PROSPECTUS
October 1, 1997
As Supplemented October 8, 1997
INVESCO SMALL COMPANY GROWTH FUND
INVESCO Small Company Growth Fund (formerly, INVESCO Emerging Growth Fund)
(the "Fund") seeks long-term capital growth. Most of its investments are in
equity securities of emerging growth companies with market capitalizations of $1
billion or less at the time of initial purchase ("small-cap companies"), but the
Fund has the flexibility to invest in other types of securities.
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 October 1, 1997, has been filed with the Securities and
Exchange Commission, and is incorporated by reference into this Prospectus. To
obtain a free copy, write to INVESCO Distributors, Inc., P.O. Box 173706,
Denver, Colorado 80217-3706; call 1-800-525-8085; or visit our web site at
http://www.invesco.com.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
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TABLE OF CONTENTS Page
----
ESSENTIAL INFORMATION........................................................6
ANNUAL FUND EXPENSES.........................................................7
FINANCIAL HIGHLIGHTS.........................................................9
INVESTMENT OBJECTIVE AND STRATEGY...........................................12
INVESTMENT POLICIES AND RISKS...............................................13
THE FUND AND ITS MANAGEMENT.................................................16
FUND PRICE AND PERFORMANCE..................................................19
HOW TO BUY SHARES...........................................................20
FUND SERVICES...............................................................25
HOW TO SELL SHARES..........................................................25
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS.............................28
ADDITIONAL INFORMATION......................................................29
<PAGE>
ESSENTIAL INFORMATION
Investment Goal And Strategy. INVESCO Small Company Growth Fund is a
diversified mutual fund that seeks long-term capital growth. It invests
primarily in small-capitalization equity securities of U.S. companies traded
"over-the-counter." There is no guarantee that the Fund will meet its objective.
See "Investment Objective And Strategy."
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 Account or systematic investing
strategy. The Fund may be a suitable investment for many types of retirement
programs, including IRA, SEP-IRA, SIMPLE IRA, 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 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. Investors should
consider whether 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 owned by its shareholders. It
employs INVESCO Funds Group, Inc. ("IFG"), founded in 1932, to serve as
investment adviser, administrator and transfer agent. INVESCO Trust Company
("INVESCO Trust"), founded in 1969, serves as sub-adviser. Together, IFG and
INVESCO Trust constitute "Fund Management." Prior to September ^ 30, 1997,
INVESCO Funds Group, Inc. served as the Fund's distributor. Effective September
^ 30, 1997, INVESCO Distributors, Inc. ("IDI"), founded in 1997 as a
wholly-owned subsidiary of IFG, became the Fund's distributor.
^ The following team of individuals, led by Timothy J. Miller, serve as
portfolio managers of the Funds: Timothy J. Miller, C.F.A.; Trent E. May,
C.F.A.; and Stacie Cowell, C.F.A. All have been co-managers of the Fund since
1997. See "The Fund And Its Management.^"
IFG, INVESCO Trust and IDI are subsidiaries of AMVESCAP PLC, an
international investment management company that manages approximately $165
billion in assets. AMVESCAP PLC is based in London with money managers located
in Europe, North America and the Far East.
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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."
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 amounts in excess of 1.50% of 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 (1)(2) 0.52%
Total Fund Operating Expenses(1)(2) 1.52%
(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, transfer agency
and distribution expenses were reduced under an expense offset arrangement.
However, as a result of an SEC requirement for mutual funds to state their total
operating
<PAGE>
expenses without crediting any such expense offset arrangement, the figures
shown above do not reflect these reductions. In comparing expenses for different
years, please note that the ratios of Expenses to Average Net Assets shown under
"Financial Highlights" do reflect any reductions for periods including and prior
to the fiscal year ended May 31, 1995. See "The Fund and Its Management."
(2)Certain expenses of the Fund are being absorbed voluntarily by IFG. In
the absence of such absorbed expenses, the Fund's "Other Expenses" and "Total
Fund Operating Expenses" would have been 0.54% and 1.54%, respectively, based on
the Fund's actual expenses for the fiscal year ended May 31, 1997.
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.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$16 $48 $83 $182
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 Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the independent accountant's report appearing
in the Fund's 1997 Annual Report to Shareholders, which is incorporated by
reference into the Statement of Additional Information. Both are available
without charge by contacting IFG 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>
Period
Ended
Year Ended May 31 May 31
------------------------------------------------------- ---------
1997 1996 1995 1994 1993 1992^
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.38 $9.37 $11.40 $9.89 $7.55 $7.50
-------------------------------------------------------- ---------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss) (0.07) (0.06) 0.04 (0.01) (0.04) (0.02)
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) (0.96) 5.25 0.46 1.53 2.38 0.07
-------------------------------------------------------- ---------
Total from Investment
Operations (1.03) 5.19 0.50 1.52 2.34 0.05
-------------------------------------------------------- ---------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.00 0.04 0.00 0.00 0.00
Distributions from
Capital Gains 0.53 0.18 2.49 0.01 0.00 0.00
-------------------------------------------------------- ---------
Total Distributions 0.53 0.18 2.53 0.01 0.00 0.00
-------------------------------------------------------- ---------
Net Asset Value -
End of Period $12.82 $14.38 $9.37 $11.40 $9.89 $7.55
======================================================== =========
TOTAL RETURN (7.08%) 55.78% 4.98% 15.34% 30.95% 0.68%*
<PAGE>
RATIOS
Net Assets - End of Period
($000 Omitted) $294,259 $370,029 $153,727 $176,510 $103,029 $25,579
Ratio of Expenses to
Average Net Assets# 1.52%@ 1.48%@ 1.49% 1.37% 1.54% 1.93%~
Ratio of Net Investment
Income (Loss) to
Average Net Assets# (0.55%) (0.78%) 0.41% (0.26%) (0.70%) (0.95%)~
Portfolio Turnover Rate 216% 221% 228% 196% 153% 50%*
Average Commission Rate
Paid^^ $0.0935 - - - - -
^ From December 27, 1991, commencement of operations, to May 31, 1992.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended May 31, 1997 and 1995. If such expenses had not been voluntarily absorbed,
ratio of expenses to average net assets would have been 1.54% and 1.52%,
respectively, and ratio of net investment income to average net assets would
have been (0.57%) and 0.38%, respectively.
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
The Fund seeks long-term capital growth. This investment objective is
fundamental and may not be changed without the approval of the Fund's
shareholders. Normally, the Fund seeks to achieve this objective through the
investment of 65% or more of its assets in equity securities of companies with
market capitalizations of $1 billion or less at the time we purchase them
("small-cap companies"). The balance of the Fund's assets may be invested in the
equity securities of companies with market capitalizations in excess of $1
billion, debt securities and short-term investments. With respect to small-cap
companies, we are primarily looking for companies in the developing stages of
their life cycle, which are currently undervalued in the marketplace, have
earnings which may be expected to grow faster than the U.S. economy in general,
and/or offer the potential for accelerated earnings growth due to rapid growth
of sales, new products, management changes, or structural changes in the
economy. There is no assurance that the Fund's investment objective will be met.
The majority of the Fund's holdings consists of common stocks traded
"over-the-counter." The Fund also has the flexibility to invest in other U.S.
and foreign securities.
The Fund's investments in debt securities include U.S. government and
corporate debt securities. Investments in U.S. government securities may consist
of securities issued or guaranteed by the U.S. government and any agency or
instrumentality of the U.S. government. In some cases, these securities are
direct obligations of the U.S. government, such as U.S. Treasury bills, notes
and bonds. In other cases, these securities are obligations guaranteed by the
U.S. government, consisting of Government National Mortgage Association
obligations, or obligations of U.S. government authorities, agencies or
instrumentalities, consisting of the Federal National Mortgage Association,
Federal Home Loan Bank, Federal Financing Bank and Federal Farm Credit Bank,
which are supported only by the assets of the issuer. The Fund may invest in
both investment grade and lower-rated corporate debt securities. However, the
Fund will not invest more than 5% of its total assets (measured at the time of
purchase) in corporate debt securities that are rated below BBB by Standard &
Poor's Ratings Group, Inc., a division of The McGraw-Hill Companies, Inc.
("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's") or, if unrated,
are judged by Fund Management to be equivalent in quality to debt securities
having such ratings. In no event will the Fund invest in a debt security rated
below CCC by S&P or Caa by Moody's. The risks of investing in debt securities
are discussed below under "Risk Factors." For a description of each corporate
bond rating category, please refer to Appendix A to the Statement of Additional
Information.
<PAGE>
The short-term investments of the Fund may consist of U.S. government and
agency securities, domestic bank certificates of deposit and bankers'
acceptances, and commercial paper rated A-1 by S&P or P-1 by Moody's, as well as
repurchase agreements with banks, registered broker-dealers and registered
government securities dealers with respect to the foregoing securities. The
Fund's assets invested in U.S. government securities and short-term investments
will be used to meet current cash requirements, such as to satisfy requests to
redeem shares of the Fund and to preserve investment flexibility. A commercial
paper rating of A-1 by S&P or P-1 by Moody's is the highest rating category
assigned by such rating organizations and indicates that the issuer has a very
strong capacity to make timely payments of principal and interest on its
commercial paper obligations. All bank certificates of deposit and bankers'
acceptances at the time of purchase by the Fund must be issued by domestic banks
(i) which are members of the Federal Reserve System having total assets in
excess of $5 billion, (ii) which have received at least a B ranking from Thomson
Bank Watch Credit Rating Service or International Bank Credit Analysis, and
(iii) which either directly or through parent holding companies have securities
outstanding which have been rated Aaa, Aa or P-1 by Moody's or AAA, AA or A-1 by
S&P.
The Fund's investment portfolio is actively traded. Since 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, sometimes exceeding 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 companies in a variety of industries; this
diversification reduces the Fund's overall exposure to investment and market
risks, but cannot eliminate these risks.
Small-Cap Stocks. The small-cap companies represented in the Fund's
investment portfolio (particularly those trading "over-the-counter") may be in
the early stages of development; have limited product lines, markets or
financial resources; and/or lack management depth. These factors may lead to
<PAGE>
more intense competitive pressures on, greater volatility in earnings of,
and relative illiquidity or erratic price movements for the securities of these
companies, compared to larger-cap companies.
Debt Securities. The Fund's investments in debt securities generally are
subject to both credit risk and market risk. Credit risk relates to the ability
of the issuer to meet interest or principal payments, or both, as they come due.
Market risk relates to the fact that the market values of the debt securities
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 outstanding
debt securities, whereas a decline in interest rates will tend to increase their
values. Although Fund Management limits the Fund's investments in debt
securities to securities it believes are not highly speculative, both kinds of
risk are increased by investing in debt securities rated BBB or lower by S&P,
Baa or lower by Moody's or, if unrated, securities determined by Fund Management
to be of equivalent quality.
Foreign Securities. Up to 25% of the Fund's total assets, measured at the
time of purchase, may be invested directly in foreign securities. Securities of
Canadian issuers and 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
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividend income or capital gains payable to
shareholders.
<PAGE>
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 of the Fund experiencing 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 and 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.
Delayed Delivery or When-Issued Securities. Up to 10% of the value of the
Fund's total assets may be committed to the purchase or sale of securities on a
when-issued or delayed-delivery basis -- that is, with settlement taking place
in the future. The payment obligation and the interest rate 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 market value of the
securities may vary, and no interest is payable to the Fund prior to settlement.
Put and Call Options. The Fund may purchase and write options on
securities and indices. These practices and their risks are discussed under
"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. 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 each repurchase agreement will
be maintained with the Fund's custodian in an amount at least equal to the
repurchase price under the agreement (including accrued interest). 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.
<PAGE>
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 on December 6, 1990, under the laws of Maryland.
The Company's board of directors has responsibility for overall
supervision of the Fund and reviews the services provided by the adviser and
sub-adviser. Under an agreement with the Company, IFG, 7800 E. Union Avenue,
Denver, Colorado 80237, serves as the Fund's investment adviser; it is primarily
responsible for providing the Fund with various administrative services. IFG's
wholly-owned subsidiary, INVESCO Trust, is the Fund's sub-adviser and is
primarily responsible for managing the Fund's investments.
^ A team of individuals, led by Timothy J. Miller, serve as portfolio ^
managers of the Fund ^ and ^ are primarily responsible for the day-to-day
management of the ^ Fund's portfolio of securities:
Timothy J. Miller
Co-portfolio manager of the Fund since 1997; co-portfolio manager of
INVESCO Growth Fund, Inc. since 1996; portfolio manager of INVESCO Dynamics Fund
since 1993; senior vice president ^(1995 to present), vice president ^(1993 to
1995) and portfolio manager ^(1992 to present) of INVESCO Trust^ Company.
Formerly (1979 to 1992), analyst and portfolio manager with Mississippi Valley
Advisors. B.S.B.A., St. Louis University; M.B.A., University of Missouri. He is
a Chartered Financial Analyst.
Trent E. May
Co-portfolio manager of the Fund since 1997; co-portfolio manager of
INVESCO Growth Fund, Inc. since 1996; vice president (since 1997) and portfolio
<PAGE>
manager (since 1996) of INVESCO Trust Company. Formerly, senior equity
manager/equity analyst at Munder Capital Management in Detroit. B.S.,
Engineering, Florida Institute of Technology; M.B.A., Rollins College. He is a
Chartered Financial Analyst.
Stacie Cowell
Co-portfolio manager of the Fund since 1997; portfolio manager (since
1996) of INVESCO Trust Company. Formerly, senior equity analyst with Founders
Asset Management; capital markets and trading analyst with Chase Manhattan Bank
in New York. B.A., Economics, Colgate University. She is a Chartered Financial
Analyst.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires Fund Management's personnel to conduct
their personal investment activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients. See
the Statement of Additional Information for more detailed information.
The Fund pays IFG 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 0.75% on the first $350 million of the Fund's
average net assets; 0.65% on the next $350 million of the Fund's average net
assets; and 0.55% on the Fund's average net assets over $700 million. For the
fiscal year ended May 31, 1997, investment management fees paid by the Fund
amounted to 0.75% of the Fund's average net assets. Out of this advisory fee,
IFG paid to INVESCO Trust, as a sub-advisory fee, an amount equal to 0.24% of
the Fund's average net assets. No fee is paid by the Fund to INVESCO Trust.
Under a Transfer Agency Agreement, IFG 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 may provide equivalent
services to the Fund. In these cases, IFG may pay, out of the fee it receives
from the Fund, an annual sub-transfer agency or recordkeeping fee to the third
party.
In addition, under an Administrative Services Agreement, IFG handles
additional administrative, recordkeeping, and internal sub- accounting services
for the Fund. For such services, IFG was paid, for the fiscal year ended May 31,
1997, a fee equal to $10,000 plus an additional amount computed at an annual
rate of 0.015% of the Fund's average net assets.
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) for the fiscal year ended May 31, 1997, including investment
<PAGE>
management fees (but excluding brokerage commissions, which are a cost of
acquiring securities), amounted to 1.52% of the Fund's average net assets.
Certain Fund expenses were absorbed voluntarily by IFG pursuant to a commitment
to the Fund to ensure that the Fund's total operating expenses did 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.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their 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 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 Fund
Management believes that the quality of the execution of the transaction and
level of commission are comparable to those available from other qualified
brokerage firms. For further information, see "Investment Practices - Placement
of Portfolio Brokerage" in the Statement of Additional Information.
IFG, INVESCO Trust and IDI are indirect wholly owned subsidiaries of
AMVESCAP PLC. AMVESCAP PLC is a publicly-traded holding company that, through
its subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct
subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of
the largest independent investment management businesses in the world. IFG and
INVESCO Trust continue to operate under their existing names. AMVESCAP PLC has
approximately $165 billion in assets under management. IFG was established in
1932 and, as of May 31, 1997, managed 14 mutual funds, consisting of 45 separate
portfolios, with combined assets of approximately $14.8 billion on behalf of
over 859,000 shareholders. INVESCO Trust (founded in 1969) served as adviser or
sub-adviser to 59 investment portfolios as of May 31, 1997, including 31
portfolios in the INVESCO group. These 59 portfolios had aggregate assets of
approximately $13.5 billion as of May 31, 1997. In addition, INVESCO Trust
provides investment management services to private clients including employee
benefit plans that may be invested in a collective trust sponsored by INVESCO
Trust. IDI was established in 1997 and is the distributor for 14 mutual funds
consisting of 45 separate portfolios.
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"). IFG
<PAGE>
prices the Fund every day that the New York Stock Exchange is open, as of
the close of regular trading (normally, 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; then subtracting liabilities,
including accrued expenses; and finally 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. Total return figures
show the average annual rate of return on a $1,000 investment in the Fund,
assuming reinvestment of all dividends and capital gain distributions for one-,
five- and ten-year periods (or since inception). Cumulative total return shows
the actual rate of return on an investment over a stated period; 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 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 Small
Company Growth 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 earnings and are not intended
to suggest future performance.
<PAGE>
HOW TO BUY SHARES
The following chart 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 IDI. However, if you invest
in the Fund through a securities broker, you may be charged a commission or
transaction fee. For all new accounts, please send a completed application form.
Please specify which Fund's shares you wish to purchase.
Fund Management 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, Fund Management 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, 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 privilege, except for 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 be responsible for
P.O. Box 173706 Individual any related loss
Denver, CO 80217- Retirement Account; the Fund or IFG
3706. $50 minimum for incurs. If you are
Or you may send each subsequent already a
your check by investment. 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 cancelled. If a
to our street purchase is
address: cancelled 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 IFG IFG incurs. If you
for instructions). are already a
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 IFG. invest continually,
when prices are low 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(R)
Your "Personal $1,000. Be sure to write
Account Line" is 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
IFG 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" below.
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 IFG 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 in
connection with the distribution of each Fund's shares to investors and the
maintenance of their accounts. These activities and services may include the
payment of compensation (including incentive compensation and/or continuing
compensation based on the amount of customer assets maintained in the Fund) to
securities dealers and other financial institutions and organizations, which may
include IDI-affiliated companies, to obtain various distribution-related and/or
administrative services for the Fund. Such services may include, among other
things, processing new shareholder account applications, preparing and
transmitting electronically 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 and
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 IDI or its affiliates or by
third parties.
Under the Plan, the Company's payments to IDI on behalf of the Fund are
limited to an amount computed at an annual rate of 0.25% of the Fund's average
net assets during the month. 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
<PAGE>
personnel of 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
limitations described above will not be paid by the Fund under the Plan, and
will be borne by IDI. In addition, IDI and its affiliates may from time to time
make additional payments from its revenues to securities dealers and other
financial institutions that provide distribution-related and/or administrative
services for the Fund. No further payments will be made by the Fund under the
Plan in the event of its termination. Also, any payments made by the Fund may
not be used to finance directly the distribution of shares of any other fund of
the Company or other mutual fund advised by IFG. Payments made by the Fund under
the Plan for compensation of marketing personnel, as noted above, are based on
an allocation formula designed to ensure that all such payments are appropriate.
For more information see "How Shares Can Be Purchased -- Distribution Plan" in
the Statement of Additional Information.
FUND SERVICES
Shareholder Accounts. IFG 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 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.
Retirement Plans and IRAs. Fund shares may be purchased for Individual
Retirement Accounts ("IRAs") and many types of tax-deferred retirement plans.
IFG can supply you with information and forms to establish or transfer your
existing plan or account.
<PAGE>
HOW TO SELL SHARES
The following chart shows several convenient ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at their 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; Individual
$1,000 for a wire Retirement Accounts
to bank of record. ("IRAs").
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 IFG's
discretion.
- --------------------------------------------------------------------------------
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 80217- shareholder(s). the certificates
3706. You may also Payment will be must be sent to
send your request mailed to your IFG.
by overnight address of record,
courier to 7800 E. or to a designated
Union Ave., Denver, bank.
CO 80237.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
By Exchange
Between this and $1,000 to open a See "Exchange
another of the new account; $50 Policy" above.
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 IFG 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 1- check may be made at least $5,000 of
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 80217- signature guarantee
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).
<PAGE>
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 CAPITAL GAIN DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to continue to qualify for tax treatment as a
regulated investment company. Thus, the Fund does not expect to pay any federal
income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and distributions of net capital gain distributions in taxable income
for federal, state, and local income tax purposes. Dividends and other
distributions are taxable whether they are received in cash or automatically
invested in shares of the Fund or another fund in the INVESCO group.
The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in August 1997,
changed the taxation of capital gains by applying different capital gains rates
depending on the taxpayer's holding period and marginal rate of federal income
tax. Net realized capital gains of the Fund are classified as short-term,
mid-term and long-term gains depending on how long the Fund held the security
which 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.
Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders.
The Fund may be subject to the 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 unless the Fund meets the qualifications to
<PAGE>
enable it to pass these taxes through to shareholders for use by them as a
foreign tax credit or deduction.
Individuals and certain other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital gain distributions and
redemption proceeds. Unless you are subject to backup withholding for other
reasons, you can avoid backup withholding on your Fund account by ensuring that
we have a correct, certified tax identification number.
We encourage you to consult a tax adviser with respect to these matters.
For further information, see "Dividends, Capital Gain Distributions and Taxes"
in the Statement of Additional Information.
Dividends and Capital Gain Distributions. The Fund earns ordinary or net
investment income, in the form of dividends and interest on its investments. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on an annual or semiannual basis, at the discretion of
the Company's board of directors.
In addition, the Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the ex- dividend date. If a shareholder purchases shares
immediately prior to such date, the shareholder will, in effect, have "bought"
the distribution by paying 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 Fund 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 Fund. The Fund will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.
<PAGE>
INVESCO Small Company Growth Fund
A no-load mutual fund seeking capital growth from
small-capitalization stocks.
PROSPECTUS
October 1, 1997
As Supplemented October 8, 1997
INVESCO FUNDS
INVESCO Distributors, Inc.
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 10800-424-8085
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.
