ provides
services relating to the distribution and sale of the Fund's shares. IDI,
established in 1997, is a registered broker-dealer that acts as distributor for
all retail funds advised by ^ INVESCO.

Under a Transfer Agency Agreement, ^ INVESCO acts as registrar, transfer
agent, and dividend disbursing agent for the Fund. The Fund pays an annual fee
of $20.00 per shareholder account or, where applicable, per participant in an
omnibus account ^. Registered broker-dealers, third party administrators of
tax-qualified retirement plans and other entities, including affiliates of ^
INVESCO, may provide equivalent services to the Fund. In these cases, ^ INVESCO
may pay, out of the fee it receives from the Fund, an annual sub-transfer agency
or recordkeeping fee to the third party.

Under an Administrative Services Agreement, ^ INVESCO handles additional
administrative, recordkeeping^ and internal sub-accounting services for the
Fund.

<PAGE>

The Fund's expenses, which are accrued daily, are deducted from its total
income before dividends are paid. If necessary, certain Fund expenses will be
absorbed voluntarily by ^ INVESCO in order to ensure that the Fund's total
operating expenses will not exceed 1.50% of the Fund's average net assets. This
commitment may be changed following consultation with the Company's board of
directors.

INVESCO ^ places orders for the purchase and sale of portfolio securities
with brokers and dealers based upon ^ INVESCO's evaluation of such brokers' and
dealers' financial responsibility coupled with their ability to effect
transactions at the best available prices. As discussed under "How ^ To Buy
Shares Distribution Expenses," the Fund may market its shares through
intermediary brokers or dealers that have entered into Dealer Agreements with ^
INVESCO or IDI, as the Fund's distributor. 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 ^ INVESCO 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 PRICE AND PERFORMANCE

Determining Price. The value of your investment in the Fund will vary
daily. The price per share is also known as the Net Asset Value ("NAV"). ^
INVESCO prices the Fund every day that the New York Stock Exchange is open, as
of the close of regular trading (generally, 4:00 p.m., New York time). NAV is
calculated by adding together the current market value of all of the Fund's
assets, including accrued interest and dividends; subtracting liabilities,
including accrued expenses; and dividing that dollar amount by the total number
of Fund shares outstanding.

Performance Data. To keep shareholders and potential investors informed, we
will occasionally advertise the Fund's total return for one-, five-, and
ten-year periods (or since inception). Total return figures show the rate of
return on a $1,000 investment in the Fund, assuming reinvestment of all
dividends and capital gain distributions for the periods cited. Cumulative total
return shows the actual rate of return on an investment for the period cited;
average annual total return represents the average annual percentage change in
the value of an investment. Both cumulative and average annual total returns
tend to "smooth out" fluctuations in the Fund's investment results, because they
do not show the interim variations in performance over the periods cited.

When we quote mutual fund rankings published by Lipper Analytical Services,
Inc., we may compare the Fund to others in its category of Growth and Income, as
well as the broad-based Lipper general fund groupings. These rankings allow you
to compare the Fund to its peers. Other independent financial media also produce
performance- or service-related comparisons, which you may see in our
promotional materials. For more information see "Fund Performance" in the
Statement of Additional Information.

Performance figures are based on historical ^ investment results and are
not intended to suggest future performance.

<PAGE>

HOW TO BUY SHARES

The ^ chart on page 43 shows several convenient ways to invest in the Fund.
Your new Fund shares will be priced at the NAV next determined after your order
is received in proper form. There is no charge to invest, exchange, or redeem
shares when you make transactions directly through ^ INVESCO. However, if you
invest in the Fund through a securities broker, you may be charged a commission
or transaction fee. ^ INVESCO 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 Company. For all new
accounts, please send a completed application form. Please specify which ^
Fund's shares you wish to purchase.

Exchange Policy. You may exchange your shares in this Fund for those in
another INVESCO fund on the basis of their respective net asset values at the
time of the exchange. Before making any exchange, be sure to review the
prospectuses of the funds involved and consider their differences.

Please note these policies regarding exchanges of fund shares:

1) The fund accounts must be identically registered.

2) You may make up to four exchanges out of each fund during each
calendar year.

4) The Fund reserves the right to reject any exchange request, or to
modify or terminate the exchange policy, when it is in the best
interests of the Fund and its shareholders. Notice of all such
modifications or termination will be given at least 60 days prior to
the effective date of the change in policy, except ^ in unusual
instances (such as when redemptions of the exchanged shares are
suspended under Section 22(e) of the Investment Company Act of 1940,
or when sales of the fund into which you are exchanging are
temporarily stopped).

<PAGE>

HOW TO BUY SHARES
================================================================================
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------

By Check
MAIL to: $1,000 for regular If your check does
INVESCO Funds account; not clear, you will
Group, Inc. $250 for an IRA; be responsible for
P.O. Box 173706 $50 minimum for any related loss
Denver, CO each subsequent the Fund or ^
80217-3706. investment. INVESCO incurs. If
You may send your you are already a
check by overnight shareholder in the
courier to: 7800 E. INVESCO funds, the
Union Ave., Denver, Fund may seek
CO 80237 reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------

By Telephone or $1,000 Payment must be
Wire received within 3
Call 1-800-525-8085 business days, or
to request your the transaction may
purchase. Then send be canceled. If a
your check by purchase is
overnight courier canceled due to
to our street nonpayment, you
address: will be responsible
7800 E. Union Ave., for any related
Denver, CO 80237. loss the Fund or ^
Or you may transmit INVESCO incurs. If
your payment by you are already a
bank wire (call ^ shareholder in the
INVESCO for INVESCO funds, the
instructions). Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.

<PAGE>

- --------------------------------------------------------------------------------

With EasiVest or
Direct Payroll
Purchase
You may enroll on $50 per month for Like all regular
the fund EasiVest; $50 per investment plans,
application, or pay period for neither EasiVest
call us for the Direct Payroll nor Direct Payroll
correct form and Purchase. You may Purchase ensures a
more details. start or stop your profit or protects
Investing the same regular investment against loss in a
amount on a monthly plan at any time, falling market.
basis allows you to with two weeks' Because you'll
buy more shares notice to ^ invest continually,
when prices are low INVESCO. regardless of
and fewer shares varying price
when prices are levels, consider
high. This your fiancial
"dollar-cost ability to keep
averaging" may help buying through low
offset market price levels. And
fluctuations. Over remember that you
a period of time, will lose money if
your average cost you redeem your
per share may be shares when the
less then the market value of all
actual average your shares is less
price per share. than their cost.
- --------------------------------------------------------------------------------

By PAL
Your "Personal $1,000; $250 for an Be sure to write
Account Line" is IRA. down the
available for confirmation number
subsequent provided by PAL.
purchases and Payment must be
exchanges 24 hours received within 3
a day. Simply call business days, or
1-800-424-8085. the transaction may
be ^ canceled. If a
purchase is ^
canceled due to
nonpayment, you
will be responsible
for any related
loss the Fund or ^
INVESCO incurs. If
you are already a
shareholder in the
INVESCO funds, the
Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------

<PAGE>
- --------------------------------------------------------------------------------

By Exchange
Between this and $1,000 to open a See "Exchange
another of the new account; $50 Policy," page ^ 42.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
Automatic Monthly minimum is $250 for
Exchange service exchanges requested
between two INVESCO by telephone.)
funds; call ^
INVESCO for further
details and the
correct form.
================================================================================

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. Under this 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
directors of the Company 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 ^
INVESCO- and 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 Company and its board of directors, 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 ^ INVESCO, IDI or
their affiliates or by third parties.

Under the Plan, the ^ Fund's payments to IDI ^ are limited to an amount
computed at an annual rate of 0.25% of the Fund's average net 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 ^ INVESCO or IDI whose primary responsibilities
involve marketing shares of the INVESCO funds, including the Fund. Payment
amounts by the Fund under the Plan, for any month, may 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, although the period is
expanded to 24 months for expenses incurred during the first 24 months of the
Fund's operations. Therefore, any obligations incurred by IDI in excess of the
limitations described above will not be paid by the Fund under the Plan, and

<PAGE>

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 the Plan's termination. Payments made by the
Fund may not be used to finance directly the distribution of shares of any other
Fund of the Company or other mutual fund advised by ^ INVESCO and distributed by
IDI. However, payments received by IDI which are not used to finance the
distribution of shares of ^ the Fund become part of IDI's revenues and may be
used by IDI for activities that promote distribution of any of the mutual funds
advised by ^ INVESCO. Subject to review by the Fund's directors, 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 or INVESCO 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 distributions which may
result from IDI's ^ or INVESCO's use of their own resources, provided that such
fees are legitimate and not excessive. For more information, see "How Shares Can
Be Purchased - Distribution Plan" in the Statement of Additional Information.

FUND SERVICES

Reinvestment of Distributions. Dividends and capital gain distributions are
automatically invested in additional Fund shares at the NAV on the ex-dividend
date, unless you choose to have dividends and/or capital gain distributions
automatically reinvested in another INVESCO fund or paid by check (minimum of
$10.00).

Telephone Transactions. All shareholders may exchange and redeem Fund
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application, a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Fund has
followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephone instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.
<PAGE>

Retirement Plans and IRAs. Fund shares may be purchased for IRAs and many
types of tax-deferred retirement plans. ^ INVESCO can supply you with
information and forms to establish or transfer your existing plan or account.

HOW TO SELL SHARES

The ^ chart on page 47 shows several convenient ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at the current NAV next
determined after a request in proper form redemption may be more or less than
the price you paid to purchase your shares, depending primarily upon the Fund's
investment performance.

Please specify from which fund you wish to redeem shares. Shareholders have
a separate account for each fund in which they invest.

- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
In Writing

Ave., Denver, CO
80237.
- --------------------------------------------------------------------------------
By Exchange

Between this and $1,000 to open a See "Exchange ^
another of the new account; $50 Policy," page ^ 42.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
automatic monthly minimum is $250 for
exchange service exchanges requested
between two INVESCO by telephone.)
funds; call ^
INVESCO for further
details and the
correct form.

<PAGE>

Payment To Third
Party
Mail your request Any amount. All registered
to INVESCO Funds owners of the
Group, Inc., P.O. account must sign
Box 173706 the request, with a
Denver, CO signature guarantee
80217-3706. from an eligible
guarantor financial
institution, such
as a commercial
bank or a
recognized national
or regional
securities firm.
================================================================================

Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances -- for instance, if normal trading is not
taking place on the New York Stock Exchange, or during an emergency as defined
by the Securities and Exchange Commission. If your shares were purchased by a
check which has not yet cleared, payment will be made promptly upon clearance of
the purchase check (which will take up to 15 days).

Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Fund reserves the right to ^ involuntarily redeem all shares in such
account, in which case the account would be liquidated and the proceeds
forwarded to the shareholder. Prior to any such redemption, a shareholder will
be notified and given 60 days to increase the value of the account to $250 or
more.

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. Distribution of all net investment income to shareholders
allows the Fund to maintain its tax status as a regulated investment company.
The Fund does not expect to pay any federal income or excise taxes because of
its tax status as a regulated investment company.

Shareholders must include all dividends and other distributions in taxable
income for federal, state and local income tax purposes, unless they are exempt
from income taxes. 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.

<PAGE>

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. ^ Long-term gains realized between July 29, 1997 and December
31, 1997 on the sale of securities held for more than one year but not for more
than 18 months are taxable at ^ the maximum rate of 28% (depending on the
shareholder's marginal tax rate). Beginning January 1, 1998, the IRS
Restructuring and Reform Act of 1998, signed into effect on July 24, 1998,
lowers the holding period for long-term capital gains entitled to the 20%
capital gains tax rate from 18 months to 12 months. Accordingly, all long-term
gains realized after December 31, 1997 on the sale of securities held for more
than ^ 12 months ^ will be taxable at a maximum 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 adviser as to
the effect of ^ distributions ^ by the Fund.

Shareholders may realize capital gains or losses when they sell their
shares at more or less than the price originally paid. Capital gains 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 it receives 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 gains and other distributions
and redemption proceeds. You can avoid backup withholding on your account by
ensuring that we have a correct, certified tax identification number, unless you
are subject to backup withholding for other reasons.

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 and dividends on 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 expenses,
to shareholders on ^ a quarterly basis, at the discretion of the Company's board
of directors. 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 or derivatives 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^ realized on foreign currency transactions, if any, 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.

Dividend and other distributions are paid to shareholders who hold shares
on the record date of the distribution, regardless of how long the 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

<PAGE>

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 Company have equal voting rights based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. The Company is not generally required and does not
expect to hold regular annual meetings of shareholders. However, when requested
to do so in writing by the holders of 10% or more of the outstanding shares of
the Fund or as may be required by applicable law or the Company's Articles of
Incorporation, the board of directors will call special meetings of
shareholders. Directors may be removed by action of the holders of a majority of
the outstanding shares of the Company's funds. The Company will assist
shareholders in communicating with other shareholders as required by the
Investment Company Act of 1940.

Master/Feeder Option. As a matter of fundamental policy, the Company may,
in the future, seek to achieve the Fund's investment objective by investing all
of the Fund's assets in another investment company having substantially the same
fundamental investment objective, policies and limitations. It is expected that
any such investment company would be managed by ^ INVESCO in substantially the
same manner as the Fund. If permitted by applicable law, any such investment may
be made in the sole discretion of the Company's board of directors without a
vote of the Fund's shareholders. However, shareholders will be given at least 30
days prior notice of any such investment. Such an investment would be made only
if the board of directors determines it to be in the best interests of the Fund
and its shareholders based on potential cost savings, operational efficiencies
or other factors. No assurance can be given that costs would be materially
reduced if this option were implemented.

<PAGE>

INVESCO GROWTH & INCOME FUND
A no-load mutual fund seeking
^ high total return.

PROSPECTUS
^ September 1, 1998

INVESCO FUNDS

INVESCO Distributors, Inc. (SM)
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 Company with
the Securities and Exchange
Commission can be located
on a web site maintained
by the Commission at
http://www.sec.gov.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
^ September 1, 1998

^ INVESCO EQUITY FUNDS, INC.
(formerly, INVESCO Capital Appreciation Funds, Inc.)
INVESCO Dynamics Fund

INVESCO Growth & Income Fund

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 Equity Funds, Inc. (formerly, INVESCO Capital Appreciation Funds, ^
Inc.) (the "Company") is a diversified, no-load management investment company
currently consisting of two separate portfolios of investments, the INVESCO
Dynamics Fund (the "Dynamics Fund")and the INVESCO Growth & Income Fund ("Growth
& Income Fund") (collectively, the "Funds"). INVESCO Dynamics Fund seeks capital
appreciation through aggressive investment policies. The Growth & Income Fund
seeks high total return through a combination of capital appreciation and
current income.

The DYNAMICS FUND seeks to achieve its investment objective of providing
its shareholders appreciation of capital through aggressive investment policies
by investing its assets in a variety of securities which are believed to present
possibilities for capital enhancement. The Dynamics Fund normally invests
primarily in common stocks but may invest in other kinds of securities when
determined appropriate by management. The Dynamics Fund should not be considered
by investors seeking current income.

<PAGE>

The GROWTH AND INCOME FUND seeks to achieve its investment objectives of
providing its shareholders appreciation of capital and current income by
investing primarily in common stocks, preferred stocks and securities
convertible into common stocks of companies which offer growth of earnings and
the payment of current dividends. The Growth & Income Fund may also purchase
securities which do not pay current dividends but which offer prospects for
growth of capital and future income.

Additional funds may be offered in the future.

A Prospectus for the Dynamics Fund dated ^ September 1, 1998 and a
Prospectus for the Growth & Income Fund dated ^ September 1, 1998, which provide
the basic information you should know before investing in the Funds, 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 the Prospectuses. It is intended to provide additional information
regarding the activities and operations of the Funds, and should be read in
conjunction with the Prospectuses.

Investment Adviser: INVESCO FUNDS GROUP, INC.

Distributor: INVESCO DISTRIBUTORS, INC.

<PAGE>

TABLE OF CONTENTS

Page

INVESTMENT POLICIES AND RESTRICTIONS........................................56

THE FUNDS AND THEIR MANAGEMENT..............................................65

HOW SHARES CAN BE PURCHASED.................................................78

HOW SHARES ARE VALUED.......................................................82

FUND PERFORMANCE............................................................83

SERVICES PROVIDED BY THE FUNDS..............................................85

TAX-DEFERRED RETIREMENT PLANS...............................................86

HOW TO REDEEM SHARES........................................................86

DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES...................................87

INVESTMENT PRACTICES........................................................90

ADDITIONAL INFORMATION......................................................93

APPENDIX A..................................................................97

<PAGE>

INVESTMENT POLICIES AND RESTRICTIONS

As discussed in each Fund's Prospectus in the section entitled "Investment
Objective ^ And Strategy" and "Investment Policies^ And Risks," the Funds may
invest in a variety of securities and employ a broad range of investment
techniques in seeking to achieve their respective investment objectives. Such
securities and techniques include the following:

^ Equity Securities. As described in the Prospectuses, equity securities
which may be purchased by the Funds consist of common, preferred and convertible
preferred stocks, and securities having equity characteristics such as rights,
warrants and convertible debt securities. Common stocks and preferred stocks
represent equity ownership interests in a corporation and participate in the
corporation's earnings through dividends which may be declared by the
corporation. Unlike common stocks, preferred stocks are entitled to stated
dividends payable from the corporation's earnings, which in some cases may be
"cumulative" if prior stated dividends have not been paid. Dividends payable on
preferred stock have priority over distributions to holders of common stock, and
preferred stocks generally have preferences on the distribution of assets in the
event of the corporation's liquidation. Preferred stocks may be "participating,"
which means that they may be entitled to dividends in excess of the stated
dividend in certain cases. The rights of common and preferred stocks are
generally subordinate to rights associated with a corporation's debt securities.
Rights and warrants are securities which entitle the holder to purchase the
securities of a company (generally, its common stock) at a specified price
during a specified time period. Because of this feature, the values of rights
and warrants are affected by factors similar to those which determine the prices
of common stocks and exhibit similar behavior (although often more volatile).
Rights and warrants may be purchased directly or acquired in connection with a
corporate reorganization or exchange offer.

Convertible securities which may be purchased by the Funds include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.

Convertible securities have an "investment value" which is the theoretical
value determined by the yield they provide in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. They also have a "conversion value"
which is their worth in market value if the securities were exchanged for their

<PAGE>

underlying equity securities. Conversion value fluctuates directly with the
price of the underlying security. If conversion value is substantially below
investment value, the price of the convertible security is governed principally
by its investment value. If the conversion value is near or above investment
value, the price of the convertible security generally will rise above
investment value and may represent a premium over conversion value due to the
combination of the convertible security's right to interest (or dividend
preference) and the possibility of capital appreciation from the conversion
feature. A convertible security's price, when price is influenced primarily by
its conversion value, generally will yield less than a senior non-convertible
security of comparable investment value. Convertible securities may be purchased
at varying price levels above their investment values or conversion values.
However, there is no assurance that any premium above investment value or
conversion value will be recovered because prices change and, as a result, the
ability to achieve capital appreciation through conversion may be eliminated.

Debt Securities (Growth & Income Fund only). As discussed in the sections
of the ^ Growth & Income Fund's Prospectus entitled ^ "Investment Objective And
Strategy" and "Investment Policies And Risks," the debt securities in which the
Fund invests generally are subject to two kinds of risk: credit risk and market
risk. Credit risk relates to the ability of the issuer to meet interest or
principal payments or both as they come due. The ratings given a debt security
by ^ Moody's Investors Service, Inc. ^("Moody's") and/or Standard & ^ Poor's, a
division of The McGraw-Hill Companies, Inc. ^("S&P") provide a generally useful
guide as to such credit risk. Market risk relates to the fact that the market
values of debt securities in which the Fund invests generally will be affected
by changes in the level of interest rates. An increase in interest rates will
tend to reduce the market values of such debt securities, whereas a decline in
interest rates will tend to increase their values.

Restricted/144A Securities. As discussed in the section of ^ its Prospectus
entitled "Investment Policies And Risks," the Dynamics Fund may invest in
restricted securities including restricted securities that can be resold to
institutional investors pursuant to Rule 144A under the Securities Act of 1933^,
as amended (the "1933 Act") (hereinafter referred to as "Rule 144A Securities"),
if a liquid institutional trading market exists. The Growth & Income Fund can
invest in Rule 144A Securities only.

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.

<PAGE>

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 a Fund could affect adversely the
marketability of such security, and the Fund might be unable to dispose of such
security promptly or at reasonable prices.

The board of directors has delegated to INVESCO the authority to determine
whether a liquid market exists for securities eligible for resale pursuant to
Rule 144A under the 1933 Act, or any successor to such rule, and whether such
securities are subject to the Fund's restriction against investing more than 10%
of its total assets in illiquid securities. Under guidelines established by the
board of directors, INVESCO will consider the following factors, among others,
in making this determination: (1) the unregistered nature of a Rule 144A
security, (2) the frequency of trades and quotes for the security; (3) the
number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (4) dealer undertakings to make a market in the
security; and (5) the nature of the security and the nature of market place
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer.

Repurchase Agreements. As discussed in the section of each Fund's
Prospectus entitled "Investment Policies And Risks," each Fund may invest in
repurchase agreements with respect to debt instruments eligible for investment
by a Fund with member banks of the Federal Reserve System, registered
broker-dealers and registered U.S. government securities dealers which are
believed to be creditworthy under standards established by the Company's board
of directors. A repurchase agreement is an agreement under which the Fund
acquires a debt instrument (generally a security issued by the U.S. government
or an agency thereof, a banker's acceptance or a certificate of deposit) from a
commercial bank, broker or dealer, subject to resale to the seller at an agreed
upon price and date (normally, the next business day). A repurchase agreement
may be considered a loan collateralized by securities. The resale price reflects
an agreed upon interest rate effective for the period the instrument is held by
a Fund and is unrelated to the interest rate on the underlying instrument. In
these transactions, the securities acquired by a Fund (including accrued
interest earned thereon) must have a total value at least equal to the value of
the repurchase agreement and are held as collateral by the Funds' custodian bank
until the repurchase agreement is completed. In addition, the Company's board of
directors monitors the Fund's repurchase agreement transactions and has
established guidelines and standards for review by the investment adviser of the
creditworthiness of any bank, broker or dealer party to a repurchase agreement
with the Fund. The Fund will not enter into repurchase agreements maturing in
more than seven days if as a result more than 10% of its total assets would be
invested in such repurchase agreements and other illiquid securities.

<PAGE>

The use of repurchase agreements involves certain risks. For example, if
the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss upon disposition of the security. If the other party to
the agreement becomes insolvent ^, the Fund may experience costs and delays in
realizing on the collateral. Finally, it is possible that the Fund may not be
able to substantiate its interest in the underlying security and may be deemed
an unsecured creditor of the other party to the agreement. While ^ INVESCO
acknowledges these risks, it is expected that the risks can be minimized through
careful monitoring procedures.

^ Securities Lending. As described in the section of each Fund's Prospectus
entitled "Investment Policies And Risks," each Fund may lend its portfolio
securities to qualified brokers, dealers, banks or other financial institutions,
provided that such loans are callable at any time by the Fund and are at all
times secured by collateral consisting of cash, letters of credit, 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 the Fund continues to
have the benefits (and risks) of ownership of the loaned securities, while at
the same time receiving income from the borrower of the securities. Loans will
be made only to firms deemed by the adviser ^(under procedures established by
the Company's board of directors) to be creditworthy and when the amount of
interest income to be received justifies the inherent risks. A loan may be
terminated by the borrower on one business day's notice, or by the 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, plus
accrued interest and dividends), 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, the 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 the Fund. Any gain or loss
during the loan period would inure to the Fund.

Futures and Options on Futures (Growth & Income Fund only). As described in
the ^ Growth & Income Fund's Prospectus, the Fund may enter into futures
contracts, and purchase and sell ("write") options to buy or sell futures
contracts. The 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 as conditions for exemption of a mutual fund, or the
investment advisers thereto, from registration as a commodity pool operator. The
Fund will not, 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.) The 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.

<PAGE>

Unlike when the Fund purchases or sells a security, no price is paid or
received by the 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, ^ because losses on open contracts are required to be reflected in cash
in the form of variation margin payments, the 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 the Fund, there was a general increase in
interest rates, thereby making the Fund's portfolio securities less valuable. In
all instances involving the purchase of financial futures contracts by the 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 the Fund's custodian to collateralize the position. At any time prior to
the expiration of a futures contract, the Fund may elect to close its position
by taking an opposite position which will operate to terminate the Fund's
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 the 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 the 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^ (Growth & Income Fund only). The Growth &
Income Fund may buy and write options on futures contracts for hedging purposes;
options are also included in the types of instruments sometimes known as
derivatives. 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 the Fund is not fully invested it may buy a call option
on a futures contract to hedge against a market advance.

<PAGE>

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, the
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the 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,
the 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 the Fund has written is
exercised, the 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, the 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 options on portfolio securities. For
example, the Fund may buy a put option on a futures contract to hedge the Fund's
portfolio against the risk of falling prices.

The amount of risk the 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.

Forward Foreign Currency Contracts. The Funds^ may enter into forward
currency contracts, which are included in the types of instruments sometimes
known as derivatives, to purchase or sell foreign currencies (i.e., non-U.S.
currencies) as a hedge against possible variations in foreign exchange rates. A
forward foreign currency exchange contract ("forward 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. Although the ^ Funds have not adopted any
limitations on ^ their ability to use forward contracts as a hedge against
fluctuations in foreign exchange rates, the ^ Funds do 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 its investment adviser ^. The
^ Funds will not enter into forward contracts for a term of more than one year.

<PAGE>

Investment Restrictions. As described in the section of the ^ Prospectuses
entitled "Investment Policies And Risks," each Fund ^ operates under certain ^
investment restrictions. ^ For purposes of the following limitations, all
percentage limitations apply immediately after a purchase or initial investment.
Any subsequent change in a particular percentage resulting from fluctuations in
value does not require elimination of any security from a Fund.

INVESCO Dynamics Fund

The following restrictions are fundamental and may not be changed with
respect to the INVESCO Dynamics 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"). Under these restrictions, the Dynamics
Fund may not:

(1) issue preference shares or create any funded debt;

(2) sell short or buy on margin;

(3) borrow money (in the event the board of directors should authorize the
borrowing of money for the purpose of exercising permissive leverage)
unless immediately thereafter the Fund's total net assets equal at
least 400% of all borrowings, except that the percentage may be less
than 400% if reduced because of changes in the value of the Fund's
investments, but it is required at all times to comply with the
provisions of the Investment Company Act of 1940 and to maintain asset
coverage of at least 300%. The Fund may borrow only from banks;

(4) buy or sell real estate (however, the Fund may purchase securities of
companies investing in real estate), commodities or commodity
contracts;

(5) invest in securities of any other investment company except for a
purchase or acquisition in accordance with a plan of reorganization,
merger or consolidation;

(6) invest in any company for the purpose of exercising control or
management;

(7) purchase the securities of any company if as a result of such purchase
more than 10% of total assets would be invested in securities that are
illiquid because of the legal or contractual restrictions on resale to
which they are subject ("restricted securities"), or because there are
no readily available market quotations for such securities, or enter
into a repurchase agreement maturing in more than seven days, if as a
result, such repurchase agreements, together with illiquid securities,
would constitute more than 10% of total assets;

(8) purchase securities if the purchase would cause the Fund, at the time,
to have more than 5% of its total assets invested in the securities of
any one issuer or to own more than 10% of the voting securities of any
one issuer (except obligations issued or guaranteed by the U.S.
Government);

(9) engage in the underwriting of any securities;

<PAGE>

(10) make loans to any person, except through the purchase of debt
securities in accordance with the Fund's investment policies, or the
lending of portfolio securities to broker-dealers or other
institutional investors, or the entering into repurchase agreements
with member banks of the Federal Reserve System, registered
broker-dealers and registered government securities dealers. The
aggregate value of all portfolio securities loaned may not exceed
33-1/3% of the Fund's total net assets (taken at current value). No
more than 10% of the Fund's total net assets may be invested in
repurchase agreements maturing in more than seven days;

(11) purchase securities of any company in which any officer or director of
the Fund or its investment adviser owns more than 1/2 of 1% of the
outstanding securities, or in which all of the officers or directors
of the Fund and its investment supervisor, as a group, own more than
5% of such securities; or

(12) invest more than 25% of the value of the Fund's assets in one
particular industry.

In applying restriction (7) above, the 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 10% of total assets limit. The board of directors has
delegated to the Fund's investment adviser the authority to determine that a
liquid market exists for securities eligible for resale pursuant to Rule 144A
under the 1933 Act, or any successor to such rule, and that such securities are
not subject to the Fund's ^ 10% of total assets limitations on investing in
securities that are not readily marketable, discussed below. Under guidelines
established by the board of directors, the adviser will consider the following
factors, among others, in making this determination: (1) the unregistered nature
of a Rule 144A security; (2) the frequency of trades and quotes for the
security; (3) the number of dealers willing to purchase or sell the security and
the number of other potential purchasers; (4) dealer undertakings to make a
market in the security; and (5) the nature of the security and the nature of
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers and the mechanics of transfer). However, Rule 144A
Securities are still subject to the Fund's 10% of total assets limitation on
investments in restricted securities (securities for which there are legal or
contractual restrictions on resale).

In applying restriction (12) above, the Fund uses a modified S&P industry
code classification schema which uses various sources to classify.

INVESCO Growth & Income Fund

The following restrictions are fundamental and may not be changed with
respect to the Growth & Income Fund without the prior approval of the holders of
a majority of the outstanding voting securities of the Fund, as defined in the
1940 Act. Under these restrictions, the Growth & Income Fund will not:

(1) issue preference shares or create any funded debt;

(2) borrow money in excess of 5% of the value of its total assets and then
only from banks, and when borrowing, it is a temporary measure for
emergency purposes*;

<PAGE>

(3) invest in the securities of any other investment company except for a
purchase or acquisition in accordance with a plan of reorganization,
merger or consolidation;

(4) with respect to 75% of its total assets, purchase securities if the
purchase would cause the Fund, at the time, to have more than 5% of
the value of its total assets invested in the securities of any one
company or to own more than 10% of the voting securities of any one
company (except obligations issued or guaranteed by the U.S.
Government);

(5) make loans to any person, except through the purchase of debt
securities in accordance with the Fund's investment policies, or the
lending of portfolio securities to broker-dealers or other
institutional investors, or the entering into repurchase agreements
with member banks of the Federal Reserve System, registered
broker-dealers and registered government securities dealers. The
aggregate value of all portfolio securities loaned may not exceed
33-1/3% of the Fund's total assets (taken at current value). No more
than 10% of the Fund's total assets may be invested in repurchase
agreements maturing in more than seven days;

(6) invest in any company for the purpose of exercising control or
management;

(7) buy other than readily marketable securities;

(8) engage in the underwriting of any securities;

(9) purchase securities of any company in which any officer or director of
the Fund or its investment adviser owns more than 1/2 of 1% of the
outstanding securities, or in which all of the officers and directors
of the Fund and its investment adviser, as a group, own more than 5%
of such securities;

(10) invest more than 25% of the value of the Fund's total assets in one
particular industry.

*The Fund has no intention of borrowing money for other than temporary cash flow
purposes in the foreseeable future unless unexpected developments make borrowing
of money by the Fund under this fundamental investment restriction desirable in
order to allow the Fund to meet its obligation (e.g., processing redemptions in
a timely manner).

With respect to investment restriction (7) above, the board of directors
has delegated to the Funds' investment adviser the authority to determine
whether a liquid market exists for securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933, or any successor to such rule, and
whether or not such securities are subject to restriction (9) above. Under
guidelines established by the board of directors, the adviser will consider the
following factors, among others, in making this determination: (1) the
unregistered nature of a Rule 144A security; (2) the frequency of trades and
quotes for the security; (3) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (4) dealer
undertakings to make a market in the security; and (5) the nature of the
security and the nature of marketplace trades (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of transfer).

<PAGE>

In applying restriction (10) above, the Fund uses a modified S&P industry
code classification schema which uses various sources to classify.

The following non-fundamental investment restrictions have been adopted by
the Fund. These investment restrictions may be changed by the directors at their
discretion, without shareholder approval:

(1) The Fund will not enter into any futures contracts, options on
futures, puts and calls if immediately thereafter the aggregate margin
deposits on all outstanding derivatives positions held by the 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.

(2) The Fund will not enter into any derivatives positions if the
aggregate net amount of the Fund's commitments under outstanding
derivatives positions of the Fund would exceed the market value of the
total assets of the Fund.

THE FUNDS AND THEIR MANAGEMENT

The Company. The Company was incorporated as INVESCO Dynamics Fund, Inc. on
April 2, 1993, under the laws of Maryland. On July 1, 1993, the Company assumed
all of the assets and liabilities of Financial Dynamics Fund, Inc. ("FDF"),
which was incorporated in Colorado on February 17, 1997. All financial and other
information about the Company for periods prior to July 1, 1993, relates to FDF.
The name of the Company was changed to INVESCO Capital Appreciation Funds, Inc.
on July 3, 1997. On August 28, 1998, the name of the Company was changed to
INVESCO Equity Funds, Inc.

The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
^("INVESCO"), is employed as the Company's investment adviser. ^ INVESCO was
established in 1932 and also serves as an investment adviser to 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 Value
Trust, and INVESCO Variable Investment Funds, Inc.

The Investment Sub-Adviser. Prior to February 3, 1998, Institutional Trust
Company ("ITC")^ (formerly INVESCO Trust Company^) provided sub-advisory
services to the Dynamics Fund. Effective February 3, 1998, ITC no longer ^
provided sub-advisory ^ services to this Fund and ^ INVESCO provides such
day-to-day portfolio management services as the investment adviser to the
Dynamics Fund. This change in no way ^ changed the basis upon which investment
advice is provided to the Dynamics Fund, the cost of those services to this Fund
or the persons actually performing the investment advisory and other services
previously provided by ITC.

<PAGE>

The Distributor. Effective September 30, 1997 ^(upon inception with respect
to the Growth & Income Fund^), 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 ^ INVESCO. Prior to
September 30, 1997, ^ INVESCO served as the Dynamics Fund's distributor.

^ INVESCO 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 ^ $261 billion in assets under
management^ as of June 30, 1998. INVESCO was established in 1932 and as of ^
April 30, 1998, managed 14 mutual funds, consisting of ^ 48 separate portfolios,
on behalf of ^ 1,492,189 shareholders.

AMVESCAP PLC's North American subsidiaries include the following:

--ITC of Denver, Colorado, provides retirement account custodian and/or
trust services for individual retirement accounts ^("IRAs") and other retirement
plan accounts. This includes services such as recordkeeping, tax reporting and
compliance. ITC acts as trustee or custodian to these plans. ITC accepts
contributions and provides, through ^ INVESCO, complete transfer agency
functions: correspondence, subaccounting, telephone communications and
processing of distributions.

--INVESCO Capital Management, Inc. of Atlanta, Georgia, manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments, and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer whose primary business is the
distribution of shares of two registered investment companies.

--INVESCO Management & Research, Inc. of Boston, Massachusetts, primarily
manages pension and endowment accounts.

<PAGE>

--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 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 pension plans and public pension funds as
well as 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, EC2M4YR, England.

As indicated in the Funds' Prospectuses, ^ INVESCO permits investment and
other personnel to purchase and sell securities for their own accounts in
accordance with a compliance policy governing personal investing by directors,
officers and employees of ^ INVESCO and its North American affiliates. The
policy requires officers, inside directors, investment and other personnel of ^
INVESCO and its North American affiliates to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal transaction
would be contrary to the provisions of the policy or would be deemed to
adversely affect any transaction then known to be under consideration for or to
have been effected on behalf of any client account, including the Funds.

In addition to the pre-clearance requirement described above, the policy
subjects officers, inside directors, investment and other personnel of ^ INVESCO
and its North American affiliates to various trading restrictions and reporting
obligations. All reportable transactions are reviewed for compliance with the
policy. The provisions of the policy are administered by and subject to
exceptions authorized by ^ INVESCO.

<PAGE>

Investment Advisory Agreement. ^ INVESCO serves as investment adviser to
the Funds pursuant to an investment advisory agreement dated February 28, 1997
(the "Agreement") with the Company which was approved by the board of directors
on November 6, 1996, by a vote cast in person by a majority of the directors of
the Company, including a majority of the directors who are not "interested
persons" of the Company or ^ INVESCO at a meeting called for such purpose.
Shareholders of the Dynamics Fund approved the Agreement on January 31, 1997 for
an initial term expiring February 28, 1999. On May 13, 1998, this period was
extended by the Company's board of directors to May 15, 1999. With respect to
the Growth & Income Fund, the Agreement was approved by ^ INVESCO on ^ May 13,
1998, for an initial term expiring ^ May 15, 1999. Thereafter, the Agreement may
be continued from year to year with respect to each Fund as long as each such
continuance is specifically approved at least annually by the board of directors
of the Company, or by a vote of the holders of a majority, as defined in the
1940 Act, of the outstanding shares of the ^ applicable Fund. Any such
continuance also must be approved by a majority of the Company's directors who
are not parties to the Agreement or interested persons (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such continuance. The Agreement may be terminated at any time without
penalty by either party or by a Fund with respect to that Fund, upon sixty (60)
days' written notice and terminates automatically in the event of an assignment
to the extent required by the 1940 Act and the rules thereunder.

The Agreement provides that ^ INVESCO shall manage the investment
portfolios of the Funds in conformity with each Fund's investment policies^.
Further, INVESCO shall perform all administrative, internal accounting
(including computation of net asset value), clerical, statistical, secretarial
and all other services necessary or incidental to the administration of the
affairs of the Funds excluding, however, those services that are the subject of
separate agreement between the Company and ^ INVESCO or any affiliate thereof,
including the distribution and sale of each Fund's shares and provision of
transfer agency, dividend disbursing agency, and registrar services, and
services furnished under an Administrative Services Agreement with ^ INVESCO
discussed below. Services provided under the Agreement include, but are not
limited to: supplying the Company 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 ^ INVESCO's
in-house legal and accounting staff (including the prospectus, statement of
additional information, proxy statements, shareholder reports, tax returns,
reports to the SEC, and other corporate documents of the Funds), except insofar

<PAGE>

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 ^ INVESCO
are borne by the Funds.

As full compensation for its advisory services to the Company, ^ INVESCO
receives a monthly fee. With respect to the Dynamics Fund, the fee is calculated
daily at the annual rate of 0.60% on the first $350 million of the Fund's
average net assets; 0.55% on the next $350 million of the Fund's average net
assets; and 0.50% on the Fund's average net assets in excess of $700 million.
For the fiscal years ended April 30, 1998, 1997 and 1996, the Dynamics Fund paid
INVESCO advisory fees of $5,874,212, $4,550,303 and $3,382,286, respectively.
With respect to the Growth & Income Fund, the fee is calculated at the annual
rate of 0.75% of the Funds' average net assets. The Growth & Income Fund did not
pay advisory fees as of April 30, 1998 as the Fund did not commence operations
until June 30, 1998.

Administrative Services Agreement. ^ INVESCO, either directly or through
affiliated companies, also provides certain administrative, sub-accounting, and
recordkeeping services to the ^ Funds pursuant to an Administrative Services
Agreement dated February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved on November 6, 1996, by a vote cast in
person by all of the directors of the Company, including all of the directors
who are not "interested persons" of the Company or ^ INVESCO at a meeting called
for such purpose. The Administrative Agreement was for an initial term expiring
February 28, 1998 and has been extended by action of the board of directors
until May 15, 1999. The Administrative Agreement may be continued from year to
year as long as each such continuance is specifically approved by the board of
directors of the Company, including a majority of the directors who are not
parties to the Administrative Agreement or interested persons (as defined in the
Investment Company Act of 1940) of any such party, cast in person at a meeting
called for the purpose of voting on such continuance. The Administrative
Agreement may be terminated at any time without penalty by ^ INVESCO on sixty
(60) days' written notice, or by the Company upon thirty (30) days' written
notice, and terminates automatically in the event of an assignment unless the
Company's board of directors approves such assignment.

The Administrative Agreement provides that ^ INVESCO shall provide the
following services to the Funds: (A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Funds; and (B) such sub-accounting, recordkeeping, and administrative services
and functions, which may be provided by affiliates of ^ INVESCO, as are
reasonably necessary for the operation of Fund shareholder accounts maintained
by certain retirement plans and employee benefit plans for the benefit of
participants in such plans.

<PAGE>

As full compensation for services provided under the Administrative
Agreement, each Fund pays a monthly fee to ^ INVESCO consisting of a base fee of
$10,000 per year, plus an additional incremental fee computed daily and paid
monthly at an annual rate of 0.015% per year of the average net assets of the
applicable Fund. During the fiscal years ended April 30, 1998, 1997^ and 1996 ^,
the Dynamics Fund paid ^ INVESCO administrative services fees in the amount of
$170,476, $130,696^ and $97,509 ^, respectively. The Growth & Income Fund did
not pay ^ INVESCO administrative services fees as of April 30, ^ 1998 as the
Fund did not commence operations until June 30, 1998.

Transfer Agency Agreement. ^ INVESCO also performs transfer agent, dividend
disbursing agent, and registrar services for the ^ Funds pursuant to a Transfer
Agency Agreement dated February 28, 1997 which was approved by the board of
directors of the Company, including a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or "interested persons" of any
such party, on November 6, 1996, for an initial term expiring February 28, 1998
^, which has been extended by action of the board of directors until May 15,
1999. Thereafter the Transfer Agency Agreement may be continued from year to
year with respect to a Fund as long as such continuance is specifically approved
at least annually by the board of directors of the Company, or by a vote of the
holders of a majority of the outstanding shares of ^ such Fund. Any such
continuance also must be approved by a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or interested persons (as
defined by the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such continuance. The Transfer Agency Agreement may
be terminated at any time without penalty by either party upon sixty (60) days'
written notice and terminates automatically in the event of assignment.

The Transfer Agency Agreement provides that the Funds shall pay to ^
INVESCO an annual fee of $20.00 per shareholder account, or, where applicable,
per participant in an omnibus account ^. This fee is paid monthly at 1/12 of the
annual fee and is based upon the actual number of shareholder accounts and
omnibus account participants in existence at any time during each month. For the
fiscal years ended April 30, 1998, 1997^ and 1996 ^, the Dynamics Fund paid ^
INVESCO transfer agency fees of $2,156,766, $1,964,970^ and $1,108,321 ^(prior
to the voluntary absorption of certain Fund expenses by INVESCO), respectively.
The Growth & Income Fund did not pay ^ INVESCO transfer agency fees as of April
30, ^ 1998 as the Fund did not commence operations until June 30, 1998.

<PAGE>

Officers and Directors of the Company. The overall direction and
supervision of the Company is the responsibility of the board of directors,
which has the primary duty of seeing that the general investment policies and
programs of each of the Funds are carried out and that the Funds are properly
administered. The officers of the Company, all of whom are officers and
employees of, and paid by ^ INVESCO, are responsible for the day-to-day
administration of the Company and each of the Funds. The investment adviser for
each Fund has the primary responsibility for making investment decisions on
behalf of that Fund. These investment decisions are reviewed by the investment
committee of ^ INVESCO.

All of the officers and directors of the Company hold comparable positions
with 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. All of the directors of the Company also serve
as trustees of INVESCO Value Trust^ and INVESCO Treasurer's Series Trust. All of
the officers of the Company also hold comparable positions with INVESCO Value
Trust and INVESCO Treasurer's Series Trust. Set forth below is information with
respect to each of the Company's officers and directors. Unless otherwise
indicated, the address of the directors and officers is Post Office Box 173706,
Denver, Colorado 80217-3706. Their affiliations represent their principal
occupations during at least 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^.
Address: 1315 Peachtree Street, NE, Atlanta, Georgia. Born: May 11, 1935.

FRED A. DEERING,+# Vice Chairman of the Board. ^ 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^. Address: Security Life Center,
1290 Broadway, Denver, Colorado. Born: January 12, 1928.
^
VICTOR L. ANDREWS,**@ Director. Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance at Georgia State
University, Atlanta, Georgia; President, Andrews Financial Associates, Inc.
(consulting firm); since October 1984, Director of the Center for the Study of
Regulated Industry of 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: ^ 34 Seawatch Drive, Atlanta,
Georgia. Born: June 23, 1930. ^

<PAGE>

BOB R. BAKER,+** Director. President and Chief Executive Officer of AMC
Cancer Research Center, Denver, Colorado, since January 1989; until mid-December
1988, Vice Chairman of the Board of First Columbia Financial Corporation (a
financial institution), Englewood, Colorado. Formerly, Chairman of the Board and
Chief Executive Officer of First Columbia Financial Corporation. Address: 1775
Sherman Street, #1000, Denver, Colorado. Born: August 7, 1936.

LAWRENCE H. BUDNER,#@@ Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930.
^

WENDY L. GRAMM, Ph.D.,**@ Director. 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, Independent 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.

^ KENNETH T. KING,#@@ Director. Formerly, Chairman of the Board of The
Capitol Life Insurance Company, Providence Washington Insurance Company, and
Director of numerous subsidiaries thereof in the U.S. Formerly, Chairman of the
Board of The Providence Capitol Companies in the United Kingdom and Guernsey.
Chairman of the Board of the Symbion Corporation (a high technology company)
until 1987. Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born:
November 16, 1925.

JOHN W. MCINTYRE,#@@ Director. Retired. Formerly, Vice Chairman of the
Board of Directors of The Citizens and Southern Corporation and Chairman of the
Board and Chief Executive Officer of The Citizens and Southern Georgia ^
Corporation and Citizens and Southern National Bank. ^ Trustee of INVESCO Global
Health Sciences Fund and Gables Residential Trust. Address: 7 Piedmont Center,
Suite 100, Atlanta, GA. Born: September 14, 1930.

<PAGE>

LARRY SOLL, Ph.D.,**@ Director. Retired. 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 its
incorporation in 1982. Director of ISI Pharmaceuticals, Inc. Trustee of INVESCO
Global Health Sciences Fund. Address: 345 Poorman Road, Boulder, Colorado. Born:
April 26, 1942.

MARK H. WILLIAMSON,+* President, CEO and Director. President, CEO and
Director of INVESCO Distributors, Inc.; President, CEO and Director of INVESCO
Funds Group, Inc. and President of INVESCO Global Health Sciences Fund.
Formerly, Chairman and CEO of NationsBanc Advisors, Inc. (1995 to 1997) and
Chairman of NationsBanc Investments, Inc. (1997 to 1998). Born: May 24, 1951.

GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel (since 1989) and Secretary (since 1989) of INVESCO Funds Group, Inc. and
^ Senior Vice President, General Counsel and Secretary of INVESCO Distributors,
Inc. (since 1997); Vice President (May 1989 to April 1995)^ of INVESCO Funds
Group, Inc.; ^ Senior Vice President, (since 1995), General Counsel (since 1989)
and Secretary (1989 to 1998) of Institutional Trust Company. Formerly, employee
of a U.S. regulatory agency, Washington, D.C. (June 1973 through May 1989).
Born: September 25, 1947.

RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO
Funds Group, Inc. ^(since 1988). Senior Vice President and Treasurer of INVESCO
Distributors, Inc. (since 1997). Senior Vice President and Treasurer of
Institutional Trust Company (1988 to 1998) 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 ^ Institutional Trust Company ^(1995 to 1998); 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
and 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) ^. Formerly, Trust Officer of ^ Institutional 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) ^. Formerly,
Trust Officer of ^ Institutional Trust Company. Born: February 3, 1948.

#Member of the audit committee of the Company's board of directors.

@Member of the derivatives committee of the Company's board of directors.

<PAGE>

@@Member of the soft dollar committee of the Company's board of directors.

+Member of the executive committee of the Company's board of directors. On
occasion, the executive committee acts upon the current and ordinary business of
the Company between meetings of the board of directors. Except for certain
powers which, under applicable law, may only be exercised by the full board of
directors, the executive committee may exercise all powers and authority of the
board of directors in the management of the business of the Company. All
decisions are subsequently submitted for ratification by the board of ^
directors.

*These directors are "interested persons" of the Company as defined in the
Investment Company Act of 1940.

**Member of the management liaison committee of the Company's board of
directors.

As of ^ August 24, 1998, officers and directors of the Company, as a group,
beneficially owned less than 1% of the Company's outstanding shares and less
than 1% of each Fund's outstanding shares.

Director Compensation

The following table sets forth, for the fiscal year ended April 30, ^ 1998:
the compensation paid by the Company to its ^ independent directors for services
rendered in their capacities as directors of the Company; the benefits accrued
as Company expenses with respect to the Defined Benefit Deferred Compensation
Plan discussed below; and the estimated annual benefits to be received by these
directors upon retirement as a result of their service to the Company. In
addition, the table sets forth the total compensation paid by all of the mutual
funds distributed by IDI and advised by INVESCO ^(including the Company), ^
INVESCO Treasurer's Series Trust, and INVESCO Global Health Sciences Fund
(collectively, the "INVESCO Complex") to these directors for services rendered
in their capacities as directors or trustees during the year ended December 31,
^ 1997. As of December 31, ^ 1997, there were 49 funds in the INVESCO Complex.

<PAGE>

Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued Annual INVESCO
Name of Compensa- As Part Benefits Complex
Person, tion From of Company Upon Re- Paid To
Position Company(1) Expenses(2) tirement(3) Directors(1)

Fred A. Deering, $ ^ 3,488 $ 2,675 $1,717 $113,350
Vice Chairman of
the Board

Victor L. Andrews ^ 3,487 2,528 1,987 92,700

Bob R. Baker ^ 3,644 2,257 2,663 96,050

Lawrence H. Budner ^ 3,385 2,528 1,987 91,000

Daniel D. Chabris(4) 3,369 2,733 1,483 89,350

Wendy L. Gramm 2,297 0 0 39,000

Kenneth T. King 3,143 2,778 1,557 94,350

John W. McIntyre 3,183 0 0 104,000

Larry Soll 2,978 0 0 78,000
------ ------ ----- -------

Total $28,974 $15,499 11,394 $797,800

% of Net Assets 0.0022%(6) 0.0012%(5) 0.0046%(6)

(1)The vice chairman of the board, the chairmen of the audit, management
liaison, derivatives, soft dollar brokerage, and compensation committees, and
the members of the executive and valuation committees each receive compensation
for serving in such capacities in addition to the compensation paid to all
independent directors.

(2)Represents estimated benefits accrued with respect to the Defined
Benefit Deferred Compensation Plan discussed below, and not compensation
deferred at the election of the directors.

(3)These figures represent the Company'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
directors' retirement, calculated using the current method of allocating
director compensation among the funds in the INVESCO Complex. These estimated
benefits assume retirement at age 72 and that the basic retainer payable to the

<PAGE>

directors will be adjusted periodically for inflation, for increases in the
number of funds in the INVESCO Complex, and for other reasons during the period
in which retirement benefits are accrued on behalf of the respective directors.
This results in lower estimated benefits for directors who are closer to
retirement and higher estimated benefits for directors who are further from
retirement. With the exception of ^ Mr. McIntyre and Drs. Gramm and Soll, each
of these directors has served as a director/trustee of one or more of the funds
in the INVESCO Complex for the minimum five-year period required to be eligible
to participate in the Defined Benefit Deferred Compensation Plan.

^ (4)Mr. Chabris is retired as a director effective September 30, 1998.

(5)Totals as a percentage of the Company's net assets as of April 30, ^
1998.

(6)Total as a percentage of the net assets of the INVESCO Complex as of
December 31, ^ 1997.

Messrs. Brady and ^ Williamson, as "interested persons" of the Company, the
^ Funds and the other funds in the INVESCO Complex, receive compensation as
officers or employees of INVESCO or its affiliated companies, and do not receive
any director's fees or other compensation from the Company or the other funds in
the INVESCO Complex for their service as directors.

The boards of directors/trustees of the mutual funds managed by ^ INVESCO
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 ^ termination of service as a
director (normally at the retirement age of 72) (or the retirement age of 73 or
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 and annualized board meeting
fees payable by the funds to the qualified director at the time of his or her
retirement (the "basic retainer"). Commencing with any such director's second
year of retirement, and commencing with the first year of retirement of a
director whose retirement has been extended by the board for three years, a
qualified director shall receive quarterly payments at an annual rate equal to ^
50% of the basic retainer and annualized board meeting fees. These payments will
continue for the remainder of the qualified director's life or ten years,
whichever is longer (the "reduced retainer payments"). If a qualified director
dies or becomes disabled after age 72 and before age 74 while still a director
of the funds, the first year retirement benefit and the reduced retainer

<PAGE>

payments will be made to him or her or to his or her beneficiary or estate. If a
qualified director becomes disabled or dies either prior to age 72 or during his
or her 74th year while still a director of the funds, the director will not be
entitled to receive the first year retirement benefit; however, the reduced
retainer payments will be made to his or her beneficiary or estate. The plan is
administered by a committee of three directors who are also participants in the
plan and one director who is not a plan participant. The cost of the plan will
be allocated among the ^ INVESCO and Treasurer's Series funds in a manner
determined to be fair and equitable by the committee. Although the Company is
not making any payments to directors under the plan as of the date of this
Statement of Additional Information, it has begun to accrue, as a current
expense, a proportionate amount of the estimated future cost of these benefits.
The Company 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 independent directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of the INVESCO and
Treasurer's Series Funds. The deferred amounts are being invested in the shares
of all of the INVESCO and Treasurer's Series Funds. Each independent director
is, therefore, an indirect owner of shares of each INVESCO and Treasurer's
Series Funds.

The Company has an audit committee that is comprised of ^ four of the
directors who are not interested persons of the Company. The committee meets
periodically with the Company's independent accountants and officers to review
accounting principles used by the Company, the adequacy of internal controls,
the responsibilities and fees of the independent accountants, and other matters.

The Company also has a management liaison committee which meets quarterly
with various management personnel of INVESCO in order (a) to facilitate better
understanding of management and operations of the Company, and (b) to review
legal and operational matters which have been assigned to the committee by the
board of directors, in furtherance of the board of directors' overall duty of
supervision.

The Company also has a soft dollar committee. The committee meets
periodically to review soft dollar brokerage transactions by the Funds, and to
review policies and procedures of the Funds' adviser with respect to soft dollar
brokerage transactions. It reports on these matters to the Company's board of
directors.

The Company also has a derivatives committee. The committee meets
periodically to review derivaties investments made by the Funds. It monitors
derivatives usage by the Funds and the procedures utilized by the Funds' adviser
to ensure that the use of such instruments follows the policies on such
instruments adopted by the board of directors. It reports on these matters to
the Company's board of directors.

<PAGE>

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 for each Fund is computed separately
for each Fund and is determined once each day that the New York Stock Exchange
is open as of the close of regular trading on that Exchange, but may also be
computed at other times. See "How Shares Are Valued."

The Company has authorized one or more brokers to accept purchase orders on
the Funds' behalf. Such brokers are authorized to designate other intermediaries
to accept purchase orders on the Funds' behalf. The Funds will be deemed to have
received a purchase order when an authorized broker or, if applicable, a
broker's authorized designee, accepts the order. A purchase order will be priced
at a Fund's Net Asset Value next calculated after the order has been accepted by
an authorized broker or the broker's authorized designee.

IDI acts as the Funds' ^ distributor under a distribution agreement with
the Funds^ and bears all ^ expenses, including the costs of printing and
distribution of prospectuses incident to direct sales and distribution of Fund
shares on a no-load basis.

Distribution Plan. As discussed under "How to Buy Shares -Distribution
Expenses" in the Prospectus, the Company has adopted a Plan and Agreement of
Distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act, which was
implemented on November 1, 1990, with respect to the Dynamics Fund, and upon
inception with respect to the Growth & Income Fund. The Plan provides that each
Fund may make monthly payments to ^ IDI of amounts computed at an annual rate no
greater than 0.25% of the Fund's average net assets to permit ^ IDI, at its
discretion, to engage in certain activities and provide services in connection
with the distribution of each Fund's shares to investors. Payment by a 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, although the period is extended to 24 months
for obligations incurred during the first 24 months of a Fund's operations. For
the fiscal year ended April 30, ^ 1998, the Dynamics Fund made payments to ^
INVESCO (the predecessor of IDI as the distributor of Dynamics Fund shares) and
IDI under the Plan in the amount of ^ $2,557,942. In addition, as of April 30, ^
1998, $269,691 of additional distribution accruals had been incurred by the
Dynamics Fund and will be paid during the fiscal year ended April 30, ^ 1999. As
noted in the section of each Fund's Prospectus entitled "How to Buy

<PAGE>

Shares-Distribution Expenses," one type of expenditure is the payment of
compensation to securities companies and other financial institutions and
organizations, which may include ^ INVESCO-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 the Funds 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 Company does 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 the Funds possibly could decrease to
the extent that the banks would no longer invest customer assets in a particular
Fund. Neither the Company 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.

For the fiscal year ended April 30, ^ 1998, allocation of 12b-1 amounts
paid by the Dynamics Fund for the following categories of expenses were:
advertising--^ $199,581; sales literature, printing, and postage--^ $214,762;
direct mail--^ $99,663; public relations/promotion--^ $72,334; compensation to
securities dealers and other organizations--^ $1,554,820; and marketing
personnel--^ $416,782. There were no allocations made with respect to the Growth
& Income Fund as of April 30, ^ 1998, as the Fund did not commence operations
until June 30, 1998.

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 Company's Transfer Agent computer-processable tapes of all Fund 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 was approved on April 21, 1993, at a meeting called for such
purpose, by a majority of the directors of the Company, including a majority of
the directors who neither are "interested persons" of the Company nor have any
financial interest in the operation of the Plan ^("independent directors").
Pursuant to authorization granted by the public shareholders of FDF on May 24,
1993, FDF, as the initial shareholder of the Fund, approved the Plan on June 24,
1993 for an initial term expiring April 30, 1994. The Plan has been continued by
action of the board of directors until May 15, 1999. With respect to the
Dynamics Fund, the board of directors, on February 4, 1997, approved amending

<PAGE>

the Plan, effective January 1, 1997, to convert the Plan to a compensation type
Rule 12b-1 plan. This amendment of the Plan did not result in increasing the
amount of the Fund's payments thereunder. With respect to the Growth & Income
Fund, the Plan ^ was approved by action of the board of directors of the Company
for an initial period expiring May 15, 1999. Pursuant to authorization granted
by the Company's board of directors on September 2, 1997, a new Plan became
effective on September 29, 1997, under which IDI assumed all obligations related
to distribution from INVESCO.

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 directors of the Company 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 ^
independent directors, or shareholders of such Fund, vote to terminate the Plan.
The Company may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the board of directors intends to consider all relevant factors
including, without limitation, the size of the Funds, 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, the Company is not 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 or her shares. So long as the Plan is in effect, the
selection and nomination of persons to serve as ^ independent directors of the
Company shall be committed to the ^ independent directors then in office at the
time of such selection or nomination. The Plan may not be amended to increase
materially the amount of a Fund's payments thereunder without approval of the
shareholders of such Fund, and all material amendments to the Plan must be
approved by the board of directors of the Company, including a majority of the ^
independent directors. Under the agreement implementing the Plan, ^ IDI or the
Funds, the latter by vote of a majority of the ^ independent directors or of the
holders of a majority of any Fund's outstanding voting securities, may terminate
such agreement without penalty upon 30 days' written notice to the other party.
No further payments will be made by any 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

<PAGE>

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 event
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 directors, including a majority of the ^ independent
directors, 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 each Fund are provided to, and reviewed by, the directors on a
quarterly basis. On an annual basis, the directors consider the continued
appropriateness of the Plan at the level of compensation provided therein.

The only directors or interested persons, as that term is defined in
Section 2(a)(19) of the 1940 Act, of the Company who have a direct or indirect
financial interest in the operation of the Plan are the officers and directors
of the Company listed herein under the section entitled "The Funds And Their
Management-Officers and Directors of the Company," who are also officers either
of ^ IDI or companies affiliated with ^ IDI. The benefits which the Company
believes will be reasonably likely to flow to the Funds and their 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 ^
objective(s) 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 ^ INVESCO:

(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 ^ INVESCO (and support them in their infancy), and
thereby expand the investment choices available to all
shareholders, and

<PAGE>

(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 "Fund Price
and Performance," the net asset value of shares 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 (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 such Fund receives a request to purchase or redeem
shares. 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 a 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 or other assets will be valued at their fair values as determined in
good faith by the board of directors or pursuant to procedures adopted by the
Company's board of directors. The above procedures may include the use of
valuations furnished by a pricing service which employs a matrix to determine
valuations for normal institutional-size trading units of debt securities. Prior
to utilizing a pricing service, the Company's board of directors reviews the

<PAGE>

methods used by such service to assure itself that securities will be valued at
their fair values. The Company's board of directors also periodically monitors
the methods used by such pricing services. Debt securities with remaining
maturities of 60 days or less at the time of purchase normally are valued at
amortized cost.

The value of the securities held by the Funds and other assets used in
computing net asset value generally are determined as of the time regular
trading in such securities or assets is completed each day. Because 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 a
Fund's 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 Company's board of directors has authorized the use of
the market price for the security obtained from an approved pricing service at
an established time during the day which may be prior to the close of regular
trading in the security. The value of all assets and liabilities 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.

FUND PERFORMANCE

As discussed in the section of ^ each Fund's Prospectus entitled "Fund
Price and Performance," the Company advertises the total return performance of
the Funds. Average annual total return performance for the Dynamics Fund for the
one-, five-, and ten-year periods ended April 30, ^ 1998, was ^ 56.42%, 22.75%
and ^ 19.44%, respectively. Average annual total return performance for each of
the periods indicated was computed by finding the average annual compounded
rates of return that would equate the initial amount invested to the ending
redeemable value, according to the following formula:

P(1 + T)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 average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period indicated.

In conjunction with performance reports, comparative data between the
Funds' performance for a given period and other types of investment vehicles,
including certificates of deposit, may be provided to prospective investors and
shareholders.

<PAGE>

In conjunction with performance reports and/or analyses of shareholder
service for the Funds, comparative data between the Funds' performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and Deutcher Aktienindex,
all of which are unmanaged market indicators. In addition, rankings, ratings,
and comparisons of investment performance and/or assessments of the quality of
shareholder service made by independent sources may be used in advertisements,
sales literature or shareholder reports, including reprints of, or selections
from, editorials or articles about the Funds. These sources utilize information
compiled (i) internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by
other recognized analytical services. The Lipper Analytical Services, Inc.
mutual fund rankings and comparisons which may be used by the Funds in
performance reports will be drawn from the Capital Appreciation (Dynamics) and
Growth and Income (Growth & Income) mutual fund groupings, in addition to the
broad-based Lipper general fund groupings. 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

<PAGE>

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
The Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth

SERVICES PROVIDED BY THE FUNDS

Periodic Withdrawal Plan. As described in the section of ^ each Fund's
Prospectus entitled "How ^ To Sell Shares," each Fund offers a Periodic
Withdrawal Plan. All dividends and distributions on shares owned by shareholders
participating in this Plan are reinvested in additional shares. Because
withdrawal payments represent the proceeds from sales of shares, the amount of
shareholders' investments in a Fund will be reduced to the extent that
withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.

The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under the Periodic Withdrawal Plan do not represent
income or a return on investment.

Participation in the Periodic Withdrawal Plan may be terminated at any time
by directing a written request to ^ INVESCO. Upon termination, all future
dividends and capital gain distributions will be reinvested in additional shares
unless the shareholder requests otherwise.

Exchange Policy. As discussed in the section of ^ each Fund's Prospectus
entitled "How ^ To Buy Shares - Exchange Policy," each Fund offers shareholders
the ability to exchange shares of a Fund for shares of certain other no-load
mutual funds advised by ^ INVESCO. Exchange requests may be made either by
telephone or by written request to INVESCO ^, using the telephone number or
address on the cover of this Statement of Additional Information. Exchanges made
by telephone must be in an amount of at least $250, if the exchange is being
made into an existing account of one of the INVESCO funds. All exchanges that
establish a new account must meet the fund's applicable minimum initial
investment requirements. Written exchange requests into an existing account have
no minimum requirements other than the fund's applicable minimum subsequent

<PAGE>

investment requirements. Any gain or loss realized on an exchange is recognized
for federal income tax purposes. This policy is not an option or right to
purchase securities 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 "Fund
Services," shares of a Fund may be purchased as the investment medium for
various tax-deferred retirement plans. Persons who request information regarding
these plans from ^ INVESCO will be provided with prototype documents and other
supporting information regarding the type of plan requested. Each of these plans
involves a long-term commitment of assets and is subject to possible regulatory
penalties for excess contributions, premature distributions or for insufficient
distributions after age 70-1/2. The legal and tax implications may vary
according to the circumstances of the individual investor. Therefore, the
investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.

HOW TO REDEEM SHARES

^ Normally, payments for shares redeemed will be mailed within seven (7)
days following receipt of the required documents as described in the section of
^ each Fund's Prospectus entitled "How ^ To Sell Shares." The right of
redemption may be suspended and payment postponed when: (a) the New York Stock
Exchange is closed for other than customary weekends and holidays; (b) trading
on that exchange is restricted; (c) an emergency exists as a result of which
disposal by a Fund of securities owned by it is not reasonably practicable, or
it is not reasonably practicable for a Fund fairly to determine the value of its
net assets; or (d) the SEC by order so permits.

The Company has authorized one or more brokers to accept redemption orders
on the Funds' behalf. Such brokers are authorized to designate other
intermediaries to accept redemption orders on the Funds' behalf. The Funds will
be deemed to have received a redemption order when an authorized broker or, if
applicable, a broker's authorized designee, accepts the order. A redemption
order will be priced at a Fund's Net Asset Value next calculated after the order
has been accepted by an authorized broker or the broker's authorized designee.

It is possible that in the future conditions may exist which would, in the
opinion of the Company's investment adviser, make it undesirable for a Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may

<PAGE>

authorize payment to be made in portfolio securities or other property of the
Fund. However, the Company 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 Fund's net assets if that is less) in any
90-day period. Securities delivered in payment of redemptions are selected
entirely by the investment adviser based on what is in the best interests of the
Fund 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"). The Dynamics Fund so qualified in
the fiscal year ended April 30, ^ 1998, and both Funds intend to qualify during
their current fiscal year. As a result, it is anticipated that neither Fund will
pay federal income or excise taxes and both Funds will be accorded conduit or
"pass through" treatment for federal income tax purposes.

Dividends paid by each Fund from net investment income as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
each Fund sends shareholders information regarding the amount and character of
dividends paid in the year.

Distributions by each Fund 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 of
how long a shareholder has held shares of the Fund. ^ Long-term gains realized
between July 29, 1997 and December 31, 1997 on the sale of securities held for
more than one year but not for more than 18 months are taxable at ^ the maximum
rate of 28% (depending on the shareholder's marginal tax rate). Long-term gains
realized between July 29, 1997 and December 31, 1997 on the sale of securities
held for more than 18 months are taxable at a maximum rate of 20% (depending on
the shareholder's marginal tax rate). Beginning January 1, 1998, the IRS
Restructuring and Reform Act of 1998, signed into effect on July 24, 1998,
lowers the holding period for long-term capital gains entitled to the 20%
capital gains tax rate from 18 months to 12 months. Accordingly, all long-term
gains realized after December 31, 1997 on the sale of securities held for more

<PAGE>

than 12 months will be taxable at a maximum 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 ^ adviser as
to the effect of ^ distributions by the Fund ^.

All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares of one of the ^ Funds 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. If shares are purchased shortly before a distribution, the
full price for the shares will be paid and some portion of the price may then be
returned to the shareholder as a taxable dividend or capital gain. However, the
net asset value per share will be reduced by the amount of the distribution,
which would reduce any gain (or increase any loss) for tax purposes on any
subsequent redemption of shares.

^ INVESCO may provide Fund shareholders with information concerning the
average cost basis of their shares in order to help them prepare their tax
returns. This information is intended as a convenience to shareholders, and will
not be reported to the Internal Revenue Service (the "IRS"). The IRS permits the
use of several methods to determine the cost basis of mutual fund shares. The
cost basis information provided by ^ INVESCO will be computed using the
single-category average cost method, although neither ^ INVESCO nor the Fund
recommends any particular method of determining cost basis. Other methods may
result in different tax consequences. If a shareholder has reported gains or
losses for a Fund in past years, the shareholder must continue to use the method
previously used, unless the shareholder applies to the IRS for permission to
change the method.

If a Fund's shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.

Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and net capital gains for the one-year period
ending on ^ October 31 of that year, plus certain other amounts.

<PAGE>

Dividends and interest received by a 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 impose taxes on capital gains in
respect of investments by foreign investors. Foreign taxes withheld will be
treated as an expense of the ^ Fund. If more than 50% of the value of a Fund's
total assets at the close of any taxable year consists of securities of foreign
corporations, the Fund will be eligible to, and may, file an election with the
Internal Revenue Service that will enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign and
U.S. possessions income taxes paid by it. Each Fund will report to its
shareholders shortly after each taxable year their respective shares of the
Fund's income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election. Otherwise, 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 such Fund's
investment company taxable income and, accordingly, will not be taxable to it 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
a ^ 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 a ^ Fund
for prior taxable years. A ^ Fund's adjusted tax basis in each PFIC's stock with
respect to which it makes this election will be adjusted to reflect that 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

<PAGE>

date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time such 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 will generally be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, for income tax purposes does not entail government
supervision of management or investment policies.

INVESTMENT PRACTICES

Leverage. The Company's charter permits each Fund to borrow from banks up
to 25% of the value of its net assets, excluding the proceeds of any such
borrowing (subject to its investment restrictions), for the purpose of
purchasing portfolio securities. This is a speculative technique commonly known
as leverage. Since the Dynamics Fund's inception, leverage has never been
employed, and it may not be employed by either Fund without express
authorization of the Company's board of directors. Such authorization is not
presently contemplated. Should the leverage technique be employed at some future
date, it would be employed with the expectation that portfolio gains
attributable to the investment of borrowed monies will exceed the interest costs
on such monies. If this expectation were not realized and the market value of
securities so purchased declined, however, the impact of such market decline
would be increased by the amount of interest paid on such borrowings.

Portfolio Turnover. There are no fixed limitations regarding a Fund's
portfolio turnover. Since the Dynamics Fund started business, the rate of
portfolio turnover has fluctuated under constantly changing economic conditions
and market circumstances.^ Securities initially satisfying the basic policies
and objectives of a Fund may be disposed of when they are no longer suitable.
Brokerage costs to a Fund are commensurate with the rate of portfolio activity.
Portfolio turnover rates for the Dynamics Fund for the fiscal years ended April
30, 1998 and 1997 were 178% and 204%, respectively. 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

<PAGE>

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. ^ INVESCO, as the Funds' investment
adviser, places orders for the purchase and sale of securities with brokers and
dealers based upon ^ INVESCO's evaluation of the financial responsibility of the
brokers and dealers, and considering the brokers' and dealers' ability to effect
transactions at the best available prices. ^ INVESCO evaluates the overall
reasonableness of brokerage commissions or underwriting discounts (the
difference between the full acquisition price to acquire the new offering and
the discount offered to members of the underwriting syndicate) paid by reviewing
the quality of executions obtained on the portfolio transactions of each Fund,
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 or discounts charged the Funds are
consistent with prevailing and reasonable commissions^ or discounts, INVESCO
also endeavors to monitor brokerage industry practices with regard to the
commissions or discounts charged by broker-dealers on transactions effected for
other comparable institutional investors. While ^ INVESCO seeks reasonably
competitive rates, the Funds do not necessarily pay the lowest commission ^,
spread or discount available.

Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, ^ INVESCO may select brokers that provide research
services to effect such transactions. Research services consist of statistical
and analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to ^ INVESCO in making
informed investment decisions. Research services prepared and furnished by
brokers through which the ^ Funds effect securities transactions may be used by
^ INVESCO in servicing all of its accounts and not all such services may be used
by ^ INVESCO in connection with the Funds.

In recognition of the value of the above-described brokerage and research
services provided by certain brokers, ^ INVESCO, consistent with the standard of
seeking to obtain the best execution on portfolio transactions, may place orders
with such brokers for the execution of transactions for the Funds on which the
commissions are in excess of those which other brokers might have charged for
effecting the same transactions.

Portfolio transactions may be effected through qualified broker-dealers
that recommend the Funds to their clients, or that act as agent in the purchase
of a Fund's shares for their clients. When a number of brokers and dealers can
provide comparable best price and execution on a particular transaction, the
Company's ^ adviser may consider the sale of Fund shares by a broker or dealer
in selecting among qualified broker-dealers.

<PAGE>

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 affiliated
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
directors of the Company have authorized the Funds to apply dollars generated
from the Company'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 Company's directors have authorized the Funds to pay transfer
agency fees to ^ INVESCO based on the number of investors who have beneficial
interests in the NTF Program Sponsor's omnibus accounts in the Funds. ^ INVESCO,
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 directors of the Company have authorized the Company 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. ^ INVESCO itself pays the portion
of ^ a Fund's Services Fee, if any, that exceeds the sum of the sub-transfer
agency or recordkeeping fee and Rule 12b-1 fee. The Company's directors have
further authorized ^ INVESCO to place a portion of the Funds' brokerage
transactions with certain NTF Program Sponsors or their affiliated brokers, if ^
INVESCO reasonably believes that, in effecting the Funds' 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 ^ INVESCO 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 ^
INVESCO with respect to investors who have beneficial interests in a particular

<PAGE>

NTF Program Sponsor's omnibus accounts in a Fund exceeds the Services Fee
applicable to the Fund, after application of credits, ^ INVESCO 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 ^ INVESCO prior
to each fiscal year-end of the Funds. The Company's board of directors has also
authorized the ^ Funds to pay to ^ IDI the full Rule 12b-1 fees contemplated by
the Plan as payment 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 pay ^ IDI for payments to such NTF Program Sponsor absent such
credits.

The aggregate dollar amount of brokerage commissions paid by the Company
for the Dynamics Fund for the fiscal years ended April 30, 1998, 1997^ and 1996
^, were $7,542,687, $5,707,197^ and $3,891,234 ^, respectively. For the fiscal
year ended April 30, ^ 1998, brokers providing research services received ^
$3,296,737 in commissions on portfolio transactions effected for the Dynamics
Fund. The aggregate dollar amount of such portfolio transactions was ^
$1,990,592,991. Brokers received no commissions on portfolio transactions
effected for the Dynamics Fund during the fiscal year ended April 30, ^ 1998, as
a result of selling shares of the Dynamics Fund.

At April 30, ^ 1998, the Dynamics Fund held debt securities of its regular
brokers or dealers, or their parents, as follows:

Value of Securities
Broker or Dealer at ^ 4/30/98
---------------- -------------------

^ State Street Bank & Trust 53,395

^ The Growth & Income Fund did not pay any brokerage fees as of April 30,
1998, as it did not commence operations until June 30, 1998.

^ INVESCO does not receive any brokerage commissions on portfolio
transactions effected on behalf of the Funds, and there is no affiliation
between ^ INVESCO or any person affiliated with ^ INVESCO or the Funds and any
broker or dealer that executes transactions for the Funds.

ADDITIONAL INFORMATION

Common Stock. The Company has ^ 1,000,000,000 authorized shares of common
stock with a par value of $0.01 per share. Of the Company's authorized shares, ^
200,000,000 shares have been allocated to ^ the Dynamics Fund and 100,000,000

<PAGE>

shares have been allocated to the Growth & Income Fund. As of July 31, 1998,
86,766,172 shares of the Dynamics Fund were outstanding and 1,393,257 shares of
the Growth & Income Fund were outstanding. All shares issued and outstanding
are, and all shares offered hereby, when issued, will be, fully paid and
nonassessable. The board of directors has the authority to designate additional
classes of common stock without seeking the approval of shareholders and may
classify and reclassify any authorized but unissued shares.

Shares of each series represent the interests of the shareholders of such
series in a particular portfolio of investments of the Company. Each series of
the Company's shares is preferred over all other series with respect to 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 Company's general liabilities. The board of directors
determines those assets and liabilities deemed to be general assets or
liabilities of the Company, and those items are allocated among series in a
manner deemed by the board of directors to be fair and equitable. Generally,
such allocation will be made based upon the relative total 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 Company's other series.

All Fund shares, regardless of series, have equal voting rights. Voting
with respect to certain matters, such as ratification of independent accountants
or election of directors, will be by all series of the Company. When not all
series are affected by a matter to be voted upon, such as approval of an
investment advisory contract or change in a Fund's investment policies, only
shareholders of the series affected by the matter may be entitled to vote.
Company shares have noncumulative voting rights, which means that the holders of
a majority of the shares voting for the election of directors of the Company can
elect 100% of the directors if they choose to do so. In such event, the holders
of the remaining shares voting for the election of directors will not be able to
elect any person or persons to the board of directors. After they have been
elected by shareholders, the directors will continue to serve until their
successors are elected and have qualified or they are removed from office, in
either case by a shareholder vote, or until death, resignation or retirement.
Directors may appoint their own successors, provided that always at least a
majority of the directors have been elected by the Company's shareholders. It is
the intention of the Company not to hold annual meetings of shareholders. The
directors will call annual or special meetings of shareholders for action by
shareholder vote as may be required by the 1940 Act or the Company's Articles of
Incorporation, or at their discretion.

<PAGE>

Principal Shareholders. As of ^ July 31, 1998, the following ^ entities
held more than 5% of the ^ Funds' outstanding equity securities.

Class and
Amount and Nature ^ Percent
Name and Address of Ownership of Class
- ---------------- ----------------- ---------
Dynamics Fund

Charles Schwab & Co. Inc. ^ 12,019,655.6400 13.92%
Special Custody Account
For The Exclusive Benefit
of Customers
Attn: Mutual Funds

101 Montgomery St.
San Francisco, CA 94104

Growth & Income Fund

Nat'l Financial Services Corp 177,547.0710 12.88%
The Exclusive Benefit of Cust
One World Financial Center
200 Liberty Street, 5th Floor
Attn: Kate Recon
New York, NY 10281-5500

Charles Schwab & Co. Inc. 109,400.2860 7.94%
Special Custody Acct for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122

Independent Accountants. ^ PricewaterhouseCoopers LLP, 950 Seventeenth
Street, Denver, Colorado, has been selected as the independent accountants of
the Company. The independent accountants are responsible for auditing the
financial statements of the Company.

Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the Company. The bank is also responsible for, among other things,
receipt and delivery of the investment securities of the Company's Funds in
accordance with procedures and conditions specified in the custody agreement.
Under the contract with the Company, the custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Company 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.

<PAGE>

Transfer Agent. The Company is provided with transfer agent, registrar, and
dividend disbursing agent services by INVESCO Funds Group, Inc., 7800 E. Union
Avenue, Denver, Colorado, pursuant to the Transfer Agency Agreement described
herein. Such services include the issuance, cancellation and transfer of shares
of the Funds, and the maintenance of records regarding the ownership of such
shares.

Reports to Shareholders. The Company's fiscal year ends on April 30. The
Company distributes reports at least semiannually to its shareholders. Financial
statements regarding the Company, 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 Company. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel to the Company.

Financial Statements. The audited financial statements of the ^ Company and
the notes thereto for the fiscal year ended April 30, ^ 1998, and the report of
^ PricewaterhouseCoopers LLP with respect to such financial statements, are
incorporated herein by reference from the Company's Annual Report to
Shareholders for the fiscal year ended April 30, ^ 1998: Statement of Investment
Securities as of April 30, ^ 1998; Statement of Assets and Liabilities as of
April 30, ^ 1998; Statement of Operations for the year ended April 30, ^ 1998;
Statement of Changes in Net Assets for each of the two years in the period ended
April 30, ^ 1998; and Financial Highlights for each of the five years in the
period ended April 30, ^ 1998.

^ Prospectuses. The Company will furnish, without charge, a copy of any
Fund's Prospectus upon request. Such requests should be made to the Company 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
related Prospectuses do not contain all of the information set forth in the
Registration Statement the Company 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.

<PAGE>

APPENDIX A

DESCRIPTION OF FUTURES AND OPTIONS CONTRACTS
(GROWTH & INCOME FUND ONLY)

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, which are regulated by the Securities and
Exchange Commission. The Options Clearing Corporation ("OCC") 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.

<PAGE>

Although the Funds generally will 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 the
Fund 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 a
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 insuffi cient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transac tions or both; (iii) trading halts, suspensions
or other restric tions 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 OCC, 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 ("OTC")
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 the

<PAGE>

Company on behalf of a Fund. With OTC options, such variables as expiration
date, exercise price and premium will be agreed upon between the Fund and the
transacting dealer, without the intermedi ation 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. The 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 agree ments,
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 equivalents, 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
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

<PAGE>

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, West 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

<PAGE>

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.

<PAGE>

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits
---------------------------------

(a) Financial Statements:
Page in
Prospectus
----------
(1) Financial statements and schedules
included in Prospectus (Part A):

Financial Highlights for each of
the ten years in the period ended
April 30, 1998 for INVESCO
Dynamics Fund.
Page in
Statement
of Addi-
tional
Informa-
tion ^
---------

(2) The following audited financial
statements of the Company and the
notes thereto with respect to the
Dynamics Fund for the fiscal year
ended April 30, ^ 1998, and the
report of ^ PricewaterhouseCoopers
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 April 30, ^
1998; Statement of Investment
Securities as of April 30, ^ 1998;
Statement of Assets and Liabilities
as of April 30, ^ 1998; Statement
of Operations for the year ended
April 30, ^ 1998; Statement of
Changes in Net Assets for each of
the two years in the period ended
April 30, ^ 1998; and Financial
Highlights for each of the five
years in the period ended April 30,
^ 1998.

(3) Financial statements and schedules
included in Part C:

None: Schedules have been omitted
as all information has been
presented in the financial
statements.

<PAGE>

(b) Exhibits:

(1) Articles of Incorporation (Charter)
filed April 2, ^ 1993.(2)

(a) Articles of Amendment to
Articles of Incorporation filed
June 26, ^ 1997.(3)

(b) Articles Supplementary to
Articles of Incorporation filed May
18, 1998.(5)

(2) Bylaws, as amended July 21, ^
1993.(2)

(3) Not applicable.

(4) Not required to be filed on EDGAR.

(5) (a) Investment Advisory Agreement
between Registrant and INVESCO

Funds Group, Inc. dated February
28, ^ 1997.(3)

(i) ^ Amendment to Investment
Advisory Agreement, dated ^
June 30, 1998.(4)
(ii) ^ Form of Amendment to Investment
Advisory Agreement dated ________,
1998. ^ (5)

(6) Distribution Agreement between
Registrant and INVESCO Funds Group,
Inc. dated February 28, ^ 1997.(3)

(b) Distribution Agreement, dated
September 30, 1997, between
Registrant and INVESCO
Distributors, ^ Inc.(4)

(7) Defined Benefit Deferred
Compensation Plan for
Non-Interested Directors and ^
Trustees. (5)

<PAGE>

(8) Custody Agreement between
Registrant and State Street Bank
and Trust Company dated July 1, ^
1993.(1)

(a) Amendment to Custody Agreement
dated October 25, ^ 1995.(3)

(b) Data Access ^ Addendum.(4)

(d) ^ Form of Additional Fund Letter dated
_________, 1998. ^ (5)

(9) (a) Transfer Agency Agreement
between Registrant and INVESCO

Funds Group, Inc. dated February
28, ^ 1997.(3)

(b) Administrative Services
Agreement between Registrant and
INVESCO Funds Group, Inc., dated
February 28, ^ 1997.(3)

(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.(4)

(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:

(a) Non-standardized Profit Sharing
Plan; (5)

(b) Non-standardized Money Purchase
Pension Plan;(5)

<PAGE>

(d) Standardized Money Purchase
Pension Plan;(5)

(e) Non-standardized 401(k) Plan
Adoption Agreement;(5)

(f) Standardized 401(k) Paired
Profit Sharing Plan;(5)

(g) Standardized Simplified
Profit Sharing Plan; ^ (5)

(h) Defined Contribution Master
Plan & Trust Agreement; ^ (5)

(15) Amended Plan and Agreement of
Distribution dated January 1, 1997,
adopted pursuant to Rule 12b-1
under the Investment Company Act of
1940.(3)

(16) Schedule for computation of
performance ^ data.(3)

(17) Financial Data Schedule for INVESCO
Dynamics Fund.

(18) Not Applicable.

- ---------------
(1)Previously filed on EDGAR with Post-Effective Amendment No. 44 to the
Registration Statement on June 22, 1993 and incorporated herein by reference.

(2)Previously filed on EDGAR with Post-Effective Amendment No. 45 to the
Registration Statement on August 27, 1996 and incorporated herein by reference.

(3)Previously filed on EDGAR with Post-Effective Amendment No. 46 to the
Registration Statement on June 30, 1997 and incorporated herein by reference.

(4)Previously filed on EDGAR with Post-Effective Amendment No. 47 to the
Registration Statement on April 16, 1998 and incorporated herein by reference.

(5)Previously filed on EDGAR with Post-Effective Amendment No. 48 to the
Registration Statement on July 10, 1998 and incorporated herein by reference.

<PAGE>

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

Title of Class Number of Record
-------------- Holders as of
Common Stock ^ July 31, 1998
-----------------
Dynamics Fund ^ 48,482
Growth & Income Fund 1,658

Item 27. Indemnification

Indemnification provisions for officers and directors of Registrant are set
forth in Article VII, Section 2 of the Articles of Incorporation, and are hereby
incorporated by reference. See Item 24(b)(1) above. Under these Articles,
officers and directors will be indemnified to the fullest extent permitted to
directors by the Maryland General Corporation Law, subject only to such
limitations as may be required by the Investment Company Act of 1940, and the
rules thereunder. Under the Investment Company Act of 1940, Fund directors and
officers cannot be protected against liability to the Company 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
Company also intends to maintain liability insurance policies covering its
directors and officers.

Item 28. Business and Other Connections of Investment Adviser

See "The ^ Fund And Its Management" in the ^ Prospectuses and "The Funds
And Their Management" in the Statement of Additional Information for information
regarding the business of the investment adviser^, INVESCO Funds Group, Inc.
("INVESCO").

Following are the names and principal occupations of each director and officer
of the investment adviser, INVESCO. Certain of these persons hold positions with
IDI, a subsidiary of INVESCO, and, during the past two fiscal years, have held
positions with INVESCO Trust Company, another subsidiary of INVESCO.

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation

Dan J. Hesser Chairman Chairman
and INVESCO Funds Group, Inc.
Director 7800 East Union Avenue
Denver, CO 80237

Mark H. Williamson Officer & President & Chief
Director Executive Officer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Ronald L. Grooms Officer Senior Vice President &
Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Daniel B. Leonard Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Timothy J. Miller Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- ------------------------
Glen A. Payne Officer Senior Vice President,
Secretary & General
Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Elroy E. Frye, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Gerard F. Hallaren, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- ------------------------

Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

James F. Lummanick Officer Vice President &
Assistant General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Frederick R. (Fritz) Officer Vice President
Meyer INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- ------------------------

Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Terry B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Ronald C. Lively Officer Senior Regional Vice
President
INVESCO Funds Group, Inc.
17406 Brown Road
Odessa, FL 33556

Scott E. Stapley Officer Senior Regional Vice
President
INVESCO Funds Group, Inc.
1615 Arch Bay Drive
Newport Beach, CA 92660

David B. McElroy Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Ryland K. Pruett, Jr. Officer Regional Vice President
INVESCO Funds Group, Inc.
2337 Mirow Place
Charlotte, NC 28270

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- ------------------------

Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854

Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Stephen A. Moran Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Kent T. Schmeckpeper Office Assistant Vice President
Account Relationship
Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Tane' T. Tyler Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Item 29. Principal Underwriters

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 Value Trust
INVESCO Variable Investment Funds, Inc.

<PAGE>

(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 Assistant
Treasurer

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 ^
7800 E. Union Avenue the Board &
^ Director
^

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 & Assistant
Denver, CO 80237 Treasurer

Mark H. Williamson President, President,
7800 E. Union Avenue Chief Executive CEO &
Denver, CO 80237 Officer & Director
Director

Item 30. Location of Accounts and Records

^ Mark H. Williamson
7800 E. Union Avenue
Denver, CO 80237

Item 31. Management Services

Not applicable.

<PAGE>

Item 32. Undertakings

(a) 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.

<PAGE>

^ 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 ^28th day of ^ August, 1998.

Attest: INVESCO ^ Equity Funds, Inc.

/s/ Glen A. Payne /s/ ^ Mark H. Williamson
- ------------------------------------ --------------------------------------
Glen A. Payne, Secretary ^ Mark H. Williamson, 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 ^28th day of ^
August, 1998.

/s/ ^ Mark H. Williamson /s/ Lawrence H. Budner
- ------------------------------------ -------------------------------------
^ Mark H. Williamson, President ^ Lawrence H. Budner, Director
^
/s/ Ronald L. Grooms /s/ ^ Fred A. Deering
- ------------------------------------ -------------------------------------
Ronald L. Grooms, Treasurer ^ Fred A. Deering, Director
(Chief Financial and Accounting
Officer)

/s/ Victor L. Andrews /s/ ^ Larry Soll
- ------------------------------------ --------------------------------------
^ Victor L. Andrews, Director Larry Soll, Director

/s/ ^ Bob R. Baker /s/ Kenneth T. King
- ------------------------------------ --------------------------------------
^ Bob R. Baker, Director Kenneth T. King, Director

/s/ Charles W. Brady /s/ John W. McIntyre
- ------------------------------------ ------------------------------------
Charles W. Brady, Director John W. McIntyre, Director

/s/ Wendy L. Gramm
- ------------------------------------
Wendy L. Gramm, Director

By*--------------------------------- By* /s/ Glen A. Payne
Edward F. O'Keefe ----------------------------------
Attorney in Fact Glen A. Payne
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 (with the exception of Dr. Gramm) have been filed with the
Securities and Exchange Commission on June 15, 1993, June 22, 1994, June 22,
1995 and June 30, 1997, respectively.

<PAGE>

Exhibit Index

Page in
Exhibit Number Registration Statement

^ 1(c) 116
11 118
17 119

99. POA GRAMM 120

ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INVESCO CAPITAL APPRECIATION FUNDS, INC.

INVESCO Capital Appreciation Funds, Inc., a corporation organized and
existing under the General Corporation Law of the State of Maryland (the
"Company"), hereby certifies to the State Department of Assessments and Taxation
of Maryland that:

FIRST: Article I of the Articles of Incorporation of the Company is
hereby amended to read as follows:

ARTICLE I

NAME AND TERM

The name of the corporation is "INVESCO EQUITY FUNDS, INC," and
it shall have perpetual existence.

SECOND: Article III of the Articles of Incorporation of the Company is
hereby amended to read as follows:

ARTICLE III

CAPITALIZATION

Section 1. The aggregate number of shares of stock of all series
which the Company shall have the authority to issue is one billion
(1,000,000,000) shares of Common Stock, having a par value of one cent
($0.01) per share. The aggregate par value of all shares which the
Company shall have authority to issue is ten million dollars
($10,000,000). Such stock may be issued as full shares or as
fractional shares.

In the exercise of the powers granted to the Board of Directors
pursuant to Section 3 of this Article III, the Board of Directors
designates three series of shares of common stock of the Company to be
designated as the INVESCO Dynamics Fund, the INVESCO Growth & Income
Fund and the INVESCO Endeavor Fund. Two hundred million (200,000,000)
shares of the Company's Common Stock are classified as and are
allocated to the INVESCO Dynamics Fund. One hundred million
(100,000,000) shares of the Company's Common Stock are classified as
and are allocated to the each of the INVESCO Growth & Income Fund and
the INVESCO Endeavor Fund.

Unless otherwise prohibited by law, so long as the Company is
registered as an open-end investment company under the Investment
Company Act of 1940, as amended, the total number of shares which the
Company is authorized to issue may be increased or decreased by the
board of directors in accordance with the applicable provisions of the
Maryland General Corporation Law.
<PAGE>

THIRD: The foregoing amendment, in accordance with the requirements of
Section 2-605 of the General Corporation Law of the State of Maryland,
was approved by a majority of the Board of Directors of the Company on
August 5, 1998.

FOURTH: The foregoing amendment was duly adopted in accordance with
the requirements of Section 2-408 of the General Corporation Law of
the State of Maryland.

The undersigned, President of the Company, who is executing on behalf of
the Company the foregoing Articles of Amendment, of which this paragraph is made
a part, hereby acknowledges, in the name and on behalf of the Company, the
foregoing Articles of Amendment to be the corporate act of the Company and
further verifies under oath that, to the best of his knowledge, information and
belief, the matters and facts set forth herein are true in all material
respects, under the penalties of perjury.

IN WITNESS WHEREOF, INVESCO Capital Appreciation Funds, Inc. has caused
these Articles of Amendment to be signed in its name and on its behalf by its
President and witnessed by its Secretary on the 26th day of August, 1998.

These Articles Supplementary shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.

INVESCO CAPITAL APPRECIATION FUNDS, INC.

By: /s/ Mark H. Williamson
-----------------------------------
Mark H. Williamson, President
[SEAL]

WITNESSED:

By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary

CERTIFICATION

I, Michael T. Branstiter, a notary public in and for the City and
County of Denver, and State of Colorado, do hereby certify that Mark H.
Williamson, personally known to me to be the person whose name is subscribed to
the foregoing Articles of Amendment, appeared before me this date in person and
acknowledged that he signed, sealed and delivered said instrument as his full
and voluntary act and deed for the uses and purposes therein set forth.

Given my hand and official seal this 26th day of August, 1998.

[NOTARY SEAL] /s/ Michael T. Branstiter
------------------------------------
Notary Public

My Commission Expires: 03/14/2002
----------

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Prospectus of INVESCO
Dynamics Fund and Statement of Additional Information constituting parts of this
Post-Effective Amendment No. 49 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated May 29, 1998, relating to the
financial statements and financial highlights appearing in the April 30, 1998
Annual Report to Shareholders of INVESCO Capital Appreciation Funds, Inc. which
is also incorporated by reference into the Registration Statement. We also
consent to the references to us under the heading "Financial Highlights" in the
Prospectus of INVESCO Dynamics Fund and under the headings "Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information.

/s/ PricewaterhouseCoopers LLP
- -------------------------
PricewaterhouseCoopers LLP

Denver, Colorado
August 24, 1998

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> INVESCO DYNAMICS FUND

<S> <C>
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</TABLE>

POWER OF ATTORNEY

The person executing this Power of Attorney hereby appoints Edward F.
O'Keefe and Glen A. Payne, or either of them, as his attorney-in-fact to execute
and to file such Registration Statements under federal and state securities laws
and such Post-Effective Amendments to such Registration Statements of the
hereinafter described entities as such attorney-in-fact, or either of them, may
deem appropriate:

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 Value Trust
INVESCO Variable Investment Funds, Inc.

This Power of Attorney, which shall not be affected by the disability of
the undersigned, is executed and effective as of the 25th day of August, 1997.

/s/ Wendy L. Gramm
------------------------------------------
Wendy L. Gramm

STATE OF District of )
Columbia )
COUNTY OF )

SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Wendy L.
Gramm, as a director or trustee of each of the above-described entities, this
25th day of August, 1997.

/s/ Margaret Foster
------------------------------------------
Notary Public

My Commission Expires: Feb. 14, 2000
-------------