INVESCO SPECIALTY FUNDS INC, 497, 1998-12-07

INVESCO SPECIALTY FUNDS INC
497, 1998-12-07

Previous: SECURITY CAPITAL GROUP INC/, 8-K, 1998-12-07

Next: DEFINED ASSET FUNDS MUNICIPAL INVT TR FD INTERM TERM SER 241, 485BPOS, 1998-12-07

PROSPECTUS
December 1, 1998

INVESCO ASIAN GROWTH FUND

INVESCO Asian Growth Fund (the "Fund") seeks to achieve capital
appreciation by investing, under normal circumstances, at least 65% of its total
assets in equity securities of companies domiciled or with primary operations in
Asia and the Pacific Rim, excluding Japan. For purposes of this prospectus, Asia
will include, but not necessarily be limited to: China, Hong Kong, India,
Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand,
as well as Pakistan and Indochina as their markets become more accessible
("Asian Issuers.") The Fund is not intended as a complete investment program due
to risks of investing in the Fund. For a description of risks inherent in
investing in the Fund see "Risk Factors" and "Portfolio Turnover."

The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, open-end, managed, no-load mutual fund consisting of seven separate
portfolios of investments. This Prospectus relates to shares of the INVESCO
Asian Growth Fund. Separate prospectuses are available upon request from INVESCO
Distributors, Inc. for the Company's other funds: INVESCO Worldwide Capital
Goods Fund, INVESCO Worldwide Communications Fund, INVESCO European Small
Company Fund, INVESCO Latin American Growth Fund, INVESCO Realty Fund and
INVESCO S&P 500 Index Fund. Investors may purchase shares of any or all of the
Funds. Additional funds may be offered in the future.

This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information dated December 1, 1998,
containing further information about the Fund 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., Post Office Box
173706, Denver, Colorado 80217-3706; call 1-800-525-8085; or visit our web site
at http://www.invesco.com.

<PAGE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE 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

ANNUAL FUND EXPENSES 2

FINANCIAL HIGHLIGHTS 4

PERFORMANCE DATA 5

INVESTMENT OBJECTIVE AND POLICIES ^ 5

RISK FACTORS 9

THE FUND AND ITS MANAGEMENT ^ 13

HOW SHARES CAN BE PURCHASED ^ 15

SERVICES PROVIDED BY THE FUND ^ 17

HOW TO REDEEM SHARES ^ 20

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS ^ 21

ADDITIONAL INFORMATION ^ 23

<PAGE>

ANNUAL FUND EXPENSES

The Fund is no-load; there are no fees to purchase, exchange or redeem
shares other than a fee to redeem or exchange shares held less than three
months. (See "Shareholder Transaction Expenses"). 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 Shares Can Be Purchased - Distribution
Expenses.") Lower expenses benefit Fund shareholders by increasing the Fund's
total return.

Annual operating expenses are calculated as a percentage of the Fund's
average annual net assets. To keep expenses competitive, INVESCO Funds Group,
Inc. ("INVESCO") and INVESCO Asia Limited ("INVESCO Asia") voluntarily reimburse
the Fund for certain expenses in excess of 2.00% (excluding excess amounts that
have been offset by the expense offset arrangement described below) of the
Fund's average net assets.

Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees 1.00%*
Exchange fees 1.00%*

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

Management Fee 0.75%
12b-1 Fees 0.25%
Other Expenses(1)(2) 1.10%
Transfer Agency Fee(3) 0.90%
General Services, Administrative 0.20%
Services, Registration, Postage(4)
Total Fund Operating Expenses 2.10%
(after voluntary expense limitation)(1)(2)

*There is a 1% fee retained by the Fund to offset transaction costs and other
expenses associated with short-term redemptions and exchanges, which is imposed
only on redemptions or exchanges of shares held less than three months.

(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 an expense offset arrangement. 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 reductions
for periods prior to the fiscal year ended July 31, 1996. See "The Fund And Its
Management."

<PAGE>

(2) Certain Fund expenses are voluntarily absorbed by INVESCO ^ and
INVESCO Asia ^. In the absence of such absorbed expenses, the Fund's "Other
Expenses" and "Total Fund Operating Expenses" in the above table would have been
1.85% and 2.85%, of the Fund's average net assets based on the actual expenses
of the Fund for the fiscal year ended July 31, 1998. See "The Fund And Its
Management."

(3) Consists of the transfer agency fee described under "Additional
Information-Transfer and Dividend Disbursing Agent."

(4) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and independent accountants, securities pricing
services, costs of administrative services under an Administrative Services
Agreement, costs of registration of Fund shares under applicable laws, and costs
of printing and distributing reports to shareholders.

Example

A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$22 $66 $114 $245

The purpose of the foregoing expense table and Example is to assist
investors in understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. Such expenses are paid from the
Fund's assets. (See "The Fund And Its Management.") THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual returns, which may be greater or less than the assumed amount.

Because the Fund pays a 12b-1 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>

INVESCO Specialty Funds, Inc.
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 INVESCO Distributors, Inc. at the address
or telephone number shown on the back cover of this ^ Prospectus.

Period
Ended
Year Ended July 31 July 31
---------------------- --------
1998 1997 1996(a)
PER SHARE DATA
Net Asset Value -
Beginning of Period $11.35 $8.95 $10.00
---------------------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.04 (0.02) 0.02
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) (6.68) 2.42 (1.05)
---------------------- --------
Total from Investment Operations (6.64) 2.40 (1.03)
---------------------- --------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.02 0.00 0.02
Distributions from Capital Gains 0.00 0.00 0.00
In Excess of Capital Gains 1.32 0.00 0.00
---------------------- --------
Total Distributions 1.34 0.00 0.02
---------------------- --------
Net Asset Value - End of Period $3.37 $11.35 $8.95
====================== ========

TOTAL RETURN(b) (62.16%) 27.04% (10.31%)(c)

<PAGE>

RATIOS
Net Assets - End of Period
($000 Omitted) $12,203 $32,969 $14,315
Ratio of Expenses to Average
Net Assets(d)(e) 2.10% 2.05% 2.19%(f)
Ratio of Net Investment Income
(Loss) to Average Net Assets(d) 0.45% (0.20%) 0.94%(f)
Portfolio Turnover Rate 141% 161% 2%(c)

(a) From March 1, 1996, commencement of investment operations, to
July 31, 1996.

(b) The applicable redemption fees are not included in the Total Return
calculation.

(d) Various expenses of the Fund were voluntarily absorbed by INVESCO and
INVESCO Asia for the years ended July 31, 1998 and 1997 and the period
ended July 31, 1996. If such expenses had not been voluntarily absorbed,
^ Ratio of Expenses to Average Net Assets would have been 2.85%,
2.10% and 2.79% (annualized), respectively, and ratio of ^ Net
Investment Income (Loss) to Average Net Assets would have been (0.30%),
(0.25%) and 0.34% (annualized), respectively.

(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser and Sub-Adviser, which is before any expense offset
arrangements.

(f) Annualized

<PAGE>

PERFORMANCE DATA

From time to time, the Fund may advertise its total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of the Fund refers to the
average annual rate of return of an investment in the Fund. This figure is
computed by calculating the percentage change in value of an investment of
$1,000, assuming reinvestment of all income dividends and capital gain
distributions, to the end of a specified period. Periods of one year, five
years, ten years and/or life of the Fund are used if available. Any given report
of total return performance should not be considered as representative of future
performance. The Fund charges no sales loads that would affect the total return
computation. However, the total return computation may be affected as a result
of the 1% redemption or exchange fee which is retained by the Fund to offset
transaction costs and other expenses associated with short-term redemptions and
exchanges, which is imposed on redemptions or exchanges of shares held less than
three months.

In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and the performance of recognized indices of investment results for
the same period, and/or assessments of the quality of shareholder service, may
be provided to shareholders. Such indices include indices provided by Dow Jones
& Company, Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers,
National Association of Securities Dealers Automated Quotations, Frank Russell
Company, Value Line Investment Survey, the American Stock Exchange, Morgan
Stanley Capital International, Wilshire Associates, the Financial Times-Stock
Exchange, the New York Stock Exchange, the Nikkei Stock Average and the Deutcher
Aktienindex, all of which are unmanaged market indicators. In addition,
rankings, ratings, and comparisons of investment performance and/or assessments
of the quality of shareholder service appearing in publications such as Money,
Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources which
utilize information compiled (i) internally; (ii) by Lipper Analytical Services,
Inc.; or (iii) by other recognized analytical services may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Fund in performance reports, will be drawn
from the "Pacific Region" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund seeks to achieve capital appreciation by investing, under normal
circumstances, at least 65% of its total assets in equity securities (common
stocks and, to a lesser degree, shares of other investment companies, preferred
stocks and securities convertible into common stocks such as rights, warrants
and convertible debt securities) of large and small companies domiciled or with
primary operations in Asia and the Pacific Rim, excluding Japan. The foregoing
investment objective is fundamental and may not be changed without the approval
of the Fund's shareholders. For purposes of the Fund, Asia and Pacific Rim
territories will include, but not necessarily be limited to: China, Hong Kong,
India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and
Thailand, as well as Pakistan and Indochina as their markets become more
accessible. The Fund defines securities of Asian Issuers as any issuer which, in
the opinion of the Fund's investment adviser or sub-adviser (collectively, "Fund
Management"), issues: (1) securities of companies organized under the laws of an
Asian territory, other than Japan; (2) securities of companies for which the
principal securities trading market is in Asian territories; (3) securities
issued or guaranteed by a government agency, instrumentality, political
subdivision, or central bank of an Asian territory; (4) securities of issuers,
wherever organized, with at least 50% of the issuer's assets, gross revenues, or
profit in any one of the two most recent fiscal years derived from activities or
assets in Asian territories, other than Japan; or (5) securities of Asian
Issuers, as defined above, in the form of depository shares or receipts. Under
normal circumstances, the Fund will invest at least 65% of its total assets in
issuers domiciled in at least five different countries, although Fund Management
expects the Fund's investments to be allocated among a larger number of
countries. While more than 50% of the Fund's total assets on occasion may be
invested in securities of Asian Issuers domiciled in, or with primary operations
in, a single country, Fund Management does not normally intend to manage the
Fund's investments with the view of investing more than 50% of the Fund's total
assets in securities of Asian Issuers domiciled in, or with primary operations
in, any one particular country.

The Fund has not established any minimum investment standards, such as
earnings history, type of industry, dividend payment history, etc. with respect
to the Fund's investments in foreign equity securities and, therefore, investors
in the Fund should consider that investments may consist of securities that may
be deemed to be speculative.

The economies of Asian countries may vary widely in their condition, and
may be subject to certain changes that could have a positive or negative impact
on the Fund. Investments in foreign securities involve certain risks which are
discussed below under "Risk Factors."

<PAGE>

The securities in which the Fund invests will typically be listed on the
principal stock exchanges in these countries, or in the secondary or junior
markets, although the Fund may purchase securities listed on the
over-the-counter market in these countries. While Fund Management believes that
smaller companies can offer greater growth potential than larger, more
established firms, the former also involve greater risk and price volatility. To
help reduce risk, Fund Management expects, under normal market conditions, to
vary its portfolio investments by company, industry and country. Investments in
foreign securities involve certain risks which are discussed below under "Risk
Factors."

Consistent with its investment objective, the balance of the Fund's assets
may be invested in debt securities (corporate bonds, commercial paper, debt
securities issued by the U.S. government, its agencies and instrumentalities,
Asian Issuers or foreign governments and, to a lesser extent, municipal bonds,
asset-backed securities and zero coupon bonds). The Fund may invest no more than
30% of its total assets in debt securities that are rated below BBB by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or Baa by
Moody's Investors Service, Inc. ("Moody's") or, if unrated, judged by Fund
Management to be equivalent in quality to debt securities having such ratings
(commonly referred to as "junk bonds"). In no event will the Fund ever invest in
a debt security rated below CCC by S&P or Caa by Moody's or, if unrated, judged
by Fund Management to be equivalent in quality to debt securities having such
ratings. The risks of investing in lower rated debt securities are discussed
below under "Risk Factors."

The amounts invested in stocks, bonds and cash securities may vary from
time to time, depending upon Fund Management's assessment of business,
economic and market conditions. However, the Fund does not currently intend to
invest any portion of its assets in Japan. In periods of unfavorable economic
and market conditions, as determined by Fund Management, the Fund may depart
from its basic investment objective and 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 the assets until conditions stabilize.
The Fund reserves the right to hold equity, fixed-income and cash securities in
whatever proportion is deemed desirable at any given time for temporary
defensive purposes. While the Fund is in a defensive position, the opportunity
to achieve capital appreciation will be limited; however, the ability to
maintain a defensive position enables the Fund to seek to avoid capital losses
during market downturns. Undernormal market conditions, the Fund does not expect
to have a substantial portion of its assets invested in cash securities.

<PAGE>

As a non-fundamental policy, in order to hedge its portfolio the Fund may
purchase and write options on securities (including index options and options on
foreign securities) and may invest in futures contracts for the purchase or sale
of foreign currencies, fixed-income securities and instruments based on
financial indices (collectively, "futures contracts"), options on futures
contracts, forward contracts and interest rate swaps and swap-related products.
Interest rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments. These practices and instruments, some of
which are known as derivatives, and their risks are discussed below under "Risk
Factors" and in the Statement of Additional Information.

Additional information on certain types of securities in which the Fund
may invest is set forth below:

When-Issued Securities. The Fund may make commitments in an amount of up
to 10% of the value of its total assets at the time any commitment is made to
purchase or sell equity or debt securities on a when-issued or delayed delivery
basis (i.e., securities may be purchased or sold by the Fund with settlement
taking place in the future, often a month later or more). The payment obligation
and, in the case of debt securities, the interest rate that will be received on
the securities generally are fixed at the time the Fund enters into the
commitment. During the period between purchase and settlement, no payment is
made by the Fund and no interest accrues to the Fund. At the time of settlement,
the market value of the security may be more or less than the purchase price,
and the Fund bears the risk of such market value fluctuations. The Fund
maintains cash, U.S. government securities, or other liquid securities having an
aggregate value equal to the amount of such purchase commitments in a segregated
account until payment is made.

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

<PAGE>

The Fund may purchase certain restricted securities that are not
registered for sale to the general public, but that can be resold to
institutional investors ("Rule 144A Securities"), ^ without regard to the
foregoing 15% limitation, if a liquid institutional trading market exists. The
liquidity of the Fund's investments in Rule 144A Securities could be impaired if
dealers or institutional investors become uninterested in purchasing these
securities. The Company's board of directors has delegated to Fund Management
the authority to determine the liquidity of Rule 144A Securities pursuant to
guidelines approved by the board. For more information concerning Rule 144A
Securities, see the Statement of Additional Information.

The settlement period of securities transactions in foreign markets may be
longer than in domestic markets. These considerations generally are more of a
concern in developing countries. For example, the possibility of political
unrest and the dependence on foreign economic assistance may be greater in these
countries than in developed countries.

Repurchase Agreements. The Fund may enter into repurchase agreements with
respect to debt instruments eligible for investment by the Fund with member
banks of the Federal Reserve System, registered broker-dealers, and registered
government securities dealers, which are deemed creditworthy by Fund Management.
A repurchase agreement, which may be considered a "loan" under the Investment
Company Act of 1940 (the "1940 Act"), is a means of investing monies for a short
period. In a repurchase agreement, 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) subject to resale to the
seller at an agreed upon price and date (normally, the next business day). In
the event that the original seller defaults on its obligation to repurchase the
security, the Fund could incur costs or delays in seeking to sell such security.
To minimize risk, the securities underlying each repurchase agreement will be
maintained with the Fund's custodian in an amount at least equal to the
repurchase price under the agreement (including accrued interest), and such
agreements will be effected only with parties that meet certain creditworthiness
standards established by the Company's board of directors. The Fund will not
enter into a repurchase agreement maturing in more than seven days if as a
result more than 15% of its net assets would be invested in such repurchase
agreements and other illiquid securities. The Fund has not adopted any limit on
the amount of its net assets that may be invested in repurchase agreements
maturing in seven days or less.

<PAGE>

Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for the Fund's portfolio. Although the Fund does not trade for
short-term profits, securities may be sold without regard to the time they have
been held in the Fund when, in the opinion of Fund Management, investment
considerations warrant such action. In addition, portfolio turnover rates may
increase as a result of large amounts of purchases or redemptions of Fund shares
due to economic, market or other factors that are not within the control of Fund
Management. As a result, while it is anticipated that the portfolio turnover
rate for the Fund's portfolio generally will not exceed 200%, under certain
market conditions the portfolio turnover rate may exceed 200%. A portfolio
turnover rate in excess of 100% may be considered higher than that of other
investment companies seeking capital appreciation. 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, along with
the Fund's brokerage allocation policies, are discussed further in the Statement
of Additional Information.

<PAGE>

violated or to require the disposition of any investment, except as
otherwise required by law. If the credit ratings of an issuer are lowered below
those specified for investment by the Fund, the Fund is not required to dispose
of the obligations of that issuer. The determination of whether to sell such an
obligation will be made by Fund Management based upon an assessment of credit
risk and the prevailing market price of the investment. If the Fund borrows
money, its share price may be subject to greater fluctuation until the borrowing
is repaid. The Fund attempts to minimize such fluctuations by not purchasing
additional securities when borrowings, including reverse repurchase agreements,
are greater than 5% of the value of the Fund's total assets. The Fund does not
intend to invest more than 5% of its assets in reverse repurchase agreements. As
a fundamental policy in addition to the above, the Fund may, notwithstanding any
other investment policy or limitation (whether or not fundamental), invest all
of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives, policies
and limitations as the Fund. See "Additional Information -Master/Feeder Option."

RISK FACTORS

There can be no assurance that the Fund will achieve its investment
objective. The Fund's investments in common stocks and other equity securities
may, of course, decline in value. The Fund's assets will be invested primarily
in Asian Issuers. Investors should realize that investing in securities of Asian
Issuers involves certain risks and special considerations, including those set
forth below, which are not typically associated with investing in securities of
U.S. issuers. Further, certain investments that the Fund may purchase, and
investment techniques that the Fund may use, involve risks including those set
forth below.

Investment in the Fund involves above-average investment risk. It is
designed as a long-term investment and not for short-term trading purposes, and
should not be considered a complete investment program.

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 may be affected
by remediation costs, which may be substantial. The Fund's investments may be
adversely affected.

<PAGE>

Political and Economic Risks. The Fund may make investments in developing
countries which involve exposure to economic structures that generally are less
diverse and mature than in the United States, and to political systems which may
be less stable. A developing country can be considered to be a country which is
in the initial stages of its industrialization cycle. In the past, markets of
developing countries have been more volatile than the markets of developed
countries; however, such markets often have provided higher rates of return to
investors.

Investing in securities of issuers in Asian countries involves certain
considerations not typically associated with investing in securities of United
States companies, including (1) restrictions on foreign investment and on
repatriation of capital invested in Asian countries, (2) currency fluctuations,
(3) the cost of converting foreign currency into United States dollars, (4)
potential price volatility and lesser liquidity of shares traded on Asian
country securities markets and (5) political and economic risks, including the
risk of nationalization or expropriation of assets and the risk of war.

Certain Asian countries are more vulnerable to the ebb and flow of
international trade, trade barriers and other protectionist or retaliatory
measures. Investments in countries that have recently opened their capital
market, including China, which appear to have relaxed their central planning
requirement and those that have privatized some of their state-owned industries
toward free markets, should be regarded as speculative.

Securities Markets. The settlement period of securities transactions in
foreign markets may be longer than in domestic markets. These considerations are
generally more of a concern in developing countries. For example, the
possibility of political upheaval and the dependence on foreign economic
assistance may be greater in these countries than developed countries.

Securities exchanges and broker-dealers in some Asian countries are
subject to less regulatory scrutiny than in the United States, as are Asian
Issuers in such countries. The limited size of the markets for securities may
enable adverse publicity, investors' perceptions or traders' positions or
strategies to affect prices unduly, at times decreasing not only the value but
also the liquidity of the Fund's investments. The Fund may invest no more than
15% of its net assets at the time of investment in illiquid securities.
Securities the proceeds of which are subject to limitations on repatriation of
principal or profits for more than seven days, and those for which there ceases
to be a ready market, will be deemed illiquid for this purpose.

<PAGE>

Foreign Securities. Due to the absence of established securities markets
in certain Asian countries there may be restrictions on investment by foreigners
in the securities of companies in these countries, and difficulties in removing
from certain of these countries the dollars invested in such companies; the
Fund's ability to invest in certain countries may be restricted to the use of
investment vehicles authorized by the local government, investment in shares of
other investment companies; or investments in American Depository Receipts
("ADRs"), American Depository Shares, and Global Depository Shares.

ADRs are instruments, usually issued by a U.S. bank or trust company,
evidencing ownership of securities of a foreign issuer into which the ADRs may
be convertible. ADRs are designed for use in United States markets and may be
traded on U.S. securities exchanges or over-the-counter. They are denominated in
dollars rather than the currency of the country in which the underlying
securities are issued.

ADRs may be issued in sponsored or unsponsored programs. In sponsored
programs, the issuer makes arrangements to have its securities traded in the
form of ADRs; in unsponsored programs, the issuer may not be directly involved
in the creation of the program. Although the regulatory requirements with
respect to sponsored and unsponsored programs are generally similar, the issuers
of unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, such information may not be reflected in the
market value of the ADRs. ADRs are subject to certain of the same risks as
direct investments in foreign securities, including the risk that changes in the
value of the currency in which the security underlying an ADR is denominated
relative to the U.S. dollar may adversely affect the value of the ADR.

<PAGE>

holdings. In addition, there may be tax ramifications relating to
investment in such entities. Investments by the Fund in other investment
companies are subject to the following limits imposed by the 1940 Act: subject
to certain exceptions, no more than 5% of the Fund's total assets may be
invested in any one investment company (but no more than 3% of the voting stock
of the underlying investment company may be purchased) and no more than 10% of
the Fund's total assets may be invested in other investment companies in the
aggregate.

Other risks and considerations of international investing include the
following: differences in accounting, auditing and financial reporting
standards, which may result in less publicly available information than is
generally available with respect to U.S. issuers; generally higher commission
rates on foreign portfolio transactions and longer settlement periods; the
smaller trading volumes and generally lower liquidity of foreign stock markets,
which may result in greater price volatility; foreign withholding taxes payable
on income and/or gains from the Fund's investment income on foreign securities,
which may reduce dividend and/or interest income or capital gains available for
distribution to shareholders; the possibility of expropriation or confiscatory
taxation; adverse changes in investment or exchange control regulations;
political instability which could affect U.S. investment in foreign countries;
potential restrictions on the flow of international capital; and the possibility
^ that the Fund ^ may experience difficulties in pursuing legal remedies and
collecting judgments.

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The
Netherlands, Portugal and Spain are presently members of the European Economic
and Monetary Union (the "EMU"). The EMU intends to establish a common European
currency for EMU countries which will be known as the "euro." Each participating
country presently plans to adopt the euro as its currency on January 1, 1999.
The old national currencies will be sub-currencies of the euro until July 1,
2002, at which time the old currencies will disappear entirely. Other European
countries may adopt the euro in the future.

<PAGE>

The planned introduction of the euro presents some uncertainties and
possible risks, including whether the payment and operational systems of banks
and other financial institutions will be ready by January 1, 1999; whether
exchange rates for existing currencies and the euro will be adequately
established; and whether suitable clearing and settlement systems for the euro
will be in operation. These and other factors may cause market disruptions
before or after January 1, 1999 and could adversely affect the value of
securities held by the Fund.

After January 1, 1999, the introduction of the euro is expected to impact
European capital markets in ways that it is impossible to quantify at this time.
For example, investors may begin to view EMU countries as a single market, and
that may impact future investment decisions for the Fund. As the euro is
implemented, there may be changes in the relative strength and value of the U.S.
dollar and other major currencies, as well as possible adverse tax consequences.
The euro transition by EMU countries - present and future - may impact the
fiscal and monetary policies of those participating countries. There may be
increased levels of price competition among business firms within EMU countries
and between businesses in EMU and non-EMU countries. The outcome of these
uncertainties could have unpredictable effects on trade and commerce and result
in increased volatility for all financial markets.

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.
The ratings given a security by S&P or Moody's provide a generally useful guide
to such credit risk. The lower rating given a security by said rating service,
the greater the credit risk such rating service perceives to exist with respect
to such ^ security. Increasing the amount of Fund assets invested in unrated or
lower grade securities, while intended to increase the yield produced by these
assets, also will increase the credit risk to which those assets are subject.

<PAGE>

lowest investment grade debt category (those rated BBB by S&P or Baa by Moody's)
are regarded as having adequate capability to pay principal and interest, they
have speculative characteristics. Adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case for higher rated bonds. Lower rated bonds
by Moody's (categories Ba, B, Caa) are of poorer quality and also have
speculative characteristics. Bonds rated Caa may be in default or there may be
present elements of danger with respect to principal or interest. Lower rated
bonds by S&P (categories BB, B, CCC) include those which are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with their terms; BB indicates
the lowest degree of speculation and CCC a high degree of speculation. While
such bonds likely will have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. For a specific description of each corporate bond rating category,
please refer to Appendix B to the Statement of Additional Information. Note,
however, that the Fund expects that most foreign debt securities in which it
would invest will not be rated by U.S. rating services.

Futures, Options and Other Derivative Instruments. The use of futures,
options, forward contracts and swaps exposes the Fund to additional investment
risks and transaction costs and, as a result, no more than 5% of the Fund's
total assets will be committed to such investments. If Fund Management seeks to
protect the Fund against potential adverse movements in the securities, foreign
currency or interest rate markets using these instruments, and such markets do
not move in a direction adverse to the Fund, the Fund could be left in a less
favorable position than if such strategies had not been used. Risks inherent in
the use of futures, options, forward contracts and swaps include (1) the risk
that interest rates, securities prices and currency markets will not move in the
directions anticipated; (2) imperfect correlation between the price of futures,
options and forward contracts and movements in the prices of the securities or
currencies being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
and (5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences. Further information on the use of futures, options,
forward foreign currency contracts and swaps and swap-related products, and the
associated risks, is contained in the Statement of Additional Information.

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.

<PAGE>

THE FUND AND ITS MANAGEMENT

The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as an open-end, diversified, management investment company.
It was incorporated on April 12, 1994, under the laws of Maryland.

The Company's board of directors has responsibility for overall
supervision of the Fund, and reviews the services provided by the investment
adviser. Under an agreement with the Company, INVESCO, 7800 E. Union Avenue,
Denver, Colorado, serves as the Fund's investment adviser. Under this agreement,
INVESCO is primarily responsible for providing the Fund with various
administrative services and supervising the Fund's daily business affairs. These
services are subject to review by the Company's board of directors.

Pursuant to an agreement with INVESCO, INVESCO Asia ^ serves as the
sub-adviser to the Fund. INVESCO Asia, subject to the supervision of INVESCO, is
primarily responsible for selecting and managing the Fund's investments.
Together, INVESCO and INVESCO Asia constitute "Fund Management."

Pursuant to an agreement with the Company, INVESCO Distributors, Inc.
("IDI") is the Fund's 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 Fund's distributor.

INVESCO, INVESCO Asia 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
and INVESCO Asia continued to operate under their existing names. AMVESCAP PLC
had approximately ^ $241 billion in assets under management as of ^ September
30, 1998. INVESCO was established in 1932 and, as of July 31, 1998, managed 14
mutual funds, consisting of 49 separate portfolios, with combined assets of
approximately $19.6 billion on behalf of 884,099 shareholders.

<PAGE>

The following individual serves as lead portfolio manager for the Fund and,
as a member of the INVESCO Asia Regional Strategies Team headed by William
Barron, is primarily responsible for determining, in accordance with the
Regional Strategies Team, the country-by-country allocation of the portfolio's
assets. For portfolio construction, the lead portfolio manager relies on stock
recommendations of the country specialists as per the "Buylist" or model
portfolio, based on the ongoing implementation and risk control policies
applicable to the portfolio:

Sam Lau Portfolio manager of the Fund since 1998; portfolio manager for
INVESCO Asia ^ since 1994; formerly (1988-1990), investment
analyst for W. I. Carr and (1990-1994) asset manager for Barings
and Morgan Guaranty Trust; began investment career in 1988; B.S.
in Computer Science and Mathematics from the University of
Illinois and M.B.A. from the Chinese University of Hong Kong.

Mr. Lau heads a team of individual country specialists who are responsible
for managing security selections for their assigned country's share of the
allocation within the parameters established by INVESCO Asia's investment policy
group.

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 investment and other personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Funds or Fund Management'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 0.75% on the first $500 million of the
Fund's average net assets, 0.65% on the next $500 million of the Fund's average
net assets and 0.55% on the Fund's average net assets over $1 billion.

Out of the advisory fee which it receives from the Fund, INVESCO pays
INVESCO Asia, as the Fund's sub-adviser, a monthly fee based upon the average
daily value of the Fund's net assets. Based upon approval of the Company's board
of directors at a meeting held May 14, 1998, the calculation of sub-advisory
fees of the Fund ^ was changed from 33.33% of the advisory fee (0.25% on the
first $500 million of the Fund's average net assets, 0.2167% on the next $500
million of the Fund's average net assets and 0.1833% on the Fund's average net
assets in excess of $1 billion) to 40% of the advisory fee (0.30% on the first

<PAGE>

$500 million of the Fund's average net assets, 0.26% on the next $500
million of the Fund's average net assets and 0.22% on the Fund's average net
assets in excess of $1 billion). No fee is paid by the Fund to INVESCO Asia.

The Company also has entered into an Administrative Services Agreement
(the "Administrative Agreement") with INVESCO. Pursuant to the Administrative
Agreement, INVESCO performs certain administrative, recordkeeping and internal
sub-accounting services, including without limitation, maintaining general
ledger and capital stock accounts, preparing a daily trial balance, calculating
net asset value daily, providing selected general ledger reports and providing
sub-accounting and recordkeeping services for Fund shareholder accounts
maintained by certain retirement and employee benefit plans for the benefit of
participants in such plans. For such services, the Fund pays INVESCO a fee
consisting of a base fee of $10,000 per year, plus an additional incremental fee
computed at the annual rate of 0.015% per year of the average net assets of the
Fund. INVESCO also is paid a fee by the Fund for providing transfer agent
services. See "Additional Information."

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 the 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 the Fund's
total income before dividends are paid. Total expenses (prior to any
expense offset arrangement) of the Fund for the fiscal year ended July 31, 1998,
including investment management fees (but excluding brokerage commissions, which
are included as a cost of acquiring securities), amounted to 2.10% of the Fund's
average net assets. Certain expenses of the Fund are voluntarily absorbed by
INVESCO and INVESCO Asia pursuant to a commitment to the Fund in order to ensure
that the Fund's total operating expenses do not exceed 2.00%. This commitment
may be changed following consultation with the Company's board of directors. In
the absence of such voluntary expense limitation, the Fund's total expenses for
the fiscal year ended July 31, 1998 would have been 2.85% of the Fund's average
net assets.

Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management'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
Shares Can Be Purchased - Distribution Expenses," the Company may market shares
of the Fund 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 brokers and 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.

<PAGE>

HOW SHARES CAN BE PURCHASED

Shares of the Fund are sold on a continuous basis by IDI, as the Fund's
distributor, at the net asset value per share next calculated after receipt of a
purchase order in good form. No sales charge is imposed upon the sale of shares
of the Fund. To purchase shares of the Fund, send a check made payable to
INVESCO Funds Group, Inc., together with a completed application form, to:

INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706

PURCHASE ORDERS MUST SPECIFY THE FUND IN WHICH THE INVESTMENT IS TO BE
MADE.

The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the section entitled "Services Provided By The Fund," may open an account
without making any initial investment if they agree to make regular, minimum
purchases of at least $50; (2) those shareholders investing in an Individual
Retirement Account ("IRA"), or through omnibus accounts where individual
shareholder recordkeeping and sub-accounting are not required, may make initial
minimum purchases of $250; (3) Fund Management may permit a lesser amount to be
invested in a Fund under a federal income tax-deferred retirement plan (other
than an IRA account), or under a group investment plan qualifying as a
sophisticated investor; and (4) Fund Management reserves the right to increase,
reduce or waive the minimum purchase requirements in its sole discretion where
it determines such action is in the best interests of the Fund.

The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire order or telephone order
be in an amount less than $1,000. For further information, the purchaser may
call the Fund's office by using the telephone number on the back cover of this
Prospectus. Orders sent by overnight courier, including Express Mail, should be
sent to the street address, not post office box, of INVESCO at 7800 E. Union
Avenue, Denver, CO 80237.

Orders to purchase shares of the Fund can be placed by telephone. Shares
of the Fund will be issued at the net asset value next determined after receipt
of telephone instructions. Generally, payments for telephone orders must be
received by the Fund within three business days or the transaction may be

<PAGE>

canceled. In the event of such cancellation, the purchaser will be held
responsible for any loss resulting from a decline in the value of the shares. In
order to avoid such losses, purchasers should send payments for telephone
purchases by overnight courier or bank wire. INVESCO has agreed to indemnify the
Fund for any losses resulting from the cancellation of telephone purchases.

If your check does not clear, or if a telephone purchase must be 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
has the option to redeem shares from any identically registered account in the
Fund or any other INVESCO fund as reimbursement for any loss incurred. You also
may be prohibited or restricted from making future purchases in any of the
INVESCO funds.

Persons who invest in the Fund through a securities broker may be charged
a commission or transaction fee by the broker for the handling of the
transaction if the broker so elects. Any investor may deal directly with the
Fund in any transaction. In that event, there is no such charge. IDI or 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.

The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of Fund Management, such rejection is in the best interest of the Fund.

Net asset value per share is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange
(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for the Fund is
calculated by dividing the market value of the Fund's securities plus the value
of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of the Fund. If market quotations are not readily available,
a security or other asset will be valued at fair value as determined in good
faith by the board of directors. Debt securities with remaining maturities of 60
days or less at the time of purchase will be valued at amortized cost, absent
unusual circumstances, so long as the Company's board of directors believes that
such value represents fair value.

Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the 1940 Act (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

<PAGE>

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 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, 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.

<PAGE>

payments received by IDI which are no 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 distribution which may result from ^ INVESCO's or
IDI's use of fees received from the Fund for services rendered by INVESCO,
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.

SERVICES PROVIDED BY THE FUND

Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Since certificates must be carefully safeguarded, and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Fund. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Fund's office by using the telephone number on the cover of this Prospectus.

Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund at the net asset value
per share in effect on the ex-dividend or ex-distribution date. A shareholder
may, however, elect to reinvest dividends and other distributions in certain of
the other no-load mutual funds advised by INVESCO and distributed by IDI, or to
receive payment of all dividends and other distributions in excess of $10.00 by
check by giving written notice to INVESCO at least two weeks prior to the record
date on which the change is to take effect. Further information concerning these
options can be obtained by contacting INVESCO.

<PAGE>

Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which the withdrawals will be made. Under the Periodic
Withdrawal Plan, INVESCO, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by INVESCO at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting INVESCO.

Exchange Policy. Shares of the Fund may be exchanged for shares of any
other fund of the Company, as well as for shares of any of the following other
no-load mutual funds, which are also advised by INVESCO and distributed by IDI,
on the basis of their respective net asset values at the time of the exchange:
INVESCO Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.), INVESCO
Combination Stock and Bond Funds, Inc. (formerly, INVESCO Flexible Funds, Inc.),
INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc.,
INVESCO ^ Growth Funds, Inc. (formerly, ^ INVESCO Growth Fund, ^ Inc.), INVESCO
Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money
Market Funds, Inc., INVESCO ^ Sector Funds, Inc. (formerly, INVESCO Strategic
Portfolios, ^ Inc.), INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds,
Inc.), INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.

Upon an exchange of shares held less than three months (other than shares
acquired through reinvestment of dividends or other distributions), a fee of 1%
of the current net asset value of the shares being exchanged will be assessed
and retained by the Fund for the benefit of the remaining shareholders. This fee
is intended to encourage long-term investment in the Fund, to avoid transaction
and other expenses caused by early redemptions or exchanges, and to facilitate
portfolio management. The fee is not a deferred sales charge, is not a
commission paid to INVESCO, and does not benefit INVESCO in any way. The fee
applies to redemptions from the Fund and exchanges into any of the other no-load
mutual funds which are also advised by INVESCO and distributed by IDI. The Fund
will use the "first-in, first-out" method to determine the three-month holding
period. Under this method the date of redemption or exchange will be compared
with the earliest purchase date of shares held in the account. If this holding
period is less than three months as to any shares, the redemption/exchange fee
will be assessed on the current net asset value of those shares.

<PAGE>

An exchange involves the redemption of shares in the Fund and investment of
the redemption proceeds in shares of another fund of the Company or in shares of
one of the funds listed above. Exchanges will be made at the net asset value per
share next determined after receipt of an exchange request in proper order. Any
gain or loss realized on such an exchange is recognizable for federal income tax
purposes by the shareholder. Exchange requests may be made either by telephone
or by written request to INVESCO, using the telephone number or address on the
back cover of this Prospectus. Exchanges made by telephone must be in an amount
of at least $250, if the exchange is being made into an existing account of one
of the INVESCO funds. All exchanges that establish a new account must meet the
Fund's applicable minimum initial investment requirements. Written exchange
requests into an existing account have no minimum requirements other than the
Fund's applicable minimum subsequent investment requirements.

The option to exchange Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
the telephone exchange option, the investor has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that exchange instructions are genuine. These
may include recording telephone instructions and providing written confirmations
of exchange transactions. As a result of this policy, the investor may bear the
risk of any loss due to unauthorized or fraudulent instructions; provided,
however, that if the Fund fails to follow these or other reasonable procedures,
the Fund may be liable.

In order to prevent abuse of this policy to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange option of
any shareholder who requests more than four exchanges in a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange policy also may be modified or terminated at any
time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the 1940 Act, or where sales of
the fund into which the shareholder is exchanging are temporarily stopped,
notice of all such modifications or termination of the exchange policy will be
given at least 60 days prior to the date of termination or the effective date of
the modification.

Before making an exchange, the shareholder should review the prospectuses
of the funds involved and consider their differences. Shareholders interested in
exercising the exchange option may contact INVESCO for information concerning
their particular exchanges.

<PAGE>

Automatic Monthly Exchange. Shareholders who have accounts in any one or
more of the mutual funds distributed by IDI may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange Policy" on a monthly basis. The
minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying INVESCO at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting INVESCO.

EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by contacting
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.

Direct Payroll Purchase. Shareholders may elect to have their employer
make automatic purchases of Fund shares for them by deducting a specified amount
from their regular paychecks. This automatic investment program can be modified
or terminated at any time by the shareholder, by notifying the employer. Further
information regarding this service can be obtained by contacting INVESCO.

Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, various ^ IRAs, simplified employee
pension plans and corporate retirement plans. In addition, shares can be used to
fund tax qualified plans established under Section 403(b) of the Internal
Revenue Code of 1986 by educational institutions, including public school
systems and private schools, and certain kinds of non-profit organizations,
which provide deferred compensation arrangements for their employees.

<PAGE>

receive the confirmations and quarterly statements described under
"Shareholder Accounts." For complete information, including prototype forms and
service charges, call INVESCO at the telephone number listed on the back cover
of this ^ Prospectus or send a written request to: Retirement Services, INVESCO
Funds Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.

HOW TO REDEEM SHARES

Shares of the Fund may be redeemed at any time at their current net asset
value per share next determined after a request in proper form is received at
the Fund's office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance. Upon the redemption of shares held less than three months (other
than shares acquired through reinvestment of dividends or other distributions),
a fee of 1% of the current net asset value of the shares will be assessed and
retained by the Fund for the benefit of remaining shareholders. This fee is
intended to encourage long-term investment in the Fund, to avoid transaction and
other expenses caused by early redemptions or exchanges, and to facilitate
portfolio management. The fee is not a deferred sales charge, is not a
commission paid to INVESCO, and does not benefit INVESCO in any way. The fee
applies to redemptions from the Fund and exchanges into any of the other no-load
mutual funds which are also advised by INVESCO and distributed by IDI. The Fund
will use the "first-in, first-out" method to determine the three-month holding
period. Under this method the date of redemption or exchange will be compared
with the earliest purchase date of shares held in the account. If this holding
period is less than three months as to any shares, the redemption/exchange fee
will be assessed on the current net asset value of those shares.

If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not post
office box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver, CO
80237. If no certificates have been issued, a written redemption request signed
by each registered owner of the account must be submitted to INVESCO at the post
office box address noted above. If shares are held in the name of a corporation,
additional documentation may be necessary. Call or write for specific
information. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), the signature(s) must be guaranteed by a financial
institution which qualifies as an eligible guarantor institution. Redemption
procedures with respect to accounts registered in the names of broker-dealers
may differ from those applicable to other shareholders.

<PAGE>

BE CAREFUL TO SPECIFY THE ACCOUNT FROM WHICH THE REDEMPTION IS TO BE MADE.
SHAREHOLDERS HAVE A SEPARATE ACCOUNT FOR EACH FUND IN WHICH THEY INVEST.

Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange, or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which will take up to 15 days).

If a shareholder participates in EasiVest, the Fund's automatic monthly
investment program, and redeems all of the shares in a Fund account, INVESCO
will terminate any further EasiVest purchases unless otherwise instructed by the
shareholder.

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

Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to
INVESCO, using the telephone number on the back of this prospectus. The
redemption proceeds, at the shareholder's option, either will be mailed to the
address listed for the shareholder's Fund account, or wired (minimum of $1,000)
or mailed to the bank which the shareholder has designated to receive the
proceeds of telephone redemptions. The Fund charges no fee for effecting such
telephone redemptions. Unless Fund Management permits a larger redemption
request to be placed by telephone, a shareholder may not place a redemption
request by telephone in excess of $25,000. These telephone redemption privileges
may be modified or terminated in the future at the discretion of Fund
Management.

<PAGE>

For ITC-sponsored federal income tax-deferred retirement plans, the term
"shareholders" is defined to mean plan trustees that file a written request to
be able to redeem Fund shares by telephone. Shareholders should understand that,
while the Fund will attempt to process all telephone redemption requests on an
expedited basis, there may be times, particularly in periods of severe economic
or market disruption, when (a) they may encounter difficulty in placing a
telephone redemption request, and (b) processing telephone redemptions will
require up to seven days following receipt of the redemption request, or
additional time because of the unusual circumstances set forth above.

Redeeming Fund shares by telephone is available to shareholders
automatically unless expressly declined. By signing a New Account Application, a
Telephone Transaction Authorization Form or otherwise utilizing telephone
redemption privileges, the shareholder has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that telephone instructions are genuine. These
may include recording telephone instructions and providing written confirmation
of transactions initiated by telephone. As a result of this policy, the investor
may bear the risk of any loss due to unauthorized or fraudulent instructions;
provided, however, that if the Fund fails to follow these or other reasonable
procedures, the Fund may be liable.

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS

Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from certain foreign
currency transactions, if any. Distribution of substantially 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 distribution policy and 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 ^ their accounts
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>

asset giving rise to the gain, a capital gain was taxable at a maximum rate
of ^ either 20% or 28%. Beginning January 1, 1998, ^ all long-term gains
realized ^ on the sale of securities held ^ more than 12 months will be taxable
at a maximum rate of 20%. In addition, legislation signed in October of 1998
provides that all capital gain distributions from a mutual fund paid to
shareholders during 1998 will be taxed at a maximum rate of 20%. Accordingly,
all capital gain distributions paid in 1998 will be taxable at a maximum rate of
20%. Note that the rate of capital gains tax is dependent on the shareholder's
marginal tax rate and may be lower than the above rates. At the end of each
year, information regarding the tax status of dividends and other distributions
is provided to shareholders. Shareholders should consult their tax ^ advisers as
to the effect of distributions by the Fund.

Shareholders may realize capital gains or losses when they sell their Fund
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 gains, in which event they
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 may be
treated as an expense of the Fund.

Individuals and certain other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital ^ gain distributions and other
distributions and redemption proceeds. Shareholders can avoid backup withholding
on their Fund account by ensuring that INVESCO has a correct, certified tax
identification number unless the shareholder is subject to backup withholding
for other reasons.

Shareholders should 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 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.

<PAGE>

together with gains realized on certai 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 distribution regardless how long the Fund shares have been
held by the shareholder. The Fund's share price will then drop by the amount of
the distribution on the ex-dividend or ex-distribution date. If a shareholder
purchases shares immediately prior to the distribution, the shareholder will, in
effect, have "bought" the distribution by paying the full purchase price, a
portion of which is then returned in the form of a taxable distribution.

ADDITIONAL INFORMATION

Voting Rights. All shares of the Fund have equal voting rights, based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all funds of the Company voting together. In other cases, such as voting upon
the investment advisory contract, voting is on a fund-by-fund basis. To the
extent permitted by law, when not all funds are affected by a matter to be voted
upon, only shareholders of the Fund or funds affected by the matter will be
entitled to vote thereon. The Company is not generally required, and does not
expect, to hold regular annual meetings of shareholders. However, the board of
directors will call special meetings of shareholders for the purpose, among
other reasons, of voting upon the question of removal of a director or directors
when requested to do so in writing by the holders of 10% or more of the
outstanding shares of the Fund or as may be required by applicable law or the
Company's Articles of Incorporation. The Company will assist shareholders in
communicating with other shareholders as required by the 1940 Act. Directors may
be removed by action of the holders of a majority or more of the outstanding
shares of the Company.

<PAGE>

applicable laws and policies then in effect, any such investment may be
made in the sole discretion of the Company's board of directors without further
approval of the shareholders of the Fund. However, Fund shareholders will be
given at least 30 days prior notice of any such investment. Such investment
would be made only if the Company's board of directors determines it to be in
the best interests of the Fund and its shareholders. In making that
determination, the board will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. No assurance can be given that costs will be materially reduced if
this option is implemented.

Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the back
cover ^ of this ^ Prospectus.

Transfer and Dividend Disbursing Agent. INVESCO, 7800 E. Union Ave.,
Denver, Colorado 80237, also acts as registrar, transfer agent, and dividend
disbursing agent for the Fund pursuant to a Transfer Agency Agreement which
provides that the Fund will pay an annual fee of $20.00 per shareholder account
or, where applicable, per participant in an omnibus account. The transfer agency
fee is not charged to each shareholder's or participant's account, but is an
expense of the Fund to be paid from the Fund's assets. Registered
broker-dealers, third party administrators of tax-qualified retirement plans and
other entities, including affiliates of INVESCO, may provide sub-transfer agency
or recordkeeping services to the Fund which reduce or eliminate the need for
identical services to be provided on behalf of the Fund by INVESCO. In such
cases, INVESCO may pay the third party an annual sub-transfer agency or
recordkeeping fee out of the transfer agency fee which is paid to INVESCO by the
Fund.

<PAGE>

INVESCO SPECIALTY FUNDS, INC.
INVESCO Asian Growth Fund

A no-load mutual fund seeking
capital appreciation.

PROSPECTUS
December 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
December 1, 1998

INVESCO EUROPEAN SMALL COMPANY FUND

INVESCO European Small Company Fund (the "Fund") seeks to achieve capital
appreciation by investing, under normal circumstances, at least 65% of its total
assets in equity securities of European companies whose individual equity market
capitalizations would place them (at the time of purchase) in the same size
range as companies in approximately the lowest 25% of market capitalization of
companies that have equity securities listed on a U.S. national securities
exchange or trade in the NASDAQ system ("small companies"). Based on this
policy, the companies held by the Fund will typically have equity market
capitalizations under $1 billion. Additionally, the Fund will, under normal
circumstances, invest at least 65% of its total assets in issuers domiciled in
at least five countries, although the Fund's investment adviser expects the
Fund's investments to be allocated among a larger number of countries. In this
regard, no more than 50% of the Fund's total assets will be invested in any one
country. For a description of risks inherent in investing in the Fund see "Risk
Factors" and "Portfolio Turnover." The Fund is not intended as a complete
investment program due to risks of investing in the Fund. See the section
entitled "Risk Factors."

The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, managed, no-load mutual fund consisting of seven separate
portfolios of investments. This Prospectus relates to shares of the INVESCO
European Small Company Fund. Separate prospectuses are available upon request
from INVESCO Distributors, Inc. for the Company's other funds: INVESCO Worldwide
Capital Goods Fund, INVESCO Worldwide Communications Fund, INVESCO Latin
American Growth Fund, INVESCO Asian Growth Fund, INVESCO Realty Fund and INVESCO
S&P 500 Index Fund. Investors may purchase shares of any or all of the Funds.
Additional funds may be offered in the future.

This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information dated December 1, 1998
containing further information about the Fund 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., Post Office Box
173706, Denver, Colorado 80217-3706; call 1-800-525-8085; or visit our web site
at http://www.invesco.com.

<PAGE>

TABLE OF CONTENTS

Page

ANNUAL FUND EXPENSES.........................................................2

FINANCIAL HIGHLIGHTS.........................................................4

PERFORMANCE DATA.............................................................5

INVESTMENT OBJECTIVE AND POLICIES............................................5

RISK FACTORS.................................................................9

THE FUND AND ITS MANAGEMENT.................................................11

HOW SHARES CAN BE PURCHASED.................................................13

SERVICES PROVIDED BY THE FUND...............................................14

HOW TO REDEEM SHARES........................................................17

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS....................................18

ADDITIONAL INFORMATION......................................................19

<PAGE>

ANNUAL FUND EXPENSES

The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund, however, is authorized to pay a Rule 12b-1 distribution fee of
one quarter of one percent of the Fund's average net assets each year. (See "How
Shares Can Be Purchased -Distribution Expenses.") Lower expenses benefit Fund
shareholders by increasing the Fund's total return.

Annual operating expenses are calculated as a percentage of the Fund's
average annual net assets. To keep expenses competitive, INVESCO Funds Group,
Inc. ("INVESCO") and INVESCO Asset Management Limited ("IAML") voluntarily
reimburse the Fund for certain expenses in excess of 2.00% (excluding excess
amounts that have been offset by the expense offset arrangements described
below) of the Fund's average net assets.

Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees None
Exchange fees None

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

Management Fee 0.75%
12b-1 Fees 0.25%
Other Expenses(1)(2) 1.04%
Transfer Agency Fee(3) 0.58%
General Services, Administrative 0.46%
Services, Registration, Postage(4)
Total Fund Operating Expenses 2.04%
(after voluntary expense limitation)(1)(2)

(1) It should be noted that the Fund's actual total operating expenses
were lower than the figures shown because the Fund's custodian and transfer
agency fees and pricing expenses 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 reductions for periods prior to the fiscal year ended
July 31, 1996. See "The Fund And Its Management."

(2) Certain Fund expenses are voluntarily absorbed by INVESCO ^ and IAML.
In the absence of such absorbed expenses, the Fund's "Other Expenses" and "Total
Fund Operating Expenses" in the above table would have been 1.06% and 2.06%, ^

<PAGE>

respectively, of the Fund's average net assets based on the actual expenses
of the Fund for the fiscal year ended July 31, 1998. See "The Fund And Its
Management."

(3) Consists of the transfer agency fee described under "Additional
Information - Transfer and Dividend Disbursing Agent."

(4) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and independent accountants, securities pricing
services, costs of administrative services furnished under an Administrative
Services Agreement, costs of registration of Fund shares under applicable laws,
and costs of printing and distributing reports to shareholders.

Example

A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$21 $64 $111 $238

The purpose of the foregoing expense table and Example is to assist
investors in understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. Such expenses are paid from the
Fund's assets. (See "The Fund And Its Management.") The Fund charges no sales
loads, redemption fees, or exchange fees. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. The assumed 5% annual return is hypothetical and should
not be considered a representation of past or future annual returns, which may
be greater or less than the assumed amount.

<PAGE>

INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)

Period
Ended
Year Ended July 31 July 31
------------------------------- --------
1998 1997 1996 1995(a)
PER SHARE DATA
Net Asset Value -
Beginning of Period $16.29 $15.08 $11.56 $10.00
------------------------------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss)(b) 0.00 (0.05) 0.07 0.04
Net Gains on Securities
(Both Realized and
Unrealized) 2.82 1.79 3.52 1.56
------------------------------- --------
Total from Investment
Operations 2.82 1.74 3.59 1.60
------------------------------- --------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.00 0.07 0.04
Distributions from
Capital Gains 3.45 0.53 0.00 0.00
------------------------------- --------
Total Distributions 3.45 0.53 0.07 0.04
------------------------------- --------
Net Asset Value -
End of Period $15.66 $16.29 $15.08 $11.56
=============================== ========

TOTAL RETURN 24.15% 11.71% 31.07% 15.98%(c)

<PAGE>

RATIOS
Net Assets - End of Period
($000 Omitted) $71,532 $75,057 $94,261 $3,801
Ratio of Expenses to
Average Net Assets(d) 2.04%(e) 1.62%(e) 1.68%(e) 2.00%(f)
Ratio of Net Investment
Income (Loss) to
Average Net Assets(d) (0.48%) (0.18%) 1.23% 2.37%(f)
Portfolio Turnover Rate 98% 87% 141% 0%(c)

(a) From February 15, 1995, commencement of investment operations, to July 31,
1995.

(b) Net Investment Income (Loss) aggregated less than $0.01 on a per share
basis for the year ended July 31, 1998.

(d) Various expenses of the Fund were voluntarily absorbed by INVESCO and IAML
for the year ended July 31, 1998 and the period ended July 31, 1995. If
such expenses had not been voluntarily absorbed, ratio of expenses to
average net assets would have been 2.06% and 10.17% (annualized),
respectively, and ratio of net investment income (loss) to average net
assets would have been (0.50%) and (5.80%) (annualized), respectively.

(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser and Sub-Adviser, which is before any expense offset
arrangements.

(f) Annualized

<PAGE>

PERFORMANCE DATA

From time to time, the Fund may advertise its total return performance.
These figures are based upon historical earnings and are not intended to
indicate future performance. The "total return" of the Fund refers to the annual
rate of return of an investment in the Fund. This figure is computed by
calculating the percentage change in value of an investment of $1,000, assuming
reinvestment of all income dividends and other distributions, to the end of a
specified period. Periods of one year, five years, ten years and/or life of the
Fund are used if available. Any given report of total return performance should
not be considered as representative of future performance. The Fund charges no
sales loads, redemption fees, or exchange fees which would affect the total
return computation.

In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and performance of 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, the James Capel
European Smaller Companies Index, the Hoare Govette Smaller Companies Index, the
FT-Actuaries Europe Index and the Deutcher Aktienindex, all of which are
unmanaged market indicators. In addition, rankings, ratings, and comparisons of
investment performance and/or assessments of the quality of shareholder service
appearing in publications such as Money, Forbes, Kiplinger's Personal Finance,
Morningstar, and similar sources which utilize information compiled (i)
internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by other
recognized analytical services, may be used in advertising. The Lipper
Analytical Services, Inc. mutual fund rankings and comparisons, which may be
used by the Fund in performance reports, will be drawn from the "International
Small Company" Lipper mutual fund grouping, in addition to the broad-based
Lipper general fund grouping.

INVESTMENT OBJECTIVE AND POLICIES

The Fund seeks to achieve capital appreciation by investing, under normal
circumstances, at least 65% of its total assets in equity securities of European
companies whose individual equity market capitalizations would place them (at
the time of purchase) in the same size range of companies in approximately the

<PAGE>

lowest 25% of market capitalization of companies that have equity
securities listed on a U.S. national securities exchange or traded in the NASDAQ
system ("small companies"). Based on this policy, the companies held by the Fund
will typically have equity market capitalizations under $1 billion. The
foregoing investment objective is fundamental and may not be changed without the
approval of the ^ Fund's shareholders. The balance of the Fund's assets may be
invested in securities of companies other than European companies and companies
whose capitalization exceeds that of small companies. The Fund defines
securities of European companies as follows: (1) securities of companies
organized under the laws of a European country; (2) securities of companies for
which the principal securities trading market is in Europe; (3) securities
issued or guaranteed by a government agency, instrumentality, political
subdivision, or central bank of a European country; (4) securities of companies,
wherever organized, with at least 50% of the issuer's assets, gross revenues, or
profit in any one of the two most recent fiscal years derived from activities or
assets in Europe; or (5) securities of European companies, as defined above, in
the form of depository receipts or shares. The Fund has not established any
minimum investment standards, such as earnings history, type of industry,
dividend payment history, etc., with respect to the Fund's investments in
foreign equity securities and, therefore, investors in the Fund should consider
that investments may consist in part of securities which may be deemed to be
speculative.

Additionally, under normal circumstances, the Fund will invest at least
65% of its total assets in issuers domiciled in at least five countries,
although the Fund's adviser ^ and sub-adviser (collectively, "Fund Management")
expects the Fund's investments to be allocated among a larger number of
countries. For purposes of this Fund, investments may be made in any countries
located on the European continent (which extends as far east as Russia)
including, but not limited to, Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Holland, Ireland, Italy, Luxembourg, Norway, Portugal, Spain,
Sweden, Switzerland, Turkey and the United Kingdom. In that regard, no more than
50% of the Fund's total assets will be invested in securities issued by
companies domiciled in any one country. The economies of European countries may
vary widely in their condition, and may be subject to sudden changes that could
have a positive or negative impact on the Fund. The securities in which the Fund
invests will typically be listed on the principal stock exchanges in these
countries, or in the secondary or junior markets, although the Fund may purchase
securities listed on the over-the-counter market in these countries. While the
Fund's investment adviser believes that smaller companies can offer greater
growth potential than larger, more established firms, the former also involve
greater risk and price volatility. To help reduce risk, Fund Management expects,

<PAGE>

under normal market conditions, to vary its portfolio investments by company,
industry and country. Investments in foreign securities involve certain risks
which are discussed below under "Risk Factors."

Under normal conditions, the Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, preferred stocks and
securities convertible into common stocks, such as rights, warrants and
convertible debt securities) which are discussed more fully in the Statement of
Additional Information. In selecting the equity securities in which the Fund
invests, Fund Management attempts to identify small companies it believes offer
favorable long-term growth potential. It also invests in companies which may
receive greater market recognition over time. The Fund's investments in small
capitalization stocks may include companies that have limited operating
histories, product lines, and financial and managerial resources. These
companies may be subject to intense competition from larger companies, and their
stock may be subject to more abrupt or erratic market movements than the stocks
of larger, more established companies. Due to these and other factors, small
companies may suffer significant losses as well as realize substantial growth.

Consistent with its investment objectives, the balance of the Fund's
assets may be invested in fixed-income securities (corporate bonds, commercial
paper, debt securities issued by the U.S. government, its agencies and
instrumentalities, or foreign governments and, to a lesser extent, municipal
bonds, asset-backed securities and zero coupon bonds). The Fund may invest up to
15% of its total assets in debt securities that are rated below BBB by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or Baa by
Moody's Investors Service, Inc. ("Moody's") or, if unrated, that are judged by
Fund Management to be equivalent in quality to debt securities having such
ratings (commonly referred to as "junk bonds"). In no event will ^ the Fund ever
invest in a debt security rated below CCC by S&P or Caa by Moody's or, if
unrated, judged by Fund Management to be equivalent in quality to debt
securities having such ratings. The risks of investing in lower rated debt
securities are discussed below under "Risk Factors."

<PAGE>

protect its assets until conditions stabilize. The Fund reserves the right
to hold equity, fixed income and cash securities in whatever proportion is
deemed desirable at any given time for temporary defensive purposes. While ^ the
Fund is in a defensive position, the opportunity to achieve capital appreciation
will be limited; however, the ability to maintain a temporary defensive position
enables the Fund to seek to avoid capital losses during market downturns. Under
normal market conditions, the Fund does not expect to have a substantial portion
of its assets invested in cash securities.

In order to hedge its portfolio, the Fund may purchase and write options
on securities (including index options and options on securities), and may
invest in futures contracts for the purchase or sale of foreign currencies,
fixed-income securities and instruments based on financial indices
(collectively, "futures contracts"), options on futures contracts, forward
contracts and interest rate swaps and swap-related products. Interest rate swaps
involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. These practices and instruments, some of which
are known as derivatives, and their risks are discussed below under "Risk
Factors" and in the Statement of Additional Information.

Additional information on certain types of securities in which the Fund
may invest is set forth below:

When-Issued Securities. The Fund may make commitments in an amount of up
to 10% of the value of its total assets at the time any commitment is made to
purchase or sell equity or debt securities on a when-issued or delayed delivery
basis (i.e., securities may be purchased or sold by the Fund with settlement
taking place in the future, often a month or more later). The payment obligation
and, in the case of debt securities, the interest rate that will be received on
the securities are generally fixed at the time the Fund enters into the
commitment. During the period between purchase and settlement, no payment is
made by the Fund and no interest accrues to the Fund. At the time of settlement,
the market value of the security may be more or less than the purchase price,
and the Fund bears the risk of such market value fluctuations. The Fund
maintains cash, U.S. government securities, or other liquid securities having an
aggregate value equal to the amount of such purchase commitments in a segregated
account until payment is made.

Illiquid and Rule 144A Securities. The Fund may invest in securities which
are illiquid because they are subject to restrictions on their resale
("restricted securities") or because, based upon their nature or the market for
such securities, they are not readily marketable. However, the Fund will not

<PAGE>

purchase any such security if the purchase would cause the Fund to invest
more than 15% of its net assets in illiquid securities. Repurchase agreements
maturing in more than seven days will be considered as illiquid for purposes of
this restriction. Investments in illiquid securities involve certain risks to
the extent that the Fund may be unable to dispose of such a security at the time
desired or at a reasonable price. In addition, in order to resell a restricted
security, the Fund might have to bear the expense and incur the delays
associated with effecting registration.

The Fund may purchase certain restricted securities that are not
registered for sale to the general public, but that can be resold to
institutional investors ("Rule 144A Securities"), ^ without regard to the
foregoing 15% limitation, if a liquid institutional trading market exists. The
liquidity of the Fund's investments in Rule 144A Securities could be impaired if
dealers or institutional investors become uninterested in purchasing these
securities. The Company's board of directors has delegated to INVESCO the
authority to determine the liquidity of Rule 144A Securities pursuant to
guidelines approved by the board. For more information concerning Rule 144A
Securities, see the Statement of Additional Information.

The settlement period of securities transactions in foreign markets may be
longer than in domestic markets. These considerations generally are more of a
concern in developing countries. For example, the possibility of political
upheaval and the dependence on foreign economic assistance may be greater in
these countries than in developed countries.

<PAGE>

only with parties that meet certain creditworthiness standards established
by the Company's board of directors. The Fund will not enter into a repurchase
agreement maturing in more than seven days if as a result more than 15% of its
net assets would be invested in such repurchase agreements and other illiquid
securities. The Fund has not adopted any limit on the amount of its net assets
that may be invested in repurchase agreements maturing in seven days or less.

Securities Lending. The Fund also may lend its securities to qualified
brokers, dealers, banks, or other financial institutions. This practice permits
the Fund to earn income, which, in turn, can be invested in additional
securities of the type described in this Prospectus in pursuit of the Fund's
investment objective. Loans of securities by ^ the Fund will be collateralized
by cash, letters of credit, or securities issued or guaranteed by the U.S.
government or its agencies equal to at least 100% of the current market value of
the loaned securities, determined on a daily basis. Cash collateral will be
invested only in high quality short-term investments offering maximum liquidity.
Lending securities involves certain risks, the most significant of which is the
risk that a borrower may fail to return a portfolio security. The Fund monitors
the creditworthiness of borrowers in order to minimize such risks. The Fund will
not lend any security if, as a result of the loan, the aggregate value of
securities then on loan would exceed 33-1/3% of the Fund's total assets (taken
at market value).

Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for the Fund's portfolio. Although the Fund does not trade for
short-term profits, securities may be sold without regard to the time they have
been held in the Fund when, in the opinion of Fund Management, investment
considerations warrant such action. In addition, portfolio turnover rates may
increase as a result of large amounts of purchases or redemptions of Fund shares
due to economic, market or other factors that are not within the control of Fund
Management. As a result, while it is anticipated that the portfolio turnover
rates for the Fund's portfolio generally will not exceed 200%, under certain
market conditions these portfolio turnover rates may exceed 200%. 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 realized
capital gains or losses that are taxable when distributed to shareholders. The
Fund's portfolio turnover rates are set forth under "Financial Highlights" and,
along with the Fund's brokerage allocation policies, are discussed in the
Statement of Additional Information.

<PAGE>

Fund's shareholders. Such fundamental investment restrictions include the
restrictions which prohibit the Fund from: lending more than 33-1/3% of its
total assets to other parties (excluding purchases of commercial paper, debt
securities and repurchase agreements); investing more than 25% of the value of
the Fund's total assets in any one industry (other than government securities);
with respect to 75% of its total assets, purchasing the securities of any one
issuer (other than cash items and government securities) if the purchase would
cause the Fund to have more than 5% of its total assets invested in the issuer
or to own more than 10% of the outstanding voting securities of the issuer; and
borrowing money or issuing senior securities except that the Fund may borrow
money for temporary or emergency purposes (not for leveraging or investment)
including entering into reverse repurchase agreements. However, unless otherwise
noted, the Fund's investment restrictions and its investment policies are not
fundamental and may be changed by action of the Company's board of directors.
Unless otherwise noted, all percentage limitations contained in the Fund's
investment policies and restrictions apply at the time an investment is made.
Thus, subsequent changes in the value of an investment after purchase or in the
value of the Fund's total assets will not cause any such limitation to have been
violated or to require the disposition of any investment, except as otherwise
required by law. If the credit ratings of an issuer are lowered below those
specified for investment by the Fund, the Fund is not required to dispose of the
obligations of that issuer. The determination of whether to sell such an
obligation will be made by Fund Management based upon an assessment of credit
risk and the prevailing market price of the investment. If the Fund borrows
money, its share price may be subject to greater fluctuation until the borrowing
is repaid. The Fund attempts to minimize such fluctuations by not purchasing
additional securities when borrowings, including reverse repurchase agreements,
are greater than 5% of the value of the Fund's total assets. As a fundamental
policy in addition to the above, the Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental), invest all of its
assets in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as the Fund. See "Additional Information - Master/Feeder Option."

RISK FACTORS

There can be no assurance that the Fund will achieve its investment
objective. The Fund's investments in common stocks and other equity securities
may, of course, decline in value. There is typically less publicly available
information concerning foreign and small companies than for domestic and larger,
more established companies. Some small companies have limited product lines,
distribution channels and financial and managerial resources. Also, because

<PAGE>

smaller companies normally have fewer shares outstanding than larger
companies and trade less frequently, it may be more difficult for the Fund to
buy and sell significant amounts of such shares without an unfavorable impact on
prevailing market prices. Some of the companies in which the Fund may invest may
distribute, sell or produce products which have recently been brought to market
and may be dependent on key personnel with varying degrees of experience.

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 may be affected by remediation
costs, which may be substantial. The Fund's investments may be adversely
affected.

Foreign Securities. For U.S. investors, the returns on foreign securities
are influenced not only by the returns on the foreign investments themselves,
but also by currency risk (i.e., changes in the value of the currencies in which
the securities are denominated relative to the U.S. dollar). In a period when
the U.S. dollar generally rises against a foreign currency, the 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, the
returns on foreign securities generally are enhanced.

Other risks and considerations of international investing include the
following: differences in accounting, auditing and financial reporting standards
which may result in less publicly available information than is generally
available with respect to U.S. issuers; generally higher commission rates on
foreign portfolio transactions and longer settlement periods; the smaller
trading volumes and generally lower liquidity of foreign stock markets, which
may result in greater price volatility; foreign withholding taxes payable on the
Fund's investment income on foreign securities, which may reduce dividend or
capital gains income payable to shareholders; the possibility of expropriation
or confiscatory taxation; adverse changes in investment or exchange control
regulations; political instability which could affect U.S. investment in foreign
countries; potential restrictions on the flow of international capital; and the
possibility ^ that the Fund ^ may experience difficulties in pursuing legal

<PAGE>

remedies and collecting judgments. The Fund's investments in foreign
securities may include investments in developing countries. Many of these
securities are speculative and their prices may be more volatile than those of
securities issued by companies located in more developed countries.

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
The Netherlands, Portugal and Spain are presently members of the European
Economic and Monetary Union (the "EMU"). The EMU intends to establish a common
European currency for EMU countries which will be known as the "euro." Each
participating country presently plans to adopt the euro as its currency on
January 1, 1999. The old national currencies will be sub-currencies of the euro
until July 1, 2002, at which time the old currencies will disappear entirely.
Other European countries may adopt the euro in the future.

Lower Rated Securities. The Fund's investments in fixed-income securities
generally are subject to both credit risk and market risk. Credit risk relates
to the ability of the issuer to meet interest or principal payments, or both, as
they come due. The ratings given a security by S&P and Moody's provide a
generally useful guide as to such credit risk. The lower the rating given a
security by such rating service, the greater the credit risk such rating service

<PAGE>

perceives to exist with respect to such security. Increasing the amount of Fund
assets invested in unrated or lower grade securities, while intended to increase
the yield produced by those assets, also will increase the credit risk to which
those assets are subject.

Market risk relates to the fact that the market values of the debt
securities in which the Fund invests generally will be affected by changes in
the level of interest rates. An increase in interest rates will tend to reduce
the market values of debt securities, whereas a decline in interest rates will
tend to increase their values. Although Fund Management limits the Fund's
investments in fixed-income securities to securities it believes are not highly
speculative, both kinds of risk are increased by investing in debt securities
rated below the top three grades by S&P or Moody's or, if unrated, securities
determined by Fund Management to be of equivalent quality. Although bonds in the
lowest investment grade debt category (those rated BBB by S&P or Baa by Moody's)
are regarded as having adequate capability to pay principal and interest, they
have speculative characteristics. Adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case for higher rated bonds. Lower rated bonds
are commonly known as "junk bonds." Those so rated by Moody's (categories Ba, B,
Caa) are of poorer quality and also have speculative characteristics. Bonds
rated Caa may be in default or there may be present elements of danger with
respect to principal or interest. Lower rated bonds by S&P (categories BB, B,
CCC) include those which are regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with their terms; BB indicates the lowest degree of speculation and
CCC a high degree of speculation. While such bonds likely will have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions. For a specific description of each
corporate bond rating category, please refer to Appendix B to the Statement of
Additional Information.

<PAGE>

directions anticipated; (2) imperfect correlation between the price of futures,
options and forward contracts and movements in the prices of the securities or
currencies being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
and (5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences. Further information on the use of futures, options,
forward foreign currency contracts and swaps and swap-related products, and the
associated risks, is contained in the Statement of Additional Information.

THE FUND AND ITS MANAGEMENT

Pursuant to an agreement with INVESCO, IAML serves as the sub-adviser to
the Fund. IAML also acts as sub-adviser to the INVESCO European Fund, the
INVESCO Pacific Basin Fund, the INVESCO International Growth Fund, the INVESCO
Emerging Markets Fund and the INVESCO Latin American Growth Fund. IAML, subject
to the supervision of INVESCO, is primarily responsible for selecting and
managing the Fund's investments.

<PAGE>

the largest independent investment management businesses in the world. INVESCO
and IAML continued to operate under their existing names. AMVESCAP PLC had
approximately ^ $241 billion in assets under management as of ^ September 30,
1998. INVESCO was established in 1932 and, as of July 31, 1998, managed 14
mutual funds, consisting of 49 separate portfolios, with combined assets of
approximately $19.6 billion on behalf of 884,099 shareholders.

The following individuals serve as lead portfolio managers for the Fund
and are supported by a team of fund managers primarily responsible for
determining, in accordance with a senior investment policy group, the
country-by-country allocation of the portfolio's assets, overall stock selection
and the ongoing implementation and risk control policies applicable to the
portfolio:

Andy Crossley Co-portfolio manager of the Fund since
1995 (inception); Fund manager of INVESCO
Asset Management Limited (1991 to
present); began investment career in
1988; B.S.-Banking and Finance,
Loughborough University; Associate of the
Chartered Institute of Bankers.

Claire Griffiths Co-portfolio manager of the Fund since
1995 (inception); Fund manager of INVESCO
Asset Management Limited (1991 to
present); began investment career in
1989; M.A., St. John's College,
Cambridge.

Mr. Crossley and Ms. Griffiths head a team of individual country
specialists who are responsible for managing security selection for their
assigned country and sector within the parameters established by the investment
policy group of IAML, sub-adviser to the Fund.

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 investment and other 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.

<PAGE>

Out of the advisory fee which it receives from the Fund, INVESCO pays
IAML, as the Fund's sub-adviser, a monthly fee based upon the average daily
value of the Fund's net assets. Based upon approval of the Company's board of
directors at a meeting held May 14, 1998, the calculation of subadvisory fees of
the Fund ^ was changed from 33.33% of the advisory fee (0.25% on the first $500
million of the Fund's average net assets, 0.2167% on the next $500 million of
the Fund's average net assets and 0.1833% on the Fund's average net assets in
excess of $1 billion) to 40% of the advisory fee (0.30% on the first $500
million of the Fund's average net assets, 0.26% on the next $500 million of the
Fund's average net assets and 0.22% on the Fund's average net assets in excess
of $1 billion). No fee is paid by the Fund to IAML.

<PAGE>

that time as a result of the interaction of their systems with the
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 the Fund's
total income before dividends are paid. Total expenses (prior to any expense
offset arrangement) of the Fund for the fiscal period ended July 31, 1998,
including investment management fees (but excluding brokerage commissions, which
are included as a cost of acquiring securities), amounted to 2.04% of the Fund's
average net assets. Certain expenses for the Fund are voluntarily absorbed by
INVESCO and IAML pursuant to a commitment to the Fund in order to ensure that
the Fund's total operating expenses do not exceed 2.00%. 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
such brokers' and dealers' financial responsibility coupled with their ability
to effect transactions at the best available prices. As discussed under "How
Shares Can Be Purchased - Distribution Expenses," the Company may market shares
of the Fund 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 brokers and dealers that
recommend the Funds, 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 execution of the transaction and level of commission are comparable
to those available from other qualified brokerage firms.

HOW SHARES CAN BE PURCHASED

INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706

Purchase orders must specify the Fund in which the investment is to be
made.

<PAGE>

in the section entitled "Services Provided By The Fund," may open an
account without making any initial investment if they agree to make regular,
minimum purchases of at least $50; (2) those shareholders investing in an
Individual Retirement Account ("IRA"), or through omnibus accounts where
individual shareholder recordkeeping and sub-accounting are not required, may
make initial minimum purchases of $250; (3) Fund Management may permit a lesser
amount to be invested in a Fund under a federal income tax-deferred retirement
plan (other than an IRA account), or under a group investment plan qualifying as
a sophisticated investor; and (4) Fund Management reserves the right to
increase, reduce or waive the minimum purchase requirements in its sole
discretion where it determines such action is in the best interests of the Fund.

The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire order or telephone order
be in an amount less than $1,000. For further information, the purchaser may
call the Fund's office by using the telephone number on the back cover of this
Prospectus. Orders sent by overnight courier, including Express Mail, should be
sent to the street address, not ^ post office box, of INVESCO at 7800 E. Union
Avenue, Denver, CO 80237.

Orders to purchase shares of the Fund can be placed by telephone. Shares
of the Fund will be issued at the net asset value per share next determined
after receipt of telephone instructions. Generally, payments for telephone
orders must be received by the Fund within three business days or the
transaction may be canceled. In the event of such cancellation, the purchaser
will be held responsible for any loss resulting from a decline in the value of
the shares. In order to avoid such losses, purchasers should send payments for
telephone purchases by overnight courier or bank wire. INVESCO has agreed to
indemnify the Fund for any losses resulting from such cancellations of telephone
purchases.

<PAGE>

Net asset value per share is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange
(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for the Fund is
calculated by dividing the market value of the Fund's securities plus the value
of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of that Fund. If market quotations are not readily available,
a security or other asset will be valued at fair value as determined in good
faith by the board of directors. Debt securities with remaining maturities of 60
days or less at the time of purchase will be valued at amortized cost, absent
unusual circumstances, so long as the Company's board of directors believes that
such value represents fair value.

Distribution Expenses. 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 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.

<PAGE>

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 limitations described above will
not be paid by the Fund under the Plan and will be borne by IDI. In addition,
INVESCO, IDI and their 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
distribution which may result from ^ INVESCO's or IDI's use of fees received
from the Fund for services rendered by INVESCO, 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.

SERVICES PROVIDED BY THE FUND

<PAGE>

change or redeem Fund shares, most shareholders do not request share
certificates in order to facilitate such a detailed confirmation of each
transaction in shares of the Fund. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Fund's office by using the telephone number on the cover of this Prospectus.

<PAGE>

INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc.,
INVESCO ^ Growth Funds, Inc. (formerly, ^ INVESCO Growth Fund, ^ Inc.), INVESCO
Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money
Market Funds, Inc., INVESCO Sector Funds, Inc. (formerly, Strategic Portfolios,
^ Inc.), INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.),
INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.

An exchange involves the redemption of shares in the Fund and investment
of the redemption proceeds in shares of another fund of the Company or in shares
of one of the funds listed above. Exchanges will be made at the net asset value
per share next determined after receipt of an exchange request in proper order.
Any gain or loss realized on such an exchange is recognizable for federal income
tax purposes by the shareholder. Exchange requests may be made either by
telephone or by written request to INVESCO using the telephone number or address
on the back cover of this Prospectus. Exchanges made by telephone must be in an
amount of at least $250, if the exchange is being made into an existing account
of one of the INVESCO funds. All exchanges that establish a new account must
meet the Fund's applicable minimum initial investment requirements. Written
exchange requests into an existing account have no minimum requirements other
than the Fund's applicable minimum subsequent investment requirements.

<PAGE>

1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange policy will be given at least 60 days prior to the date of termination
or the effective date of the modification.

Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, various ^ IRAs, simplified employee
pension plans and corporate retirement plans. In addition, shares can be used to
fund tax qualified plans established under Section 403(b) of the Internal
Revenue Code by educational institutions, including public school systems and
private schools, and certain kinds of non-profit organizations, which provide
deferred compensation arrangements for their employees.

<PAGE>

Prototype forms for the establishment of these various plans, including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from INVESCO. Institutional Trust Company ^ doing
business as INVESCO Trust Company ("ITC"), an affiliate of INVESCO, is qualified
to serve as trustee or custodian under these plans and provides the required
services at competitive rates. Retirement plans (other than IRAs) receive
monthly statements reflecting all transactions in their Fund accounts. IRAs
receive the confirmations and quarterly statements described under "Shareholder
Accounts." For complete information, including prototype forms and service
charges, call INVESCO at the telephone number listed on the back cover of this
Prospectus or send a written request to: Retirement Services, INVESCO Funds
Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.

HOW TO REDEEM SHARES

If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not post
office box, of INVESCO at 7800 E. Union Avenue, Denver, CO 80237. If no
certificates have been issued, a written redemption request signed by each
registered owner of the account must be submitted to INVESCO at the post office
box address noted above. If shares are held in the name of a corporation,
additional documentation may be necessary. Call or write for specific
information. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), the signature(s) must be guaranteed by a financial
institution which qualifies as an eligible guarantor institution. Redemption
procedures with respect to accounts registered in the names of broker-dealers
may differ from those applicable to other shareholders.

BE CAREFUL TO SPECIFY THE ACCOUNT FROM WHICH THE REDEMPTION IS TO BE MADE.
SHAREHOLDERS HAVE A SEPARATE ACCOUNT FOR EACH FUND IN WHICH THEY INVEST.

<PAGE>

Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to
INVESCO, using the telephone number on the back cover of this Prospectus. The
redemption proceeds, at the shareholder's option, either will be mailed to the
address listed for the shareholder's Fund account, or wired (minimum of $1,000)
or mailed to the bank which the shareholder has designated to receive the
proceeds of telephone redemptions. The Fund charges no fee for effecting such
telephone redemptions. Unless Fund Management permits a larger redemption
request to be placed by telephone, a shareholder may not place a redemption
request by telephone in excess of $25,000. These telephone redemption privileges
may be modified or terminated in the future at the discretion of Fund
Management.

For federal income tax-deferred retirement plans sponsored by ITC, the
term "shareholders" is defined to mean plan trustees that file a written request
to be able to redeem Fund shares by telephone. Shareholders should understand
that, while the Fund will attempt to process all telephone redemption requests
on an expedited basis, there may be times, particularly in periods of severe
economic or market disruption, when (a) they may encounter difficulty in placing
a telephone redemption request, and (b) processing telephone redemptions will
require up to seven days following receipt of the redemption request, or
additional time because of the unusual circumstances set forth above.

<PAGE>

Redeeming Fund shares by telephone is available to shareholders
automatically unless expressly declined. By signing a New Account Application, a
Telephone Transaction Authorization Form or otherwise utilizing telephone
redemption privileges, the shareholder has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believe to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that telephone instructions are genuine. These
may include recording telephone instructions and providing written confirmation
of transactions initiated by telephone. As a result of this policy, the investor
may bear the risk of any loss due to unauthorized or fraudulent instructions;
provided, however, that if the Fund fails to follow these or other reasonable
procedures, the Fund may be liable.

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS

Shareholders must include all dividends and other distributions as taxable
income for federal, state and local income tax purposes, unless ^ their accounts
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. ^ During 1997, the Taxpayer Relief Act established a new
maximum capital gains tax rate of 20%. Depending on the holding period of the
asset giving rise to the gain, a capital gain was taxable at a maximum rate of ^
either 20% or 28%. Beginning January 1, 1998, ^ all long-term gains realized ^
on the sale of securities held more than 12 months will be taxable at a maximum
rate of 20%. In addition, legislation signed in October of 1998 provides that
all capital gain distributions from a mutual fund paid to shareholders during
1998 will be taxed at a maximum rate of 20%. Accordingly, capital gain
distributions paid in 1998 will be taxable at a maximum rate of 20%. Note that

<PAGE>

the rate of capital gains tax is dependent on the shareholder's marginal
tax rate and may be lower than the above rates. 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.

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

Individuals and certain other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital ^ gain distributions and other
distributions and redemption proceeds. Shareholders can avoid backup withholding
on their Fund account by ensuring that INVESCO has a correct, certified tax
identification number, unless the shareholder is subject to backup withholding
for other reasons.

Shareholders should 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 certain 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.

<PAGE>

Dividends and other distributions are paid to shareholders who hold shares
on the record date of distribution regardless of how long the Fund shares have
been held by the shareholder. The Fund's share price will then drop by the
amount of the distribution on the ex-dividend or ex-distribution date. If a
shareholder purchases shares immediately prior to the distribution, the
shareholder will, in effect, have "bought" the distribution by paying the full
purchase price, a portion of which is then returned in the form of a taxable
distribution.

ADDITIONAL INFORMATION

Voting Rights. All shares of the Fund have equal voting rights, based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all ^ funds of the Company voting together. In other cases, such as voting
upon an investment advisory contract, voting is on a ^ fund-by-^ fund basis.
When not all ^ funds are affected by a matter to be voted upon, only
shareholders of the ^ fund or ^ funds affected by the matter will be entitled to
vote thereon. The Company is not generally required, and does not expect, to
hold regular annual meetings of shareholders. However, the board of directors
will call special meetings of shareholders for the purpose, among other reasons,
of voting upon the question of removal of a director or directors when requested
to do so in writing by the holders of 10% or more of the outstanding shares of
the Fund or as may be required by applicable law or the Company's Articles of
Incorporation. The Company will assist shareholders in communicating with other
shareholders as required by the Investment Company Act of 1940. Directors may be
removed by action of the holders of a majority or more of the outstanding shares
of the Company.

Master/Feeder Option. The Company may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company or partnership having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. It is expected that any such investment company would be managed by
INVESCO in substantially the same manner as the existing Fund. If permitted by
applicable laws and policies then in effect, any such investment may be made in
the sole discretion of the Company's board of directors without further approval
of the shareholders of the Fund. However, Fund shareholders will be given at
least 30 days prior notice of any such investment. Such investment would be made
only if the Company's board of directors determines it to be in the best
interests of the Fund and its shareholders. In making that determination, the
board will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. No assurance
can be given that costs will be materially reduced if this option is
implemented.

Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the back
cover ^ of this Prospectus.

INVESCO SPECIALTY FUNDS, INC.
INVESCO European Small Company Fund

A no-load mutual fund seeking
capital appreciation.

PROSPECTUS
December 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
December 1, 1998

INVESCO LATIN AMERICAN GROWTH FUND

INVESCO Latin American Growth Fund (the "Fund") seeks to achieve capital
appreciation by investing, under normal circumstances, at least 65% of its total
assets in equity securities (common stocks and, to a lesser degree, depository
receipts, preferred stocks and securities convertible into common stocks, such
as rights, warrants and convertible debt securities) of Latin American issuers.
For purposes of this Fund, Latin America will include: Mexico, Central America,
South America, and the Spanish speaking islands of the Caribbean. The Fund is
not intended as a complete investment program due to risks of investing in the
Fund. For a description of risks inherent in investing in the Fund, see "Risk
Factors" and "Investment Objective And Policies - Portfolio Turnover".

The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, managed, no-load mutual fund consisting of seven separate
portfolios of investments. This Prospectus relates to shares of the INVESCO
Latin American Growth Fund. Separate prospectuses are available upon request
from INVESCO Distributors, Inc. for the Company's other funds^: INVESCO
Worldwide Capital Goods Fund, INVESCO Worldwide Communications Fund, INVESCO
European Small Company Fund, INVESCO Asian Growth Fund, INVESCO Realty Fund and
INVESCO S&P 500 Index Fund. Investors may purchase shares of any or all of the
Funds. Additional funds may be offered in the future.

This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information dated December 1, 1998
containing further information about the Fund 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., Post Office Box
173706, Denver, Colorado 80217-3706; call 1-800-525-8085; or visit our web site
at http://www.invesco.com.

<PAGE>

The Fund may invest up to 35% of its assets 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 Objective And Policies" and
"Risk Factors."

<PAGE>

TABLE OF CONTENTS
Page

ANNUAL FUND EXPENSES 2

FINANCIAL HIGHLIGHTS 4

PERFORMANCE DATA 5

INVESTMENT OBJECTIVE AND POLICIES 5

RISK FACTORS 9

THE FUND AND ITS MANAGEMENT 14

HOW SHARES CAN BE PURCHASED 16

SERVICES PROVIDED BY THE FUND 18

HOW TO REDEEM SHARES 20

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS 22

ADDITIONAL INFORMATION 23

<PAGE>

ANNUAL FUND EXPENSES

The Fund is no-load; there are no fees to purchase, exchange or redeem
shares other than a fee to redeem or exchange shares held less than three
months. (See "Shareholder Transaction Expenses.") 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 Shares Can Be Purchased - Distribution
Expenses.") Lower expenses benefit Fund shareholders by increasing the Fund's
total return.

Annual operating expenses are calculated as a percentage of the Fund's
average annual net assets. To keep expenses competitive, INVESCO Funds Group,
Inc. ("INVESCO") and INVESCO Asset Management Limited ("IAML") voluntarily
reimburse the Fund for certain expenses in excess of 2.00% (excluding excess
amounts that have been offset by the expense offset arrangement described below)
of the Fund's average net assets.

Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees 1.00%*
Exchange fees 1.00%*

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

Management Fee 0.75%
12b-1 Fees 0.25%
Other Expenses(1)(2) 0.99%
Transfer Agency Fee(3) 0.47%
General Services, Administrative 0.52%
Services, Registration, Postage (4)
Total Fund Operating Expenses(1)(2) 1.99%

(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 an expense offset arrangement. 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 reductions for periods
prior to the fiscal year ended July 31, 1996. See "The Fund And Its Management."

<PAGE>

(2) Ratio is based on Total Expenses of the Fund, which is before any
expense offset arrangement.

(3) Consists of the transfer agency fee described under "Additional
Information-Transfer and Dividend Disbursing Agent."

(4) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and auditors, securities pricing services, costs
of administrative services furnished under an Administrative Services Agreement,
costs of registration of Fund shares under applicable laws, and costs of
printing and distributing reports to shareholders.

Example

A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$20 $63 $108 $233

The purpose of the foregoing expense table and Example is to assist
investors in understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. Such expenses are paid from the
Fund's assets. (See "The Fund and Its Management.") THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual returns, which may be greater or less than the assumed amount.

<PAGE>

INVESCO Specialty Funds, Inc.
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 INVESCO Distributors, Inc. at the address
or telephone number shown on the back cover of the Prospectus.

Period
Ended
Year Ended July 31 July 31
------------------------------- --------
1998 1997 1996 1995(a)
PER SHARE DATA
Net Asset Value -
Beginning of Period $18.37 $12.86 $11.69 $10.00
------------------------------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss)(b) 0.00 0.13 0.08 0.02
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) (5.41) 5.88 1.62 1.69
------------------------------- --------
Total from Investment
Operations (5.41) 6.01 1.70 1.71
------------------------------- --------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income(c) 0.00 0.14 0.09 0.02
Distributions from
Capital Gains 1.02 0.36 0.44 0.00
In Excess of Capital Gains 0.76 0.00 0.00 0.00
------------------------------- --------
Total Distributions 1.78 0.50 0.53 0.02
------------------------------- --------

<PAGE>

Net Asset Value -
End of Period $11.18 $18.37 $12.86 $11.69
=============================== ========

TOTAL RETURN(d) (30.64%) 48.06% 15.27% 17.09%(e)

RATIOS
Net Assets - End of Period
($000 Omitted) $34,725 $130,272 $32,064 $7,423
Ratio of Expenses to
Average Net Assets(f) 1.99%(g) 1.76%(g) 2.14%(g) 2.00%(h)
Ratio of Net Investment
Income (Loss) to
Average Net Assets(f) 0.00% 1.35% 1.26% 0.79%(h)
Portfolio Turnover Rate 33% 72% 29% 30%(e)

(a) From February 15, 1995, commencement of investment operations, to July 31,
1995.

(b) Net Investment Income (Loss) aggregated less than $0.01 on a per share
basis for the year ended July 31, 1998.

(c) Distributions in excess of net investment income for the year ended July
31, 1998, aggregated less than $0.01 on a per share basis.

(d) The applicable redemption fees are not included in the Total Return
calculation.

(e) Based on operations for the period shown and, accordingly, are not
representative of a full year.

(f) Various expenses of the Fund were voluntarily absorbed by INVESCO and IAML
for the period ended July 31, 1995. If such expenses had not been
voluntarily absorbed, ^ Ratio of Expenses to Average Net Assets would have
been 4.49% (annu alized) and ^ Ratio of Net Investment Income (Loss) to
Average Net Assets would have been (1.70%) (annualized).

(g) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser and Sub-Adviser, which is before any expense offset
arrangements.

(h) Annualized

<PAGE>

PERFORMANCE DATA

From time to time, the Fund may advertise its total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of the Fund refers to the
annual rate of return of an investment in the Fund. This figure is computed by
calculating the percentage change in value of an investment of $1,000, assuming
reinvestment of all income dividends and other distributions, to the end of a
specified period. Periods of one year, five years, ten years and/or life of the
Fund are used if available. Any given report of total return performance should
not be considered as representative of future performance. The Fund charges no
sales loads which would affect the total return computation. However, the total
return computation may be affected as a result of the 1% redemption or exchange
fee which is retained by the Fund to offset transaction costs and other expenses
associated with short-term redemptions and exchanges, which is imposed on
redemptions or exchanges of shares held less than three months.

In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and the performance of recognized indices of investment results for
the same period, and/or assessments of the quality of shareholder service, may
be provided to shareholders. Such indices include indices provided by Dow Jones
& Company, Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers,
National Association of Securities Dealers Automated Quotations, Frank Russell
Company, Value Line Investment Survey, the American Stock Exchange, Morgan
Stanley Capital International, Wilshire Associates, the Financial Times-Stock
Exchange, the New York Stock Exchange, the Nikkei Stock Average and the Deutcher
Aktienindex, all of which are unmanaged market indicators. In addition,
rankings, ratings, and comparisons of investment performance and/or assessments
of the quality of shareholder service appearing in publications such as Money,
Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources which
utilize information compiled (i) internally; (ii) by Lipper Analytical Services,
Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Fund in performance reports, will be drawn
from the "Latin American" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The economies of Latin American countries may vary widely in their
condition, and may be subject to certain changes that could have a positive or
negative impact on the Fund. Investments in foreign securities involve certain
risks which are discussed below under "Risk Factors."

Investment in this Fund involves above-average investment risk. It is
designed as a long-term investment and not for short-term trading purposes, and
should not be considered a complete investment program. A 1% fee, described more
fully under "Services Provided ^ By The Fund" and "How ^ To Redeem Shares," is
payable to the Fund for the benefit of remaining shareholders for redemption or
exchange of shares held less than three months.

Under normal conditions, the Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, depository receipts,
preferred stocks and securities convertible into common stocks, such as rights,
warrants and convertible debt securities) which are discussed more fully in the
Statement of Additional Information. In selecting the equity securities in which
the Fund invests, the Fund's investment adviser and sub-adviser (collectively,
"Fund Management") attempt to identify companies that in Fund Management's
opinion have demonstrated or, are likely to demonstrate in the future, strong
earnings growth that reflects the underlying economic activity within the

<PAGE>

country or countries in which they operate. The dividend payment records of
companies are also considered. Equity securities may be issued by either
established, well-capitalized companies or newly-formed, small-cap companies,
and may trade on regional or national stock exchanges or in the over-the-counter
market. The Fund's investments in small capitalization stocks may include
companies that have limited operating histories, product lines, and financial
and managerial resources. These companies may be subject to intense competition
from larger companies, and their stock may be subject to more abrupt or erratic
market movements than the stocks of larger, more established companies. Due to
these and other factors, small-cap companies may suffer significant losses as
well as realize substantial growth.

The balance of the Fund's assets may be invested in securities of U.S. and
other non-Latin American corporate or governmental issuers. These investments
may include equity securities or fixed-income securities selected to meet the
Fund's investment objective of capital appreciation. Such equity securities may
be issued by either established, well-capitalized companies or newly-formed,
small-cap companies, and may trade on regional or national stock exchanges or in
the over-the-counter market. Such fixed-income securities must meet the quality
standards described below. The risks of investing in lower rated debt securities
and in foreign securities are discussed below under "Risk Factors." In addition,
the Fund may hold certain cash and cash equivalent securities as cash reserves
("cash securities").

As discussed above, consistent with its investment objective, the Fund may
invest in fixed-income securities (corporate bonds, commercial paper, debt
securities issued by the U.S. government, its agencies and instrumentalities, or
foreign governments and, to a lesser extent, municipal bonds, asset-backed
securities and zero coupon bonds). The Fund may invest up to 35% of its total
assets in debt securities that are rated below BBB by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P") or Baa by Moody's Investors
Service, Inc. ("Moody's") or, if unrated, judged by Fund Management to be
equivalent in quality to debt securities having such ratings (commonly referred
to as "junk bonds"). The Fund expects that most foreign debt securities in which
it invests will not be rated by U.S. rating services, as discussed more fully
below. In no event will the Fund ever invest in a debt security rated below CCC
by S&P or Caa by Moody's or, if unrated, judged by Fund Management to be
equivalent in quality to debt securities having such ratings. The risks of
investing in lower rated debt securities are discussed below under "Risk
Factors."

<PAGE>

The amounts invested in stocks, bonds and cash securities may vary from
time to time, depending upon Fund Management's assessment of business, economic
and market conditions. In periods of unfavorable economic and market conditions,
as determined by Fund Management, the Fund may depart from its basic investment
objective and 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. The Fund reserves the right to
hold equity, fixed-income and cash securities in whatever proportion is deemed
desirable at any given time for defensive purposes. While the Fund is in a
defensive position, the opportunity to achieve capital appreciation will be
limited; however, the ability to maintain a temporary defensive position enables
the Fund to seek to avoid capital losses during market downturns. Under normal
market conditions, the Fund does not expect to have a substantial portion of its
assets invested in cash securities.

In order to hedge its portfolio, the Fund may purchase and write options
on securities (including index options and options on foreign securities), and
may invest in futures contracts for the purchase or sale of foreign currencies,
fixed-income securities and instruments based on financial indices
(collectively, "futures contracts"), options on futures contracts, forward
contracts and interest rate swaps and swap-related products. Interest rate swaps
involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. These practices and securities, some of which
are known as derivatives, and their risks are discussed below under "Risk
Factors" and in the Statement of Additional Information.

Additional information on certain types of securities in which the Fund
may invest is set forth below:

When-Issued Securities, The Fund may make commitments in an amount of up
to 10% of the value of its total assets at the time any commitment is made to
purchase or sell equity or debt securities on a when-issued or delayed delivery
basis (i.e., securities may be purchased or sold by the Fund with settlement
taking place in the future, often a month or more later). The payment obligation
and, in the case of debt securities, the interest rate that will be received on
the securities generally are fixed at the time the Fund enters into the
commitment. During the period between purchase and settlement, no payment is
made by the Fund and no interest accrues to the Fund. At the time of settlement,
the market value of the security may be more or less than the purchase price,
and the Fund bears the risk of such market value fluctuations. The Fund
maintains cash, U.S. government securities, or other liquid securities having an
aggregate value equal to the amount of such purchase commitments in a segregated
account until payment is made.

<PAGE>

The settlement period of securities transactions in foreign markets may be
longer than in domestic markets. These considerations generally are more of a
concern in developing countries. For example, the possibility of political
upheaval and the dependence on foreign economic assistance may be greater in
these countries than in developed countries.

<PAGE>

securities underlying each repurchase agreement will be maintained with the
Fund's custodian in an amount at least equal to the repurchase price under the
agreement (including accrued interest), and such agreements will be effected
only with parties that meet certain creditworthiness standards established by
the Company's board of directors. The Fund will not enter into a repurchase
agreement maturing in more than seven days if as a result more than 15% of its
total assets would be invested in such repurchase agreements and other illiquid
securities. The Fund has not adopted any limit on the amount of its net assets
that may be invested in repurchase agreements maturing in seven days or less.

Securities Lending. The Fund also may lend its securities to qualified
brokers, dealers, banks, or other financial institutions. This practice permits
the Fund to earn income, which, in turn, can be invested in additional
securities of the type described in this Prospectus in pursuit of the Fund's
investment objective. Loans of securities by the Fund will be collateralized by
cash, letters of credit, or securities issued or guaranteed by the U.S.
government or its agencies equal to at least 100% of the current market value of
the loaned securities, determined on a daily basis. Cash collateral will be
invested only in high quality short-term investments offering maximum liquidity.
Lending securities involves certain risks, the most significant of which is the
risk that a borrower may fail to return a portfolio security. The Fund monitors
the creditworthiness of borrowers in order to minimize such risks. The Fund will
not lend any security if, as a result of the loan, the aggregate value of
securities then on loan would exceed 33-1/3% of the Fund's total assets (taken
at market value).

Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for the Fund's portfolio. Although the Fund does not trade for
short-term profits, securities may be sold without regard to the time they have
been held in the Fund when, in the opinion of Fund Management, investment
considerations warrant such action. In addition, portfolio turnover rates may
increase as a result of large amounts of purchases or redemptions of Fund shares
due to economic, market or other factors that are not within the control of Fund
Management. As a result, while it is anticipated that the portfolio turnover
rate for the Fund's portfolio generally will not exceed 200%, under certain
market conditions the portfolio turnover rate may exceed 200%, and may be higher
than that of other investment companies seeking capital appreciation. 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
rates are set forth under "Financial Highlights" and, along with the Fund's
brokerage allocation policies, are discussed in the Statement of Additional
Information.

<PAGE>

Investment Restrictions. The Fund is subject to a variety of restrictions
regarding its investments that are set forth in this Prospectus and in the
Statement of Additional Information. Certain of the Fund's investment
restrictions are fundamental, and may not be altered without the approval of the
Fund's shareholders. Such fundamental investment restrictions include the
restrictions which prohibit the Fund from: lending more than 33-1/3% of its
total assets to other parties (excluding purchases of commercial paper, debt
securities and repurchase agreements); investing more than 25% of the value of
the Fund's total assets in any one industry (other than government securities);
with respect to 75% of its total assets, purchasing the securities of any one
issuer (other than cash items and government securities) if the purchase would
cause the Fund to have more than 5% of its total assets invested in the issuer
or to own more than 10% of the outstanding voting securities of the issuer; and
borrowing money or issuing senior securities except that the Fund may borrow
money for temporary or emergency purposes (not for leveraging or investment) and
may enter into reverse repurchase agreements in an aggregate amount not
exceeding 33-1/3% of its total assets. However, unless otherwise noted, the
Fund's investment restrictions and its investment policies are not fundamental
and may be changed by action of the Company's board of directors. Unless
otherwise noted, all percentage limitations contained in the Fund's investment
policies and restrictions apply at the time an investment is made. Thus,
subsequent changes in the value of an investment after purchase or in the value
of the Fund's total assets will not cause any such limitation to have been
violated or to require the disposition of any investment, except as otherwise
required by law. If the credit ratings of an issuer are lowered below those
specified for investment by the Fund, the Fund is not required to dispose of the
obligations of that issuer. The determination of whether to sell such an
obligation will be made by Fund Management based upon an assessment of credit
risk and the prevailing market price of the investment. If the Fund borrows
money, its share price may be subject to greater fluctuation until the borrowing
is repaid. The Fund attempts to minimize such fluctuations by not purchasing
additional securities when borrowings, including reverse repurchase agreements,
are greater than 5% of the value of the Fund's total assets. As a fundamental
policy in addition to the above, the Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental), invest all of its
assets in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as the Fund. See "Additional Information - Master/Feeder Option."

<PAGE>

RISK FACTORS

There can be no assurance that the Fund will achieve its investment
objective. The Fund's investments in common stocks and other equity securities
may, of course, decline in value. The Fund's assets will be invested primarily
in non-U.S. issuers. Investors should recognize that investing in securities of
non-U.S. issuers involves certain risks and special considerations, including
those set forth below, which are not typically associated with investing in
securities of U.S. issuers. Further, certain investments that the Fund may
purchase, and investment techniques that the Fund may use, involve risks,
including those set forth below.

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 may be affected by remediation
costs, which may be substantial. The Fund's investments may be adversely
affected.

Social, Political and Economic Risks. The Fund may make investments in
developing countries that involve exposure to economic structures that generally
are less diverse and mature than in the United States, and to political systems
that may be less stable. A developing country can be considered to be a country
that is in the initial stages of its industrialization cycle. In the past,
markets of developing countries have been more volatile than the markets of
developed countries; however, such markets often have provided higher rates of
return to investors.

The Latin American countries in which the Fund will invest may be subject
to a substantially greater degree of social, political and economic instability
than is the case in the United States, Japan and Western European countries.
Such instability may result from, among other things, the following: (i)
authoritarian governments or military involvement in political and economic
decision-making, and changes in government through extra-constitutional means;
(ii) popular unrest associated with demands for improved political, economic and
social conditions; (iii) internal insurgencies and terrorist activities; (iv)
hostile relations with neighboring countries; and (v) drug trafficking. Social,
political and economic instability could significantly disrupt the principal
financial markets in which the Fund invests and adversely affect the value of
the Fund's assets.

<PAGE>

The economies of individual Latin American countries may differ favorably
or unfavorably and significantly from the U.S. economy in such respects as the
rate of growth of gross domestic product or gross national product, rate of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency, structural unemployment and balance of payments position.
Governments of many Latin American countries have exercised and continue to
exercise substantial influence over many aspects of the private sector. In some
cases, the government owns or controls many companies, including some of the
largest in the country. Accordingly, government actions in the future could have
a significant effect on economic conditions in a Latin American country, which
could affect private sector companies and the Fund, and on market conditions,
which could have a significant effect on prices and yields of securities in the
Fund's portfolio. There may be the possibility of nationalization, asset
expropriations or future confiscatory levels of taxation affecting the Fund. In
the event of nationalization, expropriation or other confiscation, the Fund may
not be fairly compensated for its loss and could lose its entire investment in
the country involved. The economies of most Latin American countries are heavily
dependent upon international trade and accordingly are affected by protective
trade barriers and the economic conditions of their trading partners. The
enactment by the United States or other principal trading partners of
protectionist trade legislation, reduction of foreign investment in the local
economies and general declines in the international securities markets could
have a significant adverse effect upon the securities markets of these
countries. The economies of Latin American countries are vulnerable to
weaknesses in world prices for their commodity exports and natural resources.

Certain of the Latin American countries are among the largest debtors to
commercial banks and foreign governments. Currently, due to its size, Brazil is
the largest debtor among developing countries followed by Mexico. Since 1982,
certain Latin American countries, including Argentina, Brazil, Chile and Mexico,
have experienced difficulty in servicing their sovereign debt obligations in a
timely manner. Many such countries have negotiated with foreign creditors to
restructure such sovereign debt and may enter into such negotiations in the
future. Obligations arising from past restructuring agreements have affected,
and those arising from future restructuring agreements may affect, the economic
performance and political and social stability of Latin American countries.

Changes in the political leadership or policies of the governments of the
Latin American countries in which the Fund invests or in other countries that
influence them, may effect a deterioration of the current climate for foreign
investment and result in a reduction in value of the Fund's investments there.

<PAGE>

In the past, upon the assumption of power by authoritarian regimes in
particular Latin American countries, those governments expropriated significant
real and personal property holdings, without any or adequate compensation. There
can be no assurance that companies in which the Fund holds securities, property
held by such companies or the Fund's securities themselves, will not also be
expropriated, nationalized, or otherwise confiscated, resulting in substantial
losses to the Fund and its shareholders. The Fund's investments would similarly
be adversely affected by exchange control regulations in any of those countries.

Securities Markets.^ The market capitalizations of listed equity securities
on exchanges in Latin American nations is significantly smaller than those of
the United States and other major economies. Only a few issuers may constitute a
major portion of the market capitalization and trading equity. A large segment
of the ownership of many Latin American companies may be held by a limited
number of persons and families, which may limit the number of shares available
for investment by the Fund. As a consequence, individual Latin American
securities markets are vulnerable to the effect of large investors trading
significant blocks of securities or by large dispositions of securities, e.g.,
as a result of margin calls. The resulting limitations on the liquidity of Latin
American securities will influence the Fund's capability for acquiring and
disposing of such securities at the price and time it desires to do so.

Foreign Securities. Due to the absence of established securities markets in
certain Latin American countries, there may be restrictions on investment by
foreigners in the securities of companies in these countries, and difficulties
in removing from certain of these countries the dollars invested in such
companies. The Fund's ability to invest may be restricted to the use of
investment vehicles authorized by the local government, investment in shares of
other investment companies; or investments in American Depository Receipts
("ADRs"); American Depository Shares, and Global Depository Shares.

ADRs are instruments, usually issued by a U.S. bank or trust company,
evidencing ownership of securities of a foreign issuer into which the ADRs may
be convertible. ADRs are designed for use in U.S. markets and may be traded on
U.S. securities exchanges or over-the-counter markets. They are denominated in
dollars rather than the currency of the country in which the underlying
securities are issued.

<PAGE>

in the creation of the program. Although the regulatory requirements with
respect to sponsored and unsponsored programs are generally similar, the issuers
of unsponsored ADRs are not obligated to disclose material information in the
U.S. and, therefore, such information may not be reflected in the market value
of the ADRs. ADRs are subject to certain of the same risks as direct investments
in foreign securities, including the risk that changes in the value of the
currency in which the security underlying an ADR is denominated relative to the
U.S. dollar may adversely affect the value of the ADR.

As indicated above, the Fund may deem it most practical to invest in
certain countries through other investment companies or similar vehicles,
although there can be no assurance that any such vehicles will be available or
will themselves have invested in the securities found most desirable by the
Fund. The Fund will not invest through other entities unless, in the opinion of
Fund Management, the potential advantages of such investment justify the Fund's
bearing its ratable share of the expenses of such entity (constituting duplicate
levels of advisory fees to be borne by the Fund and its shareholders) and its
share of any premium encompassed in the market value of such entity at the time
of the Fund's investment over the market value of the entity's underlying
holdings. In addition, there may be tax ramifications relating to investment in
such entities. Investments by the Fund in other investment companies are subject
to the following limits imposed by the Investment Company Act of 1940: subject
to certain exceptions, no more than 5% of the Fund's total assets may be
invested in any one investment company (but no more than 3% of the voting stock
of the underlying investment company) and no more than 10% of the Fund's total
assets may be invested in other investment companies in the aggregate.

For U.S. investors, the returns on foreign securities are influenced not
only by the returns on the foreign investments themselves, but also by currency
risk (i.e., changes in the value of the currencies in which the securities are
denominated relative to the U.S. dollar). In a period when the U.S. dollar
generally rises against a foreign currency, the 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, the returns on
foreign securities generally are enhanced. Currencies of certain Latin American
countries have undergone sudden devaluations relative to the U.S. dollar as a
result of corresponding inflationary trends or other reasons. Any such
devaluation may have a deleterious effect on the Fund's investments. Inflation
may have strong negative consequences for the economy and political stability of
a country that experiences it, and may seriously affect its securities markets.

<PAGE>

The currencies of certain Latin American countries are not commonly traded
in foreign exchange markets. Certain Latin American countries have managed
currencies that, for foreign exchange purposes, do not float freely against the
U.S. dollar. Other governmental restrictions on the convertibility of the
country's currency may be imposed.

Securities exchanges and broker-dealers in most Latin American countries
are subject to less regulatory scrutiny than in the United States, as are Latin
American companies in such countries. The limited size of the markets for
securities may enable adverse publicity, investors' perceptions or traders'
positions or strategies to affect prices unduly, at times decreasing not only
the value but also the liquidity of the Fund's investments. The Fund may invest
no more than 15% of its net assets at the time of investment in illiquid
securities. Securities the proceeds of which are subject to limitations on
repatriation of principal or profits for more than seven days, and those for
which there ceases to be a ready market, will be deemed illiquid for this
purpose.

Other risks and considerations of international investing include the
following: differences in accounting, auditing and financial reporting standards
which may result in less publicly available information than is generally
available with respect to U.S. issuers; generally higher commission rates on
foreign portfolio transactions and longer settlement periods; the smaller
trading volumes and generally lower liquidity of foreign stock markets, which
may result in greater price volatility; foreign withholding taxes payable on
income and/or gains from the Fund's investment income on foreign securities,
which may reduce dividend income or capital gains available for distribution to
shareholders; the possibility of expropriation or confiscatory taxation; adverse
changes in investment or exchange control regulations; political instability
which could affect U.S. investment in foreign countries; potential restrictions
on the flow of international capital; and the possibility ^ that a Fund ^ may
experience difficulties in pursuing legal remedies and collecting judgments.

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
The Netherlands, Portugal and Spain are presently members of the European
Economic and Monetary Union (the "EMU"). The EMU intends to establish a common
European currency for EMU countries which will be known as the "euro." Each
participating country presently plans to adopt the euro as its currency on
January 1, 1999. The old national currencies will be sub-currencies of the euro
until July 1, 2002, at which time the old currencies will disappear entirely.
Other European countries may adopt the euro in the future.

<PAGE>

Debt Securities. The Fund's investments in fixed-income securities
generally are subject to both credit risk and market risk. Credit risk relates
to the ability of the issuer to meet interest or principal payments, or both, as
they come due. The ratings given a security by S&P and Moody's provide a
generally useful guide as to such credit risk. The lower the rating given a
security by such rating service, the greater the credit risk such rating service
perceives to exist with respect to such security. Increasing the amount of Fund
assets invested in unrated or lower grade securities, while intended to increase
the yield produced by those assets, also will increase the credit risk to which
those assets are subject.

<PAGE>

investments in fixed-income securities to securities it believes are not
highly speculative, both kinds of risk are increased by investing in debt
securities rated below the top three grades by S&P or Moody's or, if unrated,
securities determined by Fund Management to be of equivalent quality. Of course,
relying in part on ratings assigned by credit agencies in making investments
will not protect the Fund from the risk that the securities in which it invests
will decline in value, since credit ratings represent evaluations of the safety
of principal, dividend and interest payments on preferred stocks and debt
securities, not the market value of such securities, and such ratings may not be
changed on a timely basis to reflect subsequent events. 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 Fund Management determines it is in the
best interests of the Fund to sell such securities. Because investment in medium
and lower rated securities involves both greater credit risk and market risk,
achievement of the Fund's investment objectives may be more dependent on Fund
Management's own credit analysis than is the case for funds investing in higher
quality securities. In addition, the share price and yield of the Fund may be
expected to fluctuate more than in the case of funds investing in higher
quality, shorter term securities. Moreover, a significant economic downturn or
major increase in interest rates may result in issuers of lower rated securities
experiencing increased financial stress, which would adversely affect their
ability to service their principal, dividend and interest obligations, meet
projected business goals, and obtain additional financing. Expenses incurred to
recover an investment in a defaulted security may adversely affect the Fund's
net asset value. Finally, while Fund Management attempts to limit purchases of
medium and lower rated securities to securities having an established secondary
market, the secondary market for such securities may be less liquid than the
market for higher quality securities. The reduced liquidity of the secondary
market for such securities may adversely affect the market price of, and ability
of the Fund to value, particular securities at certain times, thereby making it
difficult to make specific valuation determinations.

Although bonds in the lowest investment grade debt category (those rated
BBB by S&P or Baa by Moody's) are regarded as having adequate capability to
pay principal and interest, they have speculative characteristics. Adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the case for
higher rated bonds. Lower rated bonds by Moody's (categories Ba, B, Caa) are of
poorer quality and also have speculative characteristics. Bonds rated Caa may be
in default or there may be present elements of danger with respect to principal
or interest. Lower rated bonds by S&P (categories BB, B, CCC) include those that
are regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with their
terms; BB indicates the lowest degree of speculation and CCC a high degree of
speculation. While such bonds likely will have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. For a specific description of each corporate
bond rating category, please refer to Appendix B to the Statement of Additional
Information. Note, however, that the Fund expects that most foreign debt
securities in which it will invest will not be rated by U.S. rating services.

In certain Latin American countries, the central government and its
agencies are the largest debtors to local and foreign banks and others.
Argentina, Brazil and Mexico are the three largest debtors among the developing
countries. Sovereign debt involves the risk that the government, as a result of
political considerations or cash flow difficulties, may fail to make scheduled
payments of interest or principal and may require holders to participate in

<PAGE>

rescheduling of payments or even to make additional loans. If a Latin
American government defaults on its sovereign debt, there is likely to be no
legal proceeding under which the debt may be ordered repaid, in whole or in
part. The ability or willingness of a foreign sovereign debtor to make payments
of principal and interest in a timely manner may be influenced by, among other
factors, its cash flow, the magnitude of its foreign reserves, the availability
of foreign exchange on the payment date, the debt service burden to the economy
as a whole, the debtor's then current relationship with the International
Monetary Fund and its then current political constraints. Some of the countries
issuing such instruments have experienced high rates of inflation in recent
years and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences, including effects on the willingness of such countries to service
their sovereign debt. A Latin American government's willingness and ability to
make timely payments on its sovereign debt are also likely to be heavily
affected by the country's balance of trade and its access to trade and other
international credits. If a country's exports are concentrated in a few
commodities, such country would be more significantly exposed to a decline in
the international prices of one or more of such commodities. A rise in
protectionism on the part of its trading partners, or unwillingness by such
partners to make payment for goods in hard currency, could also adversely affect
the country's ability to export its products and repay its debts. Sovereign
debtors may also be dependent on expected receipts from such agencies and others
abroad to reduce principal and interest arrearages on their debt. In addition,
failure by the sovereign debtor or other entity to implement economic reforms
negotiated with multilateral agencies or others, to achieve specified levels of
economic performance, or to make other debt payments when due, may cause third
parties to terminate their commitments to provide funds to the sovereign debtor,
which may further impair such debtor's willingness or ability to service its
debts. In the past, some of the Latin American countries in which the Fund
expects to invest have encountered difficulties in servicing their sovereign
debt, withholding certain payments of interest or principal. Certain of these
obligations, particularly commercial bank loans, have been restructured, usually
by rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. Holders of sovereign
debt, including the Fund, may be asked to participate in similar restructurings.

The Fund may invest in debt securities issued under the "Brady Plan" in
connection with restructurings in Latin American debt markets or earlier loans.
These securities, often referred to as "Brady Bonds," are, in some cases,
denominated in U.S. dollars and collateralized as to principal by U.S. Treasury
zero coupon bonds having the same maturity. At least one year's interest
payments, on a rolling basis, are collateralized by cash or other investments.
Brady Bonds are actively traded on an over-the-counter basis in the secondary
market for Latin American debt securities. "Brady Bonds" are lower rated bonds
and highly volatile. See "Risk Factors - Debt Securities."

Futures, Options and Other Derivative Instruments. The use of futures,
options, forward contracts and swaps exposes the Fund to additional investment
risks and transaction costs, and as a result, no more than 5% of the Fund's
total assets will be committed to such investments. If Fund Management seeks to
protect the Fund against potential adverse movements in the securities, foreign
currency or interest rate markets using these instruments, and such markets do
not move in a direction adverse to the Fund, the Fund could be left in a less
favorable position than if such strategies had not been used. Risks inherent in
the use of futures, options, forward contracts and swaps include (1) the risk
that interest rates, securities prices and currency markets will not move in the
directions anticipated; (2) imperfect correlation between the price of futures,
options and forward contracts and movements in the prices of the securities or
currencies being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
and (5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences. Further information on the use of futures, options,
forward foreign currency contracts and swaps and swap-related products, and the
associated risks, is contained in the Statement of Additional Information.
<PAGE>

THE FUND AND ITS MANAGEMENT

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 Funds Group, Inc. ("INVESCO"), 7800 E.
Union Avenue, Denver, Colorado, serves as the Fund's investment adviser. Under
this agreement, INVESCO is primarily responsible for providing the Fund with
various administrative services and supervising the Fund's daily business
affairs.

Pursuant to an agreement with INVESCO, INVESCO Asset Management Limited
("IAML") serves as the sub-adviser to the Fund. IAML also acts as sub-adviser to
the INVESCO European Fund, the INVESCO Pacific Basin Fund, the INVESCO
International Growth Fund, the INVESCO Emerging Markets Fund and the INVESCO
European Small Company Fund. IAML, subject to the supervision of INVESCO, is
primarily responsible for selecting and managing the Fund's investments.

INVESCO, IAML 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
and IAML continued to operate under their existing names. AMVESCAP PLC had
approximately ^ $241 billion in assets under management as of ^ September 30,
1998. INVESCO was established in 1932 and, as of July 31, 1998, managed 14
mutual funds, consisting of 49 separate portfolios, with combined assets of
approximately $19.6 billion on behalf of 884,099 shareholders.

The following individual serves as portfolio manager for the Fund and is
primarily responsible for determining, in consultation with the senior
investment policy group of IAML, the country-by-country allocation of the
portfolio's assets, overall stock selection methodology and the ongoing
implementation and risk control policies applicable to the portfolio:

<PAGE>

David Manuel Portfolio manager of the Fund since 1998;
fund manager with INVESCO GT Asset
Management since 1997 specializing in
Latin American equities. Previously,
senior fund manager with Abbey-Life
Investment Services (1987-1997). Mr.
Manuel earned a B.A. (Hons) from
Cambridge University and a Ph.D. from
London University.

Mr. Manuel heads a team of individual country specialists who are
responsible for managing security selection for their assigned country's share
of the allocation within the parameters established by IAML's investment policy
group.

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 investment and other 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.

<PAGE>

The Company also has entered into an Administrative Service to the
Administrative Agreement, INVESCO performs certain administrative, recordkeeping
and internal sub-accounting services, including without limitation, maintaining
general ledger and capital stock accounts, preparing a daily trial balance,
calculating net asset value daily, providing selected general ledger reports and
providing sub-accounting and recordkeeping services for Fund shareholder
accounts maintained by certain retirement and employee benefit plans for the
benefit of participants in such plans. For such services, the Fund pays INVESCO
a fee consisting of a base fee of $10,000 per year, plus an additional
incremental fee computed at the annual rate of 0.015% per year of the average
net assets of the Fund. INVESCO also is paid a fee by the Fund for providing
transfer agent services. See "Additional Information."

The Fund's expenses, which are accrued daily, are generally deducted from
the Fund's total income before dividends are paid. Total expenses (prior to any
expense offset arrangement) of the Fund for the fiscal year ended July 31, 1998,
including investment management fees (but excluding brokerage commissions, which
are a cost of acquiring securities), amounted to 1.99% of the Fund's average net
assets. Certain expenses for the Fund are voluntarily absorbed by INVESCO and
IAML pursuant to a commitment to the Fund in order to ensure that the Fund's
total operating expenses do not exceed 2.00%. This commitment may be changed
following consultation with the Company's board of directors.

<PAGE>

to effect transactions at the best available prices. As discussed under
"How Shares Can Be Purchased - Distribution Expenses," the Company may market
shares of the Fund 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 brokers and 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 execution of the transaction and level of commission are comparable
to those available from other qualified brokerage firms.

HOW SHARES CAN BE PURCHASED

INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706

PURCHASE ORDERS MUST SPECIFY THE FUND IN WHICH THE INVESTMENT IS TO BE
MADE.

<PAGE>

call the Fund's office by using the telephone number on the back cover of
this Prospectus. Orders sent by overnight courier, including Express Mail,
should be sent to the street address, not ^ post office box, of INVESCO at 7800
E. Union Avenue, Denver, CO 80237.

Net asset value per share is computed once each day that the New York
Stock Exchange is open, as of the close of regular trading on that Exchange
(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for the Fund is
calculated by dividing the market value of the Fund's securities plus the value
of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of that Fund. If market quotations are not readily available,

<PAGE>

a security or other asset will be valued at fair value as determined in
good faith by the board of directors. Debt securities with remaining maturities
of 60 days or less at the time of purchase will be valued at amortized cost,
absent unusual circumstances, so long as the Company's board of directors
believes that such value represents fair value.

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. Therefore, any

<PAGE>

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 their revenues to securities dealers, financial advisers 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 the Plan's termination. 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 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 will bear any distribution- and service-related expenses in
excess of the amounts which are compensated pursuant to the Plan. The Plan also
authorizes any financing of distribution which may result from ^ INVESCO's and
IDI's use of fees received from the Fund for services rendered by INVESCO,
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.

SERVICES PROVIDED BY THE FUND

Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund at the net asset value
per share of the Fund in effect on the ex-dividend or ex-distribution date. A
shareholder may, however, elect to reinvest dividends and other distributions in

<PAGE>

certain of the other no-load mutual funds advised by INVESCO and distributed by
IDI, or to receive payment of all dividends and other distributions in excess of
$10.00 by check by giving written notice to INVESCO at least two weeks prior to
the record date on which the change is to take effect. Further information
concerning these options can be obtained by contacting INVESCO.

Exchange Policy. Shares of the Fund may be exchanged for shares of any
other fund of the Company, as well as for shares of any of the following other
no-load mutual funds, which are also advised by INVESCO and distributed by IDI,
on the basis of their respective net asset values at the time of the exchange:
INVESCO ^ Bond Funds, Inc. (formerly, INVESCO ^ Income Funds, Inc.), INVESCO ^
Combination Stock and Bond Funds, Inc. (formerly, INVESCO ^ Flexible Funds,
Inc.), INVESCO ^ Diversified Funds, Inc., INVESCO ^ Emerging Opportunity Funds,
Inc., INVESCO Growth Funds, Inc. (formerly, INVESCO Growth Fund, Inc.), INVESCO
Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money
Market Funds, Inc., INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic
Portfolios, ^ Inc.), INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds,
Inc.), INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.

<PAGE>

also advised by INVESCO and distributed by IDI. The Fund will use the
"first-in, first-out" method to determine the three month holding period. Under
this method the date of redemption or exchange will be compared with the
earliest purchase date of shares held in the account. If this holding period is
less than three months, the redemption/exchange fee will be assessed.

An exchange involves the redemption of shares in the Fund and investment
of the redemption proceeds in shares of another fund of the Company or in shares
of one of the funds listed above. Exchanges will be made at the net asset value
per share next determined after receipt of an exchange request in proper order.
Any gain or loss realized on such an exchange is recognizable for federal income
tax purposes by the shareholder. Exchange requests may be made either by
telephone or by written request to INVESCO, using the telephone number or
address on the back cover of this Prospectus. Exchanges made by telephone must
be in an amount of at least $250, if the exchange is being made into an existing
account of one of the INVESCO funds. All exchanges that establish a new account
must meet the Fund's applicable minimum initial investment requirements. Written
exchange requests into an existing account have no minimum requirements other
than the Fund's applicable minimum subsequent investment requirements.

<PAGE>

Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, various ^ IRAs, simplified employee
pension plans and corporate retirement plans. In addition, shares can be used to
fund tax qualified plans established under Section 403(b) of the Internal
Revenue Code by educational institutions, including public school systems and
private schools, and certain kinds of non-profit organizations, which provide
deferred compensation arrangements for their employees.

<PAGE>

HOW TO REDEEM SHARES

Shares of the Fund may be redeemed at any time at their current net asset
value per share next determined after a request in proper form is received at
the Fund's office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance. Upon the redemption of shares held less than three months (other
than shares acquired through reinvestment of dividends or other distributions),
a fee of 1% of the current net asset value of the shares will be assessed and
retained by the Fund for the benefit of remaining shareholders. This fee is
intended to encourage long-term investment in the Fund, to avoid transaction and
other expenses caused by early redemptions, and to facilitate portfolio
management. The fee is not a deferred sales charge, is not a commission paid to
INVESCO, and does not benefit INVESCO in any way. The fee applies to redemptions
from the Fund and exchanges into any of the other no-load mutual funds, which
are also advised by INVESCO and distributed by IDI. The Fund will use the
"first-in, first-out" method to determine the three month holding period. Under
this method the date of redemption or exchange will be compared with the
earliest purchase date of shares held in the account. If this holding period is
less than three months, the redemption/exchange fee will be assessed on the
current net asset value of the shares being redeemed.

<PAGE>

certificates have been issued, a written redemption request signed by each
registered owner of the account must be submitted to INVESCO at the post office
box address noted above. If shares are held in the name of a corporation,
additional documentation may be necessary. Call or write for specific
information. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), the signature(s) must be guaranteed by a financial
institution which qualifies as an eligible guarantor institution. Redemption
procedures with respect to accounts registered in the names of broker-dealers
may differ from those applicable to other shareholders.

BE CAREFUL TO SPECIFY THE ACCOUNT FROM WHICH THE REDEMPTION IS TO BE MADE.
SHAREHOLDERS HAVE A SEPARATE ACCOUNT FOR EACH FUND IN WHICH THEY INVEST.

Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which will take up to 15 days).

<PAGE>

telephone redemptions. Unless Fund Management permits a larger redemption
request to be placed by telephone, a shareholder may not place a redemption
request by telephone in excess of $25,000. These telephone redemption privileges
may be modified or terminated in the future at the discretion of Fund
Management.

Redeeming Fund shares by telephone is available to shareholders
automatically unless expressly declined. By signing a New Account Application, a
Telephone Transaction Authorization Form or otherwise utilizing telephone
redemption privileges, the shareholder has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believe to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that telephone instructions are genuine. These
may include recording telephone instructions and providing written confirmation
of transactions initiated by telephone. As a result of this policy, the investor
may bear the risk of any loss due to unauthorized or fraudulent instructions;
provided, however, that if the Fund fails to follow these or other reasonable
procedures, the Fund may be liable.

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS

<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. ^ During 1997, the Taxpayer Relief Act established a new
maximum capital gains tax rate of 20%. Depending on the holding period of the
asset giving rise to the gain, a capital gain was taxable at a maximum rate of ^
either 20% or 28%. Beginning January 1, 1998, ^ all long-term gains realized ^
on the sale of securities held ^ more than 12 months will be taxable at a
maximum rate of 20%. In addition, legislation signed in October of 1998 provides
that all capital gain distributions from a mutual fund paid to shareholders
during 1998 will be taxed at a maximum rate of 20%. Accordingly, all capital
gain distributions paid in 1998 will be taxable at a maximum rate of 20%. Note
that the rate of capital gains tax is dependent on the shareholder's marginal
tax rate and may be lower than the above rates. At the end of each year,
information regarding the tax status of dividends and other distributions is
provided to shareholders. Shareholders should consult their tax advisers as to
the effect of distributions by the Fund.

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

Shareholders should consult a tax adviser with respect to these matters.
For further information see "Dividends, Other Distributions And Taxes" in the
Statement of Additional
Information.

<PAGE>

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 net realized capital gains. Net realized capital gains, if any,
together with gains realized on certain 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.

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. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all Funds of the Company voting together. In other cases, such as voting upon
an investment advisory contract, voting is on a Fund-by-Fund basis. When not all
Funds are affected by a matter to be voted upon, only shareholders of the ^ fund
or ^ funds affected by the matter will be entitled to vote thereon. The Company
is not generally required, and does not expect, to hold regular annual meetings
of shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the Fund or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company will assist shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940. Directors may be removed by
action of the holders of a majority or more of the outstanding shares of the
Company.

<PAGE>

Master/Feeder Option. 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 or partnership having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. It is expected that any such investment company would be managed by
Fund Management in substantially the same manner as the existing Fund. If
permitted by applicable laws and policies then in effect, any such investment
may be made in the sole discretion of the Company's board of directors without
further approval of the shareholders of the Fund. However, Fund shareholders
will be given at least 30 days prior notice of any such investment. Such
investment would be made only if the Company's board of directors determines it
to be in the best interests of the respective Fund and its shareholders. In
making that determination, the board will consider, among other things, the
benefits to shareholders and/or the opportunity to reduce costs and achieve
operational efficiencies. No assurance can be given that costs will be
materially reduced if this option is implemented.

Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the back
cover ^ of this Prospectus.

<PAGE>

INVESCO SPECIALTY FUNDS, INC.
INVESCO Latin American Growth Fund

A no-load mutual fund seeking capital
appreciation.

PROSPECTUS
December 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
December 1, 1998

INVESCO REALTY FUND

INVESCO Realty Fund (the "Fund") seeks to provide above-average current
income. Long-term capital growth potential is an additional consideration in
selecting securities for the Fund's investment portfolio. The Fund normally
invests at least 65% of its total assets in dividend-paying, publicly-traded
stocks of companies in the real estate industry. The remaining assets are
invested in other income-producing securities such as corporate bonds.

The Fund is a series of INVESCO Specialty Funds, Inc. ^(the "Company"), a
diversified, managed no-load mutual fund consisting of seven separate portfolios
of investments. Separate prospectuses are available upon request from INVESCO
Distributors, Inc. for the Company's other funds: INVESCO Worldwide Capital
Goods Fund, INVESCO Worldwide Communications Fund, INVESCO European Small
Company Fund, INVESCO Asian Growth Fund, INVESCO Latin American Growth Fund and
INVESCO S&P 500 Index Fund. Investors may purchase shares of any and all of the
Funds. Additional funds may be offered in the future.

This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information dated December 1, 1998,
containing further information about the Fund 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.

<PAGE>

TABLE OF CONTENTS

Page

ESSENTIAL INFORMATION........................................................2

ANNUAL FUND EXPENSES.........................................................3

FINANCIAL HIGHLIGHTS.....................................................^ 4

INVESTMENT OBJECTIVE AND STRATEGY........................................^ 5

INVESTMENT POLICIES AND RISKS............................................^ 5

THE FUND AND ITS MANAGEMENT..............................................^ 10

FUND PRICE AND PERFORMANCE...............................................^ 12

HOW TO BUY SHARES........................................................^ 12

FUND SERVICES............................................................^ 15

HOW TO SELL SHARES.......................................................^ 15

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS.................................^ 16

ADDITIONAL INFORMATION...................................................^ 17

<PAGE>

ESSENTIAL INFORMATION

Investment Goal And Strategy: The Fund seeks to provide above-average
current income. Long-term capital growth potential is an additional
consideration in selecting securities for the Fund's investment portfolio. The
Fund normally invests at least 65% of its total assets in publicly-traded stocks
of companies primarily engaged in the real estate industry. The remaining assets
are invested in other income-producing securities such as mortgage-backed
securities and corporate bonds. There is no guarantee that the Fund will meet
its objective. See "Investment Objective ^ And Strategy" ^ and "Investment
Policies And Risks."

Designed For: Investors primarily seeking above-average current income
consistent with reasonable risk, without sacrificing the potential for long-term
capital growth. While not 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 Gifts/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: Since stock prices fluctuate on a daily basis, the Fund's
price per share varies daily. Potential shareholders should consider this a
long-term investment.

Risks: The Fund focuses on equity securities of companies principally
engaged in the real estate industry. As such, in addition to the normal market
risks associated with investments in securities generally, the Fund is
particularly sensitive to conditions in the real estate industry. Real estate is
a cyclical industry that is sensitive to, among other things, interest rates,
property tax rates, national, regional and local economic conditions and
availability of materials. 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 Realty Advisors, Inc. ("IRAI") serves as the Fund's sub-adviser.
Together, INVESCO and IRAI constitute "Fund Management." INVESCO Distributors,
Inc. ("IDI"), founded in 1997 as a wholly-owned subsidiary of INVESCO, is the
Fund's distributor.

<PAGE>

The Fund's investments are selected by a team of IRAI portfolio managers
that is collectively responsible for the investment decisions relating to the
Fund.

INVESCO, IRAI and IDI are indirect, wholly-owned subsidiaries of AMVESCAP
PLC, an international investment management company that managed approximately ^
$241 billion in assets as of ^ September 30, 1998. AMVESCAP PLC is based in
London, with money managers located in Europe, North America, ^ South 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."

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 benefit investors by increasing the Fund's total return.

<PAGE>

We calculate annual operating expenses as a percentage of the Fund's
average annual net assets. To keep expenses competitive, INVESCO voluntarily
reimburses the Fund for expenses in excess of 1.20% of the Fund's average net
assets (excluding expense offset arrangement described below).

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)(2) 0.22%
-----
Total Fund Operating Expenses
(after expense limitation)(1)(2) 1.22%

=====

(1) It should be noted that the Fund's actual operating expenses were lower than
the figures shown because the Fund's custodian fees were reduced under an
expense offset arrangement. However, as a result of an SEC requirement, the
figures shown above do not reflect these reductions.

(2) Certain expenses of the Fund are absorbed voluntarily by INVESCO. In the
absence of such absorbed expenses the Fund's "Other Expenses" and "Total Fund
Operating Expenses" would have been 0.97% (annualized) and 1.97% (annualized),
respectively, of the Fund's actual expenses for the fiscal year ended July 31,
1998.

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
------ ------- ------- --------
$13 $39 $67 $148

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 OR EXPENSES,
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."

<PAGE>

FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout the 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 back cover of this Prospectus. The Annual Report also contains more
information about the Fund's performance.

Year Period
Ended Ended
July 31 July 31
--------- ---------
1998 1997(a)
PER SHARE DATA
Net Asset Value - Beginning of Period $10.99 $10.00
--------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.38 0.22
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (0.96) 0.99
--------- ---------
Total from Investment Operations (0.58) 1.21
--------- ---------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.39 0.22
Distributions from Capital Gains 0.87 0.00
--------- ---------
Total Distributions 1.26 0.22
--------- ---------
Net Asset Value - End of Period $9.15 $10.99
========= =========

TOTAL RETURN (6.49%) 12.24%(b)

<PAGE>

RATIOS

Net Assets - End of Period
($000 Omitted) $23,548 $36,658
Ratio of Expenses to Average
Net Assets(c)(d) 1.22% 1.20%(e)
Ratio of Net Investment Income to
Average Net Assets(c) 3.53% 4.08%(e)
Portfolio Turnover Rate 258% 70%(b)

(a) From January 1, 1997, commencement of investment operations, to July 31,
1997.

(b) Based on operations for the period shown and, accordingly, are not
representative of a full year.

(c) Various expenses of the Fund were voluntarily absorbed by INVESCO and IRAI
for the year ended July 31, 1998 and the period ended July 31, 1997. If
such expenses had not been voluntarily absorbed, ^ Ratio of Expenses to
Average Net Assets would have been 1.97% and 1.83% (annualized),
respectively, and ^ Ratio of Net Investment Income to Average Net Assets
would have been 2.78% and 3.45% (annualized), respectively.

(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangement.

(e) Annualized

<PAGE>

INVESTMENT OBJECTIVE AND STRATEGY

The Fund seeks to provide above-average current income while following
sound investment practices. This investment objective is fundamental and cannot
be changed without the approval of the Fund's shareholders. Long-term capital
growth potential is an additional, but secondary, consideration in the selection
of portfolio securities. There is no assurance that the Fund's investment
objective will be met.

The Fund normally invests at least 65% of its total assets in equity
securities of companies principally engaged in the real estate industry. A
company is "principally engaged" in that industry if at least 50% of its assets,
gross income or net profits are attributable to the ownership, construction,
management or sale of residential, commercial or industrial real estate. Such
companies may include, for example, real estate investment trusts ("REITs"),
real estate brokers, home builders or real estate developers, companies with
substantial real estate holdings (such as paper and lumber producers,
agricultural businesses and lodging and entertainment companies) and companies
with significant involvement in the real estate industry, such as building
supply companies and financial institutions that write real estate mortgages. In
addition to common stocks, "equity securities" may include preferred stocks,
securities convertible into common stock and warrants.

The Fund's investments in equity securities are diversified by both
property type and geographic region. Under normal circumstances, no one property
type will represent more than 50% of the Fund's total assets. The remaining
assets of the Fund are invested in debt securities, including mortgage-backed
securities and debt or equity securities of companies which may or may not be
principally involved in the real estate industry, including non-investment grade
and unrated debt securities. The Fund may invest up to 25% of its total assets
in foreign securities.

Although the Fund seeks to invest for the long term, the Fund retains the
right to sell portfolio securities without regard to how long they have been in
the Fund's portfolio. The Fund anticipates a portfolio turnover rate of between
60% and 75%. A portfolio turnover rate of 75% would occur if three-quarters of
the Fund's portfolio securities were sold within one year.

When ^ we believe market or economic conditions are unfavorable, the Fund
may assume a defensive position by temporarily investing up to 100% of its total
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.

<PAGE>

INVESTMENT POLICIES AND RISKS

Investors generally should expect to see the price per share and income
levels of the Fund vary with movements in the securities markets, changes in
economic conditions and interest rates, and other factors.

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 may be affected by
remediation costs, which may be substantial. The Fund's investments may be
adversely affected.

Concentration. The Fund's performance is tied closely to conditions
affecting the real estate industry, which has historically been cyclical. The
real estate industry is highly sensitive to national, regional and local
economic conditions, in addition to such factors as interest rates, changes in
property taxes and real estate values, overbuilding, and changes in rental
income. The structure, management and cash flow of many of the companies in the
industry also may heavily impact their performance. Although the Fund does not
intend to invest directly in private real estate assets, it conceivably could
own real estate directly as a result of default on debt securities that it holds
in its portfolio. Therefore, the Fund may be subject to certain risks associated
with the direct ownership of real estate, including, among others, difficulties
in valuing and trading real estate and declines in the value of real estate.

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,
Inc. ("S&P") or Moody's Investors Services, Inc. ("Moody's"). "Market risk"
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, the prices of bonds generally
increase.

<PAGE>

The lower a bond's quality, the more it is subject to credit risk and
market risk and the more speculative it becomes. This is also true of most
unrated securities. No more than 15% of the total assets of the Fund may be
invested 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 Fund Management to be of equivalent quality). These include issues
which are of poorer quality and may have some speculative characteristics,
according to the ratings services. Investments in unrated securities may not
exceed 25% of the Fund's total assets. Never, under any circumstances, is the
Fund permitted to purchase bonds which are rated below B by Moody's or B- by S&P
or, if unrated, judged by ^ Fund Management ^ to be of equivalent quality. Bonds
rated B or B- generally lack characteristics of a desirable investment and are
deemed speculative with respect to the issuer's capacity to pay interest and
repay principal over a long period of time. While Fund Management continuously
monitors all of the corporate bonds in the ^ Fund's investment portfolio for the
issuer's ability to make required principal and interest payments and other
quality factors, it may retain a bond whose rating is changed to one below the
minimum rating required for purchase of the security.

Because investment in medium- and lower-rated securities involves both
greater credit risk and market risk, achievement of the Fund's investment
objective may be more dependent on Fund Management's own credit analysis than is
the case for funds investing in higher quality securities. In addition, the
share price and yield of the Fund may be expected to fluctuate more than in that
of funds investing in higher quality, shorter term securities. Moreover, a
significant economic downturn or major increase in interest rates may result in
issuers of lower-rated securities experiencing increased financial stress, which
would adversely affect their ability to service their principal, dividend and
interest obligations; meet projected business goals; and obtain additional
financing. In this regard, it should be noted that while the market for high
yield corporate bonds has been in existence for many years and from time to time
has experienced economic downturns, this market has experienced a significant
increase in the use of high yield corporate debt securities to fund highly
leveraged corporate acquisitions and restructurings. Past experience may not,
therefore, provide an accurate indication of future performance of the high
yield bond market, particularly during periods of economic recession.
Furthermore, expenses incurred to recover an investment in a defaulted security
may adversely affect the Fund's net asset value. Finally, while Fund Management
attempts to limit purchases of medium- and lower-rated securities to securities
having an established secondary market, the secondary market for such securities
may be less liquid than the market for higher-quality securities. The reduced
liquidity of the secondary market for such securities may adversely affect the
market price of, and ability of the Fund to value, particular securities at
certain times, thereby making it difficult to make specific valuation
determinations.

<PAGE>

For a detailed description of corporate bond ratings, refer to Appendix B
to the Statement of Additional Information.

REITs. Real estate investment trusts (REITs) are pooled investment
vehicles that invest primarily in income-producing real estate or real estate
related loans or interests. REITs are generally classified as either equity or
mortgage, or a combination of the two. An equity REIT invests the majority of
its assets directly in real estate and derives most of its income from rents. A
mortgage REIT invests the majority of its assets in real estate mortgages and
derives most of its income from interest payments. In addition to the risks
inherent in any investment in the real estate industry, investments in REITs
have certain unique risks. Equity REITs can be affected by changes in the value
of the underlying property owned by them; mortgage REITs are affected by the
quality of the credit extended. REITs are not diversified, and are subject to
the risks of real estate financing, including cash flow dependency and defaults
by borrowers. REITs attempt to qualify for beneficial tax treatment by
distributing 95% of their taxable income to their interest holders. If a REIT
fails to qualify for such beneficial tax treatment, it would be taxed as a
corporation, and distributions to its shareholders (including the Fund) would be
reduced. By investing in REITs indirectly through the Fund, a Fund shareholder
will bear not only a proportionate share of the expenses of the Fund, but also,
indirectly, similar expenses of the REIT. For taxable shareholders, a portion of
the dividends paid by a REIT may be considered return on capital and would not
currently be regarded as taxable income. Therefore, depending upon an
individual's tax bracket, the dividend yield may have a higher tax-effective
yield.

Mortgage-Backed Securities. The Fund may invest in mortgage-backed
securities issued or guaranteed by the U.S. government or federal agencies such
as Government National Mortgage Association ("GNMA"), Fannie Mae (formerly known
as the Federal National Mortgage Association) and Federal Home Loan Mortgage
Corporation ("FHLMC"). Some of these securities, such as GNMA certificates, are
backed by the full faith and credit of the U.S. Treasury while others, such as
FHLMC certificates, are not. Mortgage-backed securities represent interests in
pools of mortgages which have been purchased from loan institutions such as
banks and savings & loans, and packaged for resale in the secondary market.
Interest and principal are "passed through" to the holders of the securities.
The timely payment of interest and principal is guaranteed by a federal agency,
but the market value of the security is not guaranteed and will vary. The Fund
also may invest in mortgage-backed securities issued by private,

<PAGE>

non-governmental issuers such as banks and broker-dealers. When interest
rates drop, many home buyers choose to refinance their mortgages. These
resulting prepayments of the initial margin may shorten the average weighted
lives of mortgage-backed securities and may lower their returns. Prepayment
rates cannot be predicted with any accuracy. Under certain interest rate and
prepayment rate structures, it is possible that the Fund may fail to recoup the
full amount of its investment in mortgage-backed securities, despite any direct
or indirect governmental or agency guarantee. When the Fund reinvests amounts
received representing unscheduled prepayments of principal, it likely will
receive a rate of interest that is lower than the rate on then-existing
adjustable rate mortgage pass-through securities.

Collateralized mortgage obligations ("CMOs") may be issued by, among
others, U.S. government agencies and instrumentalities. CMOs are issued in
classes, with the principal of, and interest on, the underlying mortgage assets
allocated among the several classes. Each class is commonly referred to as a
"tranche," and is issued at a specific or adjustable interest rate. Each tranche
must be fully retired no later than its final distribution date. Generally,
interest is paid or accrued monthly. CMOs typically are collateralized by GNMA,
Fannie Mae or FHLMC certificates. They also may be collateralized by other
mortgage assets, including whole loans or private mortgage pass-through
securities. CMOs are paid from payments of principal and interest on collateral
of mortgaged assets and any reinvestment income thereon. Risks of investing in
CMOs, in addition to the general risks of investing in the real estate industry,
include failure of the counter-party to meet its commitments, the effects of
prepayment on mortgage cash flows and adverse interest rate changes. Investing
in the lower tranches of CMOs presents risks similar to investments in equity
securities. The yield of CMOs may be affected by adjustability of interest rates
and the possibility that prepayments of principal may be made significantly
earlier than the final distribution dates. These practices and risks are
discussed under "Investment Policies ^ And Restrictions" in the Statement of
Additional Information.

Interest Rate Futures Contracts. The Fund may buy and sell interest rate
futures contracts relating to U.S. government securities for the purpose of
hedging the value of its securities portfolio. These practices and their risks
are discussed under "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 are not subject to this 25%
limitation.

<PAGE>

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 dividends 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 that the Fund may experience difficulties in pursuing legal
remedies and collecting judgments.

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
The Netherlands, Portugal and Spain are presently members of the European
Economic and Monetary Union (the "EMU"). The EMU intends to establish a common
European currency for EMU countries which will be known as the "euro." Each
participating country presently plans to adopt the euro as its currency on
January 1, 1999. The old national currencies will be sub-currencies of the euro
until July 1, 2002, at which time the old currencies will disappear entirely.
Other European countries may adopt the euro in the future.

<PAGE>

Illiquid and Rule 144A Securities. The Fund may invest up to 15% of its
net assets, measured at the time of purchase, in securities which are illiquid
because they are subject to restrictions on their resale ("restricted
securities") or because, based upon the nature of the market for such
securities, they are not readily marketable. Investments in illiquid securities
involve the risk that the Fund may not be able to sell such securities at the
time or price desired. In addition, in order to resell a restricted security,
the Fund might have to bear the expense and incur the delays associated with
registration of the security. 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"), without regard to the
foregoing 15% limitation, if a liquid trading market exists. The Company's board
of directors has delegated to Fund Management 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.

Delayed Delivery or When-Issued Purchases. Up to 10% of the value of the
Fund's net assets may be committed to the purchase or sale of debt 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. No interest is payable to the Fund prior to settlement.

<PAGE>

agreement will be maintained as collateral 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 set
by the Company's board of directors.

Futures Contracts and Options. The Fund may enter into futures contracts
for hedging or other non-speculative purposes within the meaning and intent of
applicable rules of the Commodity Futures Trading Commission ("CFTC"). For
example, futures contracts may be purchased or sold to attempt to hedge against
the effects of interest or exchange rate changes on the Fund's current or
intended investments. If an anticipated decrease in the value of portfolio
securities occurs as a result of a general increase in interest rates or a
change in exchange rates, the adverse effects of such changes may be offset, in
whole or part, by gains on the sale of futures contracts. Conversely, an
increase in the cost of portfolio securities to be acquired caused by a general
decline in interest rates or a change in exchange rates may be offset, in whole
or part, by gains on futures contracts purchased by the Fund. The Fund will
incur brokerage fees when it purchases and sells futures contracts, and it will
be required to maintain margin deposits.

The Fund also may use options to buy or sell futures contracts or debt
securities. Such investment strategies will be used as a hedge and not for
speculation.

Put and call options on futures contracts or securities may be traded by
the Fund in order to protect against declines in the values of portfolio
securities or against increases in the cost of securities to be acquired.
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 changes sufficiently, the option may expire
without value to the Fund. The writing of covered options does not present less
risk than the trading of futures contracts and will constitute only a partial
hedge, up to the amount of the premium received. Additionally, if an option is
exercised, the Fund may suffer a loss on the transaction.

<PAGE>

The Fund may purchase put or call options in anticipation of changes in
interest rates or other factors which may adversely affect the value of its
portfolio or the prices of securities which the Fund anticipates purchasing at a
later date. The Fund may be able to offset such adverse effects on its
portfolio, in whole or in part, through the options purchased.

The Fund may, from time to time, also sell ("write") covered call options
or cash secured puts in order to attempt to increase the yield on its portfolio
or to protect against declines in the value of its portfolio securities. By
writing a covered call option, the Fund, in return for the premium income
realized from the sale of the option, gives up the opportunity to profit from a
price increase in the underlying security above the option exercise price, if
the price increase occurs while the option is in effect. In addition, the Fund's
ability to sell the underlying security will be limited while the option is in
effect. By writing a cash secured put, the Fund, which receives the premium, has
the obligation during the option period, upon assignment of an exercise notice,
to buy the underlying security at a specified price. A put is secured by cash if
the Fund maintains at all times cash, Treasury bills or other high grade
short-term obligations with a value equal to the option exercise price in a
segregated account with its custodian.

Although the Fund will enter into options and futures contracts solely for
hedging or other non-speculative purposes, within the meaning and intent of
applicable rules of the CFTC, their use does involve certain risks. For example,
a lack of correlation between the value of an instrument underlying an option or
futures contract and the assets being hedged, or unexpected adverse price
movements, could render the Fund's hedging strategy unsuccessful and could
result in losses. In addition, there can be no assurance that a liquid secondary
market will exist for any contract purchased or sold, and the Fund may be
required to maintain a position until exercise or expiration, which could result
in losses. Transactions in futures contracts and options are subject to other
risks as well.

The risks related to transactions in options and futures to be entered
into by the Fund are set forth in greater detail in the Statement of Additional
Information, which should be reviewed in conjunction with the foregoing
discussion.

<PAGE>

Investment Restrictions. Certain restrictions, which are identified 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. The Fund's ability to borrow money is limited to
borrowings from banks for temporary or emergency purposes, and reverse
repurchase agreements, in amounts as aggregated not exceeding 33-1/3% of total
assets.

For a further discussion of risks associated with an investment in the
Fund, see "Investment Policies And Restrictions" 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 on April 12, 1994, 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 investment
adviser and investment sub-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
various administrative services. IRAI is the Fund's sub-adviser and is primarily
responsible for managing the Fund's investments.

INVESCO, IRAI 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
and IRAI continued to operate under their existing names. AMVESCAP PLC had
approximately ^ $241 billion in assets under management as of ^ September 30,
1998. INVESCO was established in 1932 and, as of July 31, 1998, managed 14
mutual funds, consisting of 49 separate portfolios, with combined assets of
approximately $19.6 billion on behalf of 884,099 shareholders. IRAI, founded in
1983, is a registered investment adviser ^ who, as of July 31, 1998, managed
$5.1 billion of assets (both securities and direct investments in real estate)
for its clients. IRAI's clients include corporate plans and public pension
funds, as well as endowment and foundation accounts. It presently serves as
sub-adviser to ^ four other mutual fund portfolios as well as other
collective investment vehicles. As of July 31, 1998, the portfolio of direct
investments in real estate managed by IRAI for its clients contained ^ 187
properties totalling more than ^ 235 million square feet of commercial real
estate and ^ 25,000 apartment units.

<PAGE>

The Fund's investments are selected by a team of IRAI portfolio managers
that is collectively responsible for the investment decisions relating to the
Fund.

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 concerning
this policy.

Out of ^ the advisory fee, INVESCO pays to IRAI, as sub-adviser to the
Fund, a monthly fee based upon the average daily value of the Fund's net assets.
Based upon approval of the Company's board of directors at a meeting held May
14, 1998, the calculation of sub-advisory fees of the Fund ^ was changed from
33.33% of the advisory fee (0.25% of the Fund's average net assets) to 40% of
the advisory fee (0.30% of the Fund's average net assets.) No fee is paid by the
Fund to IRAI.

Under a Distribution Agreement, 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
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 July 31, 1998, the Fund paid INVESCO a fee equal to
0.04% of the Fund's average net assets (prior to the absorption of certain Fund
expenses).

<PAGE>

The Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of the Fund for the fiscal year
ended July 31, 1998, including investment management fees (but excluding
brokerage commissions, which are a cost of acquiring securities), amounted to
1.22% of the Fund's average net assets. Certain Fund expenses were absorbed
voluntarily by INVESCO in order to ensure that the Fund's total operating
expenses did not exceed 1.20% 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
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 brokers and 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.

<PAGE>

FUND PRICE AND PERFORMANCE

Determining Price. The value of your investment in the Fund may 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 the Fund's assets,
including accrued interest and dividends; ^ subtracting liabilities, including
accrued expenses; and ^ dividing that dollar amount by the total number of
shares outstanding.

Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise the Fund's total return and yield 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 periods 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 interim variations in performance that occur during the periods
cited.

The yield of the Fund refers to the income generated by an investment in
the Fund over a 30-day or one-month period, and is computed by dividing the net
investment income per share earned during the period by the net asset value per
share at the end of the period, then adjusting the result to provide for
semi-annual compounding. More information about the Fund's performance is
contained in the Company's Annual Report to Shareholders. You can get a free
copy by calling or writing IDI using the phone number or address on the back
cover 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 Real Estate
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.

<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 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.

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.

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 INVESCO
80217-3706. investment. incurs. If you are
Or you may send 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 telephone purchase
address: is 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 INVESCO. 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
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
telephone 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.
- --------------------------------------------------------------------------------
By Exchange
Between this and $1,000 to open a See "Exchange

another of the new account; $50 Policy^," page 12.
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 purchases requested
between two INVESCO by telephone.)
funds; call INVESCO
for further details
and the correct

form.
========================== ========================== =========================

<PAGE>

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 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) In order to prevent abuse of this policy to the disadvantage of
other shareholders, the Fund reserves the right to temporarily
or permanently terminate the exchange option of any shareholder
who requests more than four exchanges in a year, or at any time the
Fund determines the actions of the shareholder are
detrimental to Fund performance and shareholders. The Fund
will determine whether to do so based on a consideration
of both the number of exchanges any particular shareholder,
or group of shareholders, has requested and the time period
over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting
additional exchange requests. The Fund is intended to be a
long-term investment vehicle and is not designed to provide
investors the means of speculation on short-term market
movements.

5) Notice of all modifications or terminations that would affect all
Fund shareholders will be given at least 60 days prior to the
effective date of the change in policy, except in unusual
circumstances (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 suspended).

<PAGE>

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 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.

Under the Plan, the ^ Company'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 this period is
expanded to 24 months for obligations 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
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 the distribution of any of the mutual funds
advised by INVESCO. Subject to review by the Company's directors, payments made

<PAGE>

by the Fund under the Plan for compensation of marketing personnel, as
noted above, are based on an allocation formula designed to ensure that all such
payments are appropriate. IDI will bear any distribution- and service-related
expenses in excess of the amounts which are compensated pursuant to the Plan.
The Plan also authorizes any financing of distribution which may result from ^
INVESCO's IDI's use of fees received from the Fund for services rendered by
INVESCO, 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
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 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.

<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.

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.

- --------------------------------------------------------------------------------
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 account owners. the certificates
80217-3706. You may Payment will be must be sent to
also send your mailed to your INVESCO.
request by address of record
overnight courier or to a designated
to 7800 E. Union bank.
Ave., Denver, CO
80237.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
By Exchange

Between this and $1,000 to open a See "Exchange
another of the new account; $50 Policy" page ^ 12.
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, You must have at
request the on 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.

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

<PAGE>

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

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.

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 substantially all of
its net investment income, net capital gains and net gains from certain foreign
currency transactions, if any.

<PAGE>

Distribution of substantially 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
distribution policy and its tax status as a regulated investment company.

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. ^ During 1997, the Taxpayer Relief Act established a new
maximum capital gains tax rate of 20%. Depending on the holding period of the
asset giving rise to the gain, a capital gain was taxable at a maximum rate of ^
either 20% or 28%. Beginning January 1, 1998, ^ all long-term gains realized ^
on the sale of securities held ^ more than 12 months will be taxable at a
maximum rate of 20%. In addition, legislation signed in October of 1998 provides
that all capital gain distributions from a mutual fund paid to shareholders
during 1998 will be taxed at a maximum rate of 20%. Accordingly, capital gain
distributions paid in 1998 will be taxable at a maximum rate of 20%. Note that
the rate of capital gains tax is dependent on the shareholder's marginal tax
rate and may be lower than the above rates. 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 gains, in which event they
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 may be
treated as an expense of the Fund.

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

<PAGE>

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 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
gains distributions are automatically reinvested in additional shares of the
Fund at the net asset value on the payable date unless otherwise requested.

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 Fund 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

<PAGE>

shareholders. Directors may be removed by action of the holders of a
majority of the outstanding shares of the Fund. 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
investment objectives, 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
these options were implemented.

<PAGE>

INVESCO SPECIALTY FUNDS, INC.
INVESCO Realty Fund

A no-load mutual fund seeking to
provide above-average current
income.

PROSPECTUS
December 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>

PROSPECTUS
December 1, 1998

INVESCO S&P 500 INDEX FUND
Class I and Class II Shares

INVESCO S&P 500 Index Fund (the "Fund") seeks to provide both price
performance and income comparable to the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500" or the "Index"), which is composed of 500 selected
large capitalization stocks. In pursuing this objective, the Fund will invest in
the equity securities that comprise the S&P 500 in approximately the same
proportions that they are represented in the Index, and in other instruments
that are based upon the value of the Index.

The Fund offers two classes of shares. Class I shares are not subject to
any distribution fee; Class II shares are subject to an annual distribution fee
of 0.25% of the Fund's average daily net assets attributable to Class II shares.
Both Class I and Class II shares may be subject to a redemption fee.

The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, open-end managed no-load mutual fund consisting of seven separate
portfolios of investments. Separate prospectuses are available upon request from
INVESCO Distributors, Inc. for the Company's other funds: INVESCO Worldwide
Capital Goods Fund, INVESCO Worldwide Communications Fund, INVESCO European
Small Company Fund, INVESCO Latin American Growth Fund, INVESCO Asian Growth
Fund and INVESCO Realty Fund. Investors may purchase shares of any or all of the
Funds. Additional funds may be offered by the Company 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 December 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.

<PAGE>

TABLE OF CONTENTS
Page

ESSENTIAL INFORMATION........................................................2

ANNUAL FUND EXPENSES.........................................................3

FINANCIAL HIGHLIGHTS.........................................................5

INVESTMENT OBJECTIVE AND STRATEGY............................................6

INVESTMENT POLICIES AND RISKS................................................7

THE FUND AND ITS MANAGEMENT..................................................9

FUND PRICE AND PERFORMANCE..................................................11

HOW TO BUY SHARES...........................................................12

FUND SERVICES...............................................................15

HOW TO SELL SHARES..........................................................15

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS....................................17

ADDITIONAL INFORMATION......................................................18

<PAGE>

ESSENTIAL INFORMATION

Investment Goal And Strategy: The Fund seeks to provide price performance
and income comparable to that of the S&P 500, an index comprised of common
stocks of U.S. companies that is weighted to companies with large market
capitalizations. The Fund also may invest in other instruments whose value
depends upon or derives from the value of the S&P 500. There is no guarantee
that the Fund will meet its objective. See "Investment Objective And Strategy"
and "Investment Policies And Risks."

Designed For: Investors primarily seeking a competitive long-term
investment return through a diversified portfolio. While not 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
Gifts/Transfers 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: Since stock prices fluctuate on a daily basis, the Fund's
price per share varies daily. Stock prices may decline for extended periods.
Potential shareholders should consider this a long-term investment.

Risks: The Fund's investment strategy seeks to track the investment
composition and performance of the S&P 500 by investing in the common stocks
that comprise the Index in approximately the same proportions as they are
represented in the S&P 500 Index or in other instruments whose value depends
upon or derives from the value of the S&P 500. Accordingly, the Fund does not
employ traditional methods of investment management to select the securities
held in its portfolio. Since the Fund will attempt to track the Index, when the
overall stock market rises or falls, the price of shares in the Fund can be
expected to rise and fall at the same time. The Fund does not eliminate market
risk; rather, it attempts to ensure that its returns will be comparable to those
of the overall stock market. 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 INVESCO Specialty
Funds, Inc. 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. World Asset Management ("World") serves as
sub-adviser. Together, INVESCO and World constitute "Fund Management." INVESCO
Distributors, Inc. ("IDI"), founded in 1997 as a wholly-owned subsidiary of
INVESCO, is the Fund's distributor.

<PAGE>

INVESCO and IDI are subsidiaries of AMVESCAP PLC, an international
investment management company that managed approximately ^ $241 billion in
assets as of ^ September 30, 1998. AMVESCAP PLC is based in London with money
managers located in Europe, North America, South America and the Far East.

Under an agreement with INVESCO, World serves as sub-advisor to the Fund.
In that capacity, World has the primary responsibility, under the supervision of
INVESCO, for providing portfolio management services to the Fund. See "The Fund
And Its Management."

This Fund offers all of the following services at no charge:

Class I and II Shares
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions

Class II Shares Only
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: For Class I shares, the minimum initial
investment is $250,000. For Class II shares, the minimum initial investment is
$5,000 for individual accounts and $2,000 for IRAs which is waived for regular
investment plans, including EasiVest and Direct Payroll Purchase.

Minimum Subsequent Investment: For Class I shares, the minimum subsequent
investment is $25,000 and for Class II shares, the minimum subsequent investment
is $1,000. (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, other than a fee to redeem or exchange shares held less than three
months. See "Shareholder Transaction Expenses." The Fund is authorized to pay a
Rule 12b-1 distribution fee of one quarter of one percent of the average net
assets attributable to Class II shares of the Fund each year. See "How To Buy
Shares - Distribution Expenses."

<PAGE>

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, INVESCO voluntarily
reimburses the Fund for certain expenses in excess of 0.30% of average net
assets relating to Class I shares and 0.55% of average net assets relating to
Class II shares.

Class I Class II
------- --------
Shareholder Transaction Expenses

Sales load "charge" on purchases None None
Sales load "charge" on reinvested
dividends None None
Redemption fees 1.00%* 1.00%*
Exchange fees 1.00%* 1.00%*

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

Management Fee 0.25%~ 0.25%~
12b-1 Fees None 0.25%~
Other Expenses (1)(2) 0.21%~ 0.12%~
Total Fund Operating Expenses (2) 0.46%~ 0.62%~

~Annualized

(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 an expense offset arrangement. However, as a result of an SEC requirement
for mutual funds to state their total operating expenses without crediting any
such expense offset arrangements, the figures shown above do not reflect these
reductions. See "The Fund And Its Management."

(2) Certain Fund expenses will be absorbed voluntarily by INVESCO in order to
ensure that expenses for the Fund will not exceed 0.30% of average daily net

<PAGE>

assets relating to Class I shares and 0.55% of average daily net assets relating
to Class II shares. If such voluntary expense limits were not in effect, the
Fund's "Other Expenses" and "Total Fund Operating Expenses" for the period
December 23, 1997 (commencement of ^ operations) through July 31, 1998, would
have been 2.26% and 2.51%, respectively, of Class I shares average net assets
and 1.21% and 1.71%, respectively, of Class II shares average net assets.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

Class I $5 $15 $26 $58
Class II $6 $20 $35 $77

Because the Fund pays a 12b-1 distribution fee on Class II shares,
investors who own Class II shares of the Fund 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 for the period December 23, 1997 through July
31, 1998 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 back
cover of this Prospectus. The Annual Report also contains more information about
the Fund's performance.

Period Period
Ended Ended
July 31 July 31
---------- ----------
1998(a) 1998(a)
Class I Class II
PER SHARE DATA
Net Asset Value - Beginning of Period $10.00 $10.00
---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.11 0.07
Net Gains on Securities (Both
Realized and Unrealized) 1.98 2.14
---------- ----------
Total from Investment Operations 2.09 2.21
LESS DISTRIBUTIONS FROM NET
INVESTMENT INCOME 0.08 0.07
---------- ----------
Net Asset Value - End of Period $12.01 $12.14
========== ==========

TOTAL RETURN(b) 20.93%(c) 22.11%(c)

RATIOS
Net Assets - End of Period
($000 Omitted) $3,259 $15,065
Ratio of Expenses to Average
Net Assets(d)(e) 0.46%(f) 0.62%(f)
Ratio of Net Investment Income to
Average Net Assets(e) 1.96%(f) 1.52%(f)
Portfolio Turnover Rate 0%(g) 0%(g)

<PAGE>

(a) From December 23, 1997, commencement of investment operations, to July 31,
1998.

(b) The applicable redemption fees are not included in the Total Return
calculation.

(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any offset arrangement.

(e) Various expenses of the Fund were voluntarily absorbed by INVESCO for
the period ended July 31, 1998. If such expenses had not been voluntarily
absorbed, ^ Ratio of Expenses to Average Net Assets would have been 2.51%
(annualized) for Class I and 1.71% (annualized) for Class II and ^ Ratio
of Net Investment Income (Loss) to Average Net Assets would have been
(0.09%) (annualized) for Class I and 0.42% (annualized) for
Class II.

(f) Annualized

(g) Portfolio Turnover Rate calculated to less than 0.10% for the period ended
July 31, 1998.

<PAGE>

INVESTMENT OBJECTIVE AND STRATEGY

The Fund seeks to track the aggregate price and income performance of the
S&P 500, an index comprised of common stocks of U.S. companies that emphasizes
large-capitalization companies. This investment objective is fundamental and
cannot be changed without the approval of the Fund's shareholders. The Fund
seeks to achieve its objective by investing in the common stocks that comprise
the Index in approximately the same proportions as they are represented in the
S&P 500. The Fund also may invest in other instruments that are based upon the
value of the Index, including Standard & Poor's Depository Receipts ("SPDRs"),
and it may also purchase and sell futures contracts and options on the Index.
There is no assurance that the Fund's investment objective will be met.

The S&P 500 is comprised of 500 common stocks that are chosen by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") for inclusion in
the Index. As of July 31, 1998, the S&P 500 represented approximately ^ 75% of
the market capitalization of publicly-traded common stocks in the United States.
The Index is weighted by market value. Because of this weighting, the 144
largest companies in the S&P 500 accounted for approximately ^ 78% of the Index
at July 31, 1998. Typically, companies included in the S&P 500 are dominant
firms in their industries, and approximately ^ 91% of them trade on the New York
Stock Exchange.

The Fund is managed through the use of an "indexing" investment style,
which attempts to track the investment composition of the S&P 500 through
statistical methods. Therefore, the Fund does not employ typical methods of
mutual fund investment management, such as selecting securities on the basis of
economic, financial or market analysis. The Fund is managed without regard to
potential tax ramifications.

The Fund cannot precisely duplicate the investment composition or
performance of the Index because, unlike the Fund, the Index is unmanaged and
has no expenses. Moreover, the Fund must take into account sales and redemptions
of Fund shares and other factors that are inapplicable to the Index itself.
Although the Fund at any given time may not hold securities of all 500 companies
represented in the Index, and at commencement of operations it will hold
securities of a relatively small number of those companies. As assets in the
Fund increase, it normally will hold securities of at least 95% of those
companies. Because at any given time the Fund likely will not precisely mirror
the S&P 500, the Fund would ordinarily place heavier concentration on industry
sectors dominated by large corporations, such as communications or automobiles.
Until the Fund's portfolio is fully invested (except for cash), the Fund will
attempt to identify sectors that are underrepresented in the Fund's portfolio
and purchase balancing securities until the Fund's portfolio sector weightings
closely match those of the Index.

<PAGE>

Redemptions of large numbers of shares of the Fund could reduce the number
of issuers represented in the Fund's portfolio, which could adversely affect the
accuracy with which the Fund tracks the performance of the S&P 500.

The Fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes no
representation or warranty, express or implied, to the owners of the Fund or any
member of the public regarding the advisability of investing in securities
generally or in the Fund particularly or the ability of the S&P 500 to trace
general stock market performance. S&P's only relationship to the Company is the
licensing of certain trademarks and trade names of S&P and of the S&P 500 which
is determined, composed and calculated by S&P without regard to the Company or
the Fund. S&P has no obligation to take the needs of the Company or the owners
of the Fund into consideration in determining, composing or calculating the S&P
500. S&P is not responsible for and has not participated in the determination of
the prices and amount of the Fund or the timing of the issuance or sale of Fund
shares or in the determination of calculation of the equation by which the Fund
is to be converted into cash. S&P has no obligation or liability in connection
with administration, marketing or trading of the Fund.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE COMPANY, OWNERS OF THE FUND, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE S&P 500 OR ANY DATA INCLUDED THEREIN. S&P
MAKES NO EXPRESS OR IMPLIED WARRANTY, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.

INVESTMENT POLICIES AND RISKS

Investors generally should expect to see the price per share of the Fund
vary with movements in the securities markets, changes in economic conditions
and other factors. Due to the composition of the Index, the Fund invests in many
different companies in a variety of industries; this diversification reduces the
Fund's overall exposure to particular investment and market risks, but cannot
eliminate them.

<PAGE>

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 may be affected by
remediation costs, which may be substantial. The Fund's investments may be
adversely affected.

Limited Portfolio. While the S&P 500 includes the majority of large market
capitalization stocks in the U.S. stock market, it excludes the stocks of most
medium and smaller sized companies that comprise the remaining capitalization of
the U.S. stock market. Similarly, it excludes securities of most foreign
issuers. The Fund's portfolio, therefore, will exclude securities excluded from
the Index. While the large capitalization stocks that comprise the S&P 500
historically have shown less price volatility than the stocks excluded from the
Index and the Fund, the excluded stocks may or may not offer better price
performance and income than those included in the Index and the Fund.

From time to time, the Fund may receive securities that are not included
in the Index as a result of a corporate reorganization of a S&P 500 company.
Such securities will be disposed of in due course in accordance with the Fund's
investment objective. Conversely, if an issuer included in the S&P 500 has a
change in rank within the Index, or is dropped from it entirely, the Fund may be
required to sell some or all of the common stock of that issuer held by the
Fund. Such sales may result in the Fund realizing lower prices, or losses, that
might not have been incurred if the Fund were not required to effect such sales.

Indexing. In the event of a decline in the S&P 500, the Fund and its
shares will sustain a similar decline. Since the Fund's investment objective is
to track the aggregate price and income performance of the Index, the Fund will
not be actively managed in an attempt to reduce the risk inherent in the Index
or the stock market. Due to purchases and sales of portfolio securities to meet
investor purchases and redemptions, the Fund will not have a 100% correlation to
the Index. At commencement of operations, the Fund expects that the composition
of its portfolio will have approximately an 80% correlation to the composition
of the S&P 500. Under ordinary circumstances, the Fund expects that the
composition of its portfolio will have at least a 95% correlation to the
composition of the S&P 500.

<PAGE>

Investment Company Securities. To manage its daily cash positions, the
Fund may invest in securities issued by other investment companies that invest
in short-term debt securities and seek to maintain a net asset value of $1.00
per share ("money market funds"). The Fund also may invest in SPDRs and shares
of other investment companies that are structured to seek a similar correlation
to the performance of the S&P 500. SPDRs are traded on the American Stock
Exchange. SPDR holders such as the Fund are paid a "Dividend Equivalent Amount"
that corresponds to the amount of cash dividends accruing to the securities held
by the SPDR Trust, net of certain fees and expenses. Therefore, the dividend
yield of SPDRs may be less than that of the Index. The Investment Company Act of
1940 limits investments in securities of other investment companies, such as the
SPDR Trust. These limitations include, among others, that, subject to certain
exceptions, no more than 10% of the Fund's total assets may be invested in
securities of other investment companies, and, with respect to 75% of the Fund's
total assets, no more than 5% of its total assets may be invested in the
securities of any one investment company. As a shareholder of another investment
company, the Fund would bear its pro rata portion of the other investment
company's expenses, including advisory fees, in addition to the expenses the
Fund bears directly in connection with its own operations.

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 instrument if the prior owner defaults on its repurchase obligation. To
reduce that risk, securities that are the subject of the repurchase agreement
will be maintained as collateral 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 set 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.

<PAGE>

For example, futures contracts may be purchased or sold to attempt to
hedge against a price movement in the S&P 500 at times when the Fund is not
fully invested in stocks included in the S&P 500. In such circumstances,
purchasing a futures contract may reduce the potential that cash inflows to the
Fund will interfere with its ability to track the Index, since futures contracts
may serve as a temporary substitute for stocks until the stocks can be purchased
by the Fund in a cost-effective manner. Inasmuch as futures contracts require a
comparatively small initial margin deposit, the Fund may be able to be fully
exposed to price movements in the S&P 500 while still keeping a cash reserve to
meet potential redemptions.

The Fund also may use options to buy or sell futures contracts with
respect to the Index or securities comprising the Index. Put and call options on
futures contracts or securities may be traded by the Fund in order to protect
against declines in the values of portfolio securities or against increases in
the cost of securities to be acquired. 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 changes
sufficiently, the option may expire without value to the Fund. The writing of
covered options does not present less risk than the trading of futures contracts
and will constitute only a partial hedge, up to the amount of the premium
received. Additionally, if an option is exercised, the Fund may suffer a loss on
the transaction.

The Fund also may purchase put or call options on the Index and on the
Standard & Poor's 100 Composite Index (the "S&P 100") in order to have fuller
exposure to price movements in the Index pending investment of purchase orders
or to maintain liquidity in anticipation of potential Fund shareholder
redemptions.

<PAGE>

the obligation during the option period, upon assignment of an exercise
notice, to buy the underlying security at a specified price. A put is secured by
cash if the Fund maintains at all times cash, Treasury bills or other liquid
obligations with a value equal to the option exercise price in a segregated
account with its custodian.

Although the Fund will enter into options and futures contracts solely for
hedging, liquidity or other non-speculative 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 the Fund's hedging strategy
unsuccessful and could result in losses. In addition, there can be no assurance
that a liquid secondary market will exist for any contract purchased or sold,
and the Fund may be required to maintain a position until exercise or
expiration, which could result in losses. Transactions in futures contracts and
options are subject to other risks as well.

Portfolio Turnover. Although the Fund seeks to invest for the long term,
the Fund retains the right to sell portfolio securities regardless of the length
of time they have been in the Fund's portfolio. The indexing method of portfolio
management is expected to generate a portfolio turnover rate of less than 50%,
which would occur if one-half of the Fund's portfolio securities were sold
within one year. Ordinarily, portfolio investments are sold by the Fund only to
reflect changes in the S&P 500 (for example, mergers involving companies
included in the Index, or new weightings of securities within the Index) or to
accommodate cash flows in and out of the Fund while attempting to maintain the
similarity of the Fund's portfolio to the composition of the S&P 500.

Investment Restrictions. Certain restrictions, which are identified in the
Statement of Additional Information, are fundamental and 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. The Fund's ability to borrow
money is limited to borrowings from banks for temporary or emergency purposes in
amounts not exceeding 33-1/3% of net assets.

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.

<PAGE>

THE FUND AND ITS MANAGEMENT

The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission a diversified, open-end, management investment company. It
was incorporated on April 12, 1994, under the laws of Maryland.

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 had approximately ^
$241 billion in assets under management as of ^ September 30, 1998. INVESCO was
established in 1932 and, as of July 31, 1998, managed 14 mutual funds,
consisting of 49 separate portfolios, with combined assets of approximately
$19.6 billion on behalf of 884,099 shareholders.

World is the Fund's sub-adviser and is primarily responsible for managing
the Fund's investments. Under the terms of the sub-advisory agreement, World
provides the Fund with certain recordkeeping and management services in
connection with the Fund, including monitoring the Index and determining which
securities to purchase and sell in order to keep the Fund's portfolio in balance
with the Index.

World is a general partnership organized by Munder Capital Management
("MCM"), a general partnership formed in December 1994 which engages in
investment management and advisory services. As of ^ July 31, 1998, World's
total assets under management were approximately ^ $16.9 billion (including
index mutual fund portfolios), and MCM's total assets under management were
approximately ^ $48.2 billion. The principal business address for World is 255
Brown Street Centre, 2nd Floor, Birmingham, Michigan 48009.

<PAGE>

The Fund's investments are selected by a team of World portfolio managers
that is collectively responsible for the investment decisions relating to the
Fund.

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 0.25% of the Fund's average net assets. For
the period ended July 31, 1998, investment advisory fees paid by the Fund
amounted to 0.25% (annualized) of the Fund's average net assets. Out of this
fee, INVESCO pays to World, as sub-adviser to the Fund, an amount computed at
the following annual rates: 0.07% on the first $10 million of the Fund's average
net assets, 0.05% on the next $40 million of the Fund's average net assets, and
0.03% on the Fund's average net assets in excess of $50 million. No fee is paid
by the Fund to World.

Under an Administrative Services Agreement, INVESCO handles additional
administrative, recordkeeping and internal sub-accounting services for the Fund.
For the period December 23, 1997 (commencement of operations) through July 31,
1998, INVESCO was paid a fee equal to 0.07% of the Fund's average net assets
(prior to the absorption of certain Fund expenses).

<PAGE>

The expenses of each class of the Fund, which are accrued daily, are
deducted from total income before dividends are paid. Total expenses of the Fund
for the period December 23, 1997 (commencement of operations) through July 31,
1998, including investment management fees (but excluding brokerage commissions,
which are a cost of acquiring securities), amounted to 0.46% (annualized) of the
Fund's average net assets held in Class I shares and 0.62% (annualized) of the
Fund's average net assets held in Class II shares. Certain Fund expenses were
absorbed voluntarily by INVESCO in order to ensure that the Fund's total
operating expenses did not exceed 0.30% for Class I shares and 0.55% for Class
II shares. 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
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 brokers and 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.

<PAGE>

FUND PRICE AND PERFORMANCE

Determining Price. The value of your investment in the Fund may vary
daily. The price per share of each class of the Fund is also known as the Net
Asset Value ("NAV"). INVESCO prices each class of 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 for each class of shares is calculated separately
by adding together the current market value of all of the class' assets,
including accrued interest and dividends; subtracting liabilities, including
accrued expenses attributable to the class; and dividing that dollar amount by
the total number of shares of the class outstanding.

The yield of the Fund refers to the income generated by an investment in
the Fund over a 30-day or one-month period, and is computed by dividing the net
investment income per share earned during the period by the net asset value per
share at the end of the period, then adjusting the result to provide for
semi-annual compounding. 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 cover 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 large-cap
funds and/or S&P 500 indices, 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 Fund offers two classes of shares. Each class represents an identical
interest in the investment portfolio of the Fund and has the same rights, except
that each class bears its own distribution and shareholder servicing charges.
The income attributable to each class and the dividends payable on the shares of
each class will be reduced by the amount of the distribution fee or service fee,
if applicable, payable by that class.

In deciding which class of shares to purchase, you should consider, among
other things, (i) the length of time you expect to hold your shares, (ii) the
charges of the distribution plan applicable to the class, if any, and (iii) the
eligibility requirements that apply to purchases of a particular class.

Generally, the minimum initial investment in Class I shares is $250,000
and the minimum subsequent investment is $25,000, except that INVESCO may permit
a lesser amount to be invested in the Fund under a federal income tax-deferred
retirement plan (other than an IRA, or under a group investment plan qualifying
as a sophisticated investor. Generally, the minimum initial investment in Class
II shares is $5,000 ($2,000 for IRA accounts) and the minimum subsequent
investment is $1,000.

The ^ chart on page 13 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 when you do so
directly through INVESCO, although in some circumstances a fee may be charged on
exchanges or redemptions. 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 and which class of shares
you wish to purchase.

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.

<PAGE>

HOW TO BUY SHARES
================================================================================
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
By Check
Mail to: Class I If your check does
INVESCO Funds $250,000; $25,000 not clear, you will
Group, Inc. for each subsequent be responsible for
P.O. Box 173706 investment. any related loss
Denver, CO the Fund or INVESCO
80217-3706. Class II incurs. If you are
Or you may send $5,000 for regular already a
your check by account; shareholder in the
overnight courier $2,000 for an IRA; INVESCO funds, the
to: 7800 E. Union $1,000 minimum for Fund may seek
Ave., Denver, CO each subsequent reimbursement from
80237. investment. your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or
Wire
Call 1-800-525-8085 Class I Payment must be
to request your $250,000; $25,000 received within 3
purchase. Then send for each subsequent business days, or
your check by investment. the transaction may
overnight courier be canceled. If a
to our street Class II telephone purchase
Address: $5,000 for regular is canceled due to
7800 E. Union Ave., account; nonpayment, you
Denver, CO 80237. $2,000 for an IRA; will be responsible
Or you may transmit $1,000 minimum for for any related
your payment by each subsequent loss the Fund or
bank wire (call investment. 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 Class I Like all regular
the fund EasiVest and Direct investment plans,
application, or Payroll Purchase neither EasiVest
call us for the plans are not nor Direct Payroll
correct form and available to Class Purchase ensures a
more details. I purchasers or profit or protects
Investing the same shareholders. against loss in a
amount on a monthly falling market.
basis allows you to Class II Because you'll
buy more shares $50 per month for invest continually,
when prices are low EasiVest; $50 per regardless of
and fewer shares pay period for varying price
when prices are Direct Payroll levels, consider
high. This Purchase. You may your financial
"dollar-cost start or stop your ability to keep
averaging" may help regular investment buying through low
offset market plan at any time, price levels. And
fluctuations. Over with two weeks' remember that you
a period of time, notice to INVESCO. will lose money if
your average cost You must fulfill you redeem your
per share may be the minimum initial shares when the
less than the investment market value of all
actual average requirements your shares is less
price per share. ($5,000 for regular than their cost.
account; $2,000 for
an IRA) before
using one of these
options.

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

<PAGE>

- --------------------------------------------------------------------------------
By PAL
Your "Personal Class I Be sure to write
Account Line" is $25,000 down the
available for confirmation number
subsequent Class II provided by PAL.
purchases and $1,000; $250 for an Payment must be
exchanges 24 hours IRA. received within 3
a day. Simply call business days, or
1-800-424-8085. the transaction may
be canceled. If a
telephone 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 Class I See "Exchange
another of the $250,000 to open a Policy" below.
INVESCO funds. Call new account;
1-800-525-8085 for $25,000 for written
prospectuses of requests to
other INVESCO purchase additional
funds. You may also shares. The
establish an ^ exchange minimum is
automatic monthly $1,000 for
exchange service purchases requested
between two INVESCO by telephone.
funds; call INVESCO
for further details Class II
and the correct $5,000 to open a
form. new account; $2,000
for IRAs; $1,000 for
written requests to purchase
additional shares. The
exchange minimum is $1,000
for purchases requested by telephone.

================================================================================

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.

Upon the exchange of shares of the Fund held less than three months (other
than shares acquired through reinvestment of dividends or other distributions),
a fee of 1% of the current net asset value of the shares will be assessed and
retained by the Fund for the benefit of remaining shareholders. This fee is
intended to encourage long-term investments in the Fund, to avoid transaction
and other expenses caused by early redemptions, and to facilitate portfolio
management. The fee is not a deferred sales charge, is not a commission paid to
INVESCO, or otherwise results in a direct payment to INVESCO. The fee applies to
redemptions from the Fund and exchanges into any of the other no-load mutual
funds that are advised by INVESCO and distributed by IDI. The Fund will use the
"first in, first out" method to determine the three-month holding period. Under
this method, the date of exchange will be compared with the earliest purchase
date of shares held in the account. If this method results in the redemption of
shares deemed held for less than three months, the redemption fee will be
assessed against such shares. INVESCO reserves the right, in the sole
determination of INVESCO, to waive the redemption fee.

<PAGE>

Please note these policies regarding exchanges of Fund shares:

1) The fund accounts must be identically registered.

2) You may make four exchanges out of each fund during each calendar
year, subject to a charge of 1% of the NAV of Fund shares held for
less than three months discussed above.

4) In order to prevent abuse of this policy to the disadvantage of
other shareholders, the Fund reserves the right to temporarily or
permanently terminate the exchange option of any shareholder who
requests more than four exchanges in a year, or at any time the Fund
determines the actions of the shareholder are detrimental to Fund
performance and shareholders. The Fund will determine whether to do
so based on a consideration of both the number of exchanges any
particular shareholder, or group of shareholders, has requested and
the time period over which those exchange requests have been made,
together with the level of expense to the Fund which will result
from effecting additional exchange requests. The Fund is intended
to be a long-term investment vehicle and is not designed to provide
investors the means of speculation on short-term market movements.

(5) Notice of all modifications or terminations that would affect all
Fund shareholders will be given at least 60 days prior to the
effective date of the change in policy, except in unusual
circumstances (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 suspended).

<PAGE>

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
Class II 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 electronically to the Fund's Transfer
Agent 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 and
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
attributable to the Fund's Class II shares. 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 this period is expanded to 24 months for obligations
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 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

<PAGE>

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
distribution which may result from ^ INVESCO's or IDI's use of fees received
from the Fund for services rendered by INVESCO, 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.

There is no distribution fee applicable to Class I shares.

FUND SERVICES

Shareholder Accounts. INVESCO will maintain a separate 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.

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
capital gain distributions automatically reinvested in another INVESCO fund or
paid by check (minimum of $10.00).

<PAGE>

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 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 following chart shows several convenient ways to redeem your Fund
shares. Shares of each class 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.

Upon the redemption of shares held less than three months (other than
shares acquired through reinvestment of dividends or other distributions), a fee
of 1% of the current net asset value of the shares will be assessed and retained
by the Fund for the benefit of remaining shareholders. This fee is intended to
encourage long-term investments in the Fund, to avoid transaction and other
expenses caused by early redemptions, and to facilitate portfolio management.
The fee is not a deferred sales charge, is not a commission paid to INVESCO, and
does not benefit INVESCO in any way. The fee applies to redemptions from the
Fund and exchanges into any of the other no-load mutual funds that are advised
by INVESCO and distributed by IDI. The Fund will use the "first in, first out"
method to determine the three-month holding period. Under this method, the date
of redemption or exchange will be compared with the earliest purchase date of
shares held in the account. If this holding period is less than three months,
the redemption/exchange fee will be assessed on the current net asset value of
the shares being redeemed. INVESCO reserves the right, in its sole discretion,
to waive the redemption fee.

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

<PAGE>

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

By Telephone
Call us toll-free Class I This option is not
at 1-800-525-8085. $1,000 (or, if available for
less, full shares held in
liquidation of the IRAs.
account) for a
redemption check;
no minimum for a
wire to bank of
record.

Class II $250 (or,
if less, full liquidation
of the account) for a
redemption check; $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 the discretion of
INVESCO.
- --------------------------------------------------------------------------------

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 account owners. the certificates
80217-3706. You may Payment will be must be sent to
also send your mailed to your INVESCO.
request by address of record
overnight courier or to a
to 7800 E. Union pre-designated
Ave., Denver, CO bank.
80237.
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
By Exchange
Between this and Class I See "Exchange
another of the $250,000 to open a Policy," page 12.
INVESCO funds. Call new account in the
1-800-525-8085 for Fund; $1,000 to
prospectuses of open a new account
other INVESCO in the other
funds. You may also INVESCO funds;
establish an $25,000 for written
automatic monthly requests to
exchange service purchase additional
between two INVESCO shares for an
funds; call INVESCO existing account.
for further details
and the correct form. Class II
--------
$5,000 to open a
new account in the
Fund; $1,000 to open
a new account in the
other INVESCO funds;
$2,000 for IRAs;
$1,000 for written
requests to purchase
additional shares for an
existing account. The
exchange minimum
is $1,000 for purchases
requested by telephone.
- --------------------------------------------------------------------------------
Periodic Withdrawal
Plan
You may call us to $100 per payment, You must have at
request the on 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.

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

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

Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $50,000 for Class I shares, or
$5,000 for Class II shares ($2,000 for IRAs) 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 the above minimums.

<PAGE>

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS

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. ^ During 1997, the Taxpayer Relief Act established a new
maximum capital gains tax rate of 20%. Depending on the holding period of the
asset giving rise to the gain, a capital gain was taxable at a maximum rate of ^
either 20% or 28%. Beginning January 1, 1998, ^ all long-term gains realized ^
on the sale of securities held ^ more than 12 months will be taxable at a
maximum rate of 20%. In addition, legislation signed in October of 1998 provides
that all capital gain distributions from a mutual fund paid to shareholders
during 1998 will be taxed at a maximum rate of 20%. Accordingly, all capital
gain distributions paid in 1998 will be taxable at a maximum rate of 20%. Note
that the rate of capital gains tax is dependent on the shareholder's marginal
tax rate and may be lower than the above rates. 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 indicated above.

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

<PAGE>

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.

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 shares of the Fund at the net
asset value on the payable date unless otherwise requested.

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, except that only shares of a class are entitled to vote
on matters concerning only that class of shares, and holders of each class of
shares have separate voting rights on matters in which the interests of the
class differ from the interests of the other class, to the extent required by
applicable law, regulation and regulatory interpretation. The Company is not

<PAGE>

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 Fund will assist shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940.

<PAGE>

INVESCO SPECIALTY FUNDS, INC.
INVESCO S&P 500 Index Fund

A no-load mutual fund seeking to
provide price performance and income
comparable to the Standard & Poor's
500 Composite Stock Index.

PROSPECTUS
December 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>

PROSPECTUS
December 1, 1998

INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO WORLDWIDE COMMUNICATIONS FUND

INVESCO Worldwide Capital Goods Fund (the "Capital Goods Fund") seeks to
achieve capital appreciation by investing, under normal circumstances, at least
65% of its total assets in companies that are primarily engaged in the design,
development, manufacture, distribution, sale or service of capital goods, or in
the mining, processing, manufacture or distribution of raw materials and
intermediate goods used by industry and agriculture.

INVESCO Worldwide Communications Fund (the "Communications Fund") seeks to
achieve a high total return on investment through capital appreciation and
current income by investing, under normal circumstances, at least 65% of its
total assets in companies that are primarily engaged in the design, development,
manufacture, distribution or sale of communications services and equipment. Up
to 35% of the Communications Fund's assets will be invested, under normal
circumstances, in companies that are engaged in developing, constructing or
operating communications infrastructure projects throughout the world, or in
supplying equipment or services to such companies.

Under normal circumstances, each Fund will invest at least 65% of its
total assets in issuers domiciled in at least three countries, one of which may
be the United States, although the Funds' investment adviser expects each Fund's
investments to be allocated among a larger number of countries. The percentage
of each Fund's assets invested in securities of issuers domiciled in the United
States normally will be higher than that invested in securities issued by
companies in any other single country. However, it is possible that at times a
Fund may have 65% or more of its total assets invested in foreign securities.
The Funds have adopted certain investment policies which may expose the Funds to
increased risks or costs. See "Risk Factors" and "Investment Objectives and
Policies-Portfolio Turnover."

Each Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, managed, no-load mutual fund consisting of seven separate
portfolios of investments. This Prospectus relates to shares of the Capital
Goods and Communications Funds. Separate Prospectuses are available upon request
from INVESCO Distributors, Inc. for the Company's other funds^: INVESCO European
Small Company Fund, INVESCO Latin American Growth Fund, INVESCO Asian Growth
Fund, INVESCO Realty Fund and INVESCO S&P 500 Index Fund. Investors may purchase
shares of any or all of the Funds. Additional funds may be offered in the
future.

<PAGE>

This Prospectus provides you with the basic information you should know
before investing in the Capital Goods Fund or Communications Fund. You should
read it and keep it for future reference. A Statement of Additional Information
dated December 1, 1998, containing further information about the Funds 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., Post Office 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, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES OF THE FUNDS ARE
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.

<PAGE>

TABLE OF CONTENTS
Page

ANNUAL FUND EXPENSES.........................................................2

FINANCIAL HIGHLIGHTS.........................................................4

PERFORMANCE DATA.............................................................6

INVESTMENT OBJECTIVES AND POLICIES...........................................6

RISK FACTORS..............................................................^ 10

THE FUNDS AND THEIR MANAGEMENT............................................^ 13

HOW SHARES CAN BE PURCHASED...............................................^ 14

SERVICES PROVIDED BY THE FUNDS............................................^ 16

HOW TO REDEEM SHARES......................................................^ 18

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS..................................^ 19

ADDITIONAL INFORMATION....................................................^ 21

<PAGE>

ANNUAL FUND EXPENSES

The Funds are no-load; there are no fees to purchase, exchange or redeem
shares. The Funds are authorized to pay a Rule 12b-1 distribution fee of one
quarter of one percent of each Fund's average net assets each year. (See "How
Shares Can Be Purchased -Distribution Expenses.") Lower expenses benefit Fund
shareholders by increasing ^ each Fund's total return.

Annual operating expenses are calculated as a percentage of each Fund's
average annual net assets. To keep expenses competitive, INVESCO Funds Group,
Inc. ("INVESCO") the Funds' adviser, voluntarily reimburses the Capital Goods
and Communications Funds for certain expenses in excess of 2.00% and 2.00%,
respectively (excluding excess amounts that have been offset by the expense
offset arrangements described below), of each Fund's average net assets.

Capital Goods Communications
Fund Fund
Shareholder Transaction Expenses
Sales load "charge" on purchases None None
Sales load "charge" on reinvested
dividends None None
Redemption fees None None
Exchange fees None None

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

Management Fee 0.65% 0.65%
12b-1 Fees 0.25% 0.25%
Other Expenses ^ 1.07% 0.42%(1)
Transfer Agency ^ Fee(1)(2) 0.48% 0.28%
General Services,

Administrative 0.59% 0.14%
Services, Registration,

^ Postage(1)(3)

Total Fund Operating

^ Expenses(4) 1.97%(1) 1.32%

(1) It should be noted that the Fund's actual total operating expenses were
lower than the figures shown because the Fund's distribution, transfer agency
and 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 reductions for periods prior to the fiscal year ended July 31, 1996. See
"The Funds And Their Management."

<PAGE>

(2)^ Consists of the transfer agency fee described under "Additional
Information - Transfer and Dividend Disbursing Agent."

^(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and independent accountants, securities pricing
services, costs of administrative services furnished under an Administrative
Services Agreement, costs of registration of Fund shares under applicable laws,
and costs of printing and distributing reports to shareholders.

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

Example

A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Capital Goods Fund $20 $62 $107 $231
Communications Fund $14 $42 $73 $160

The purpose of the foregoing expense table and Example is to assist
investors in understanding the various costs and expenses that an investor in a
Fund will bear directly or indirectly. Such expenses are paid from the
respective Fund's assets. (See "The Funds And Their Management.") The Funds
charge no sales loads, redemption fees, or exchange fees. THE EXAMPLE SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual returns, which may be greater or less than the assumed amount.

Because the Funds pay a 12b-1 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>

INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)

Worldwide Capital Goods Fund

Year Ended July 31
--------------------------------------------
1998 1997 1996 1995(a)
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.70 $9.61 $9.84 $10.00
--------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss)(b) 0.00 0.05 0.01 0.01
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) (0.32) 4.37 0.01 (0.16)
--------------------------------------------
Total from Investment
Operations (0.32) 4.42 0.02 (0.15)
--------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.06 0.00 0.01
Distributions from
Capital Gains 1.21 1.27 0.25 0.00
--------------------------------------------
Total Distributions 1.21 1.33 0.25 0.01
--------------------------------------------
Net Asset Value -
End of Period $11.17 $12.70 $9.61 $9.84
============================================

TOTAL RETURN (2.06%) 50.86% 0.27% (1.49%)

<PAGE>

RATIOS

Net Assets - End of Period
($000 Omitted) $13,095 $22,254 $7,731 $10,364
Ratio of Expenses to
Average Net Assets(c) 1.97%(d) 1.98%(d) 2.11%(d) 2.00%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(c) (0.23%) 0.51% 0.05% 0.25%
Portfolio Turnover Rate 219% 192% 247% 193%

(a) Commencement of investment operations was August 1, 1994.

(b) Net Investment Income (Loss) aggregated less than $0.01 on a per share
basis for the year ended July 31, 1998.

(c) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
years ended July 31, 1997, 1996 and 1995. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have
been 2.58%, 2.49% and 2.96%, respectively, and ratio of net investment
income (loss) to average net assets would have been (0.09%), (0.33%) and
(0.71%), respectively.

(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.

<PAGE>

INVESCO Specialty Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)

Worldwide Communications Fund

Year Ended July 31
--------------------------------------------
1998 1997 1996 1995(a)
PER SHARE DATA
Net Asset Value -
Beginning of Period $15.31 $12.43 $12.30 $10.00
--------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.01 0.06 0.22 0.11
Net Gains on Securities
(Both Realized and
Unrealized) 5.32 3.90 1.38 2.35
--------------------------------------------
Total from Investment
Operations 5.33 3.96 1.60 2.46
--------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.06 0.22 0.11
Distributions from
Capital Gains 1.04 1.02 1.25 0.05
--------------------------------------------
Total Distributions 1.04 1.08 1.47 0.16
--------------------------------------------
Net Asset Value -
End of Period $19.60 $15.31 $12.43 $12.30
============================================
TOTAL RETURN 36.79% 33.93% 13.67% 24.83%

RATIOS
Net Assets - End of Period
($000 Omitted) $276,577 $72,458 $50,516 $27,254
Ratio of Expenses to
Average Net Assets 1.32%(b) 1.69%(b) 1.66%(b) 1.95%
Ratio of Net Investment
Income (Loss) to
Average Net Assets (0.16%) 0.56% 1.78% 1.43%
Portfolio Turnover Rate 55% 96% 157% 215%

(a) Commencement of investment operations was August 1, 1994.

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

<PAGE>

PERFORMANCE DATA

From time to time, the Funds advertise their total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of a Fund refers to the
annual rate of return of an investment in the Fund. This figure is computed by
calculating the percentage change in value of an investment of $1,000, assuming
reinvestment of all income dividends and capital gain distributions, to the end
of a specified period. Periods of one year, five years, and ten years and/or
life of the Fund are used if available. Any given report of total return
performance should not be considered as representative of future performance.
The Funds charge no sales loads, redemption fees, or exchange fees which would
affect the total return computation.

In conjunction with performance reports and/or analyses of shareholder
service for the Funds, comparative data between the Funds' performance for a
given period and the performance of recognized indices of investment results for
the same period, and/or assessments of the quality of shareholder service, may
be provided to shareholders. Such indices include indices provided by Dow Jones
& Company, Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers,
National Association of Securities Dealers Automated Quotations, Frank Russell
Company, Value Line Investment Survey, the American Stock Exchange, Morgan
Stanley Capital International, Wilshire Associates, the Financial Times-Stock
Exchange, the New York Stock Exchange, the Nikkei Stock Average and the Deutcher
Aktienindex, all of which are unmanaged market indicators. In addition,
rankings, ratings, and comparisons of investment performance and/or assessments
of the quality of shareholder service appearing in publications such as Money,
Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources which
utilize information compiled (i) internally; (ii) by Lipper Analytical Services,
Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Funds in performance reports, will be
drawn from the "Global Funds" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.

INVESTMENT OBJECTIVES AND POLICIES

INVESCO WORLDWIDE CAPITAL GOODS FUND

<PAGE>

distribution of raw materials and intermediate goods used by industry and
agriculture. The foregoing investment objective is fundamental and may not be
changed in any material respect without the approval of the Capital Goods Fund's
shareholders. Capital goods include finished products and equipment used by
industrial and agricultural firms, such as industrial machinery, construction
equipment, computers, software, farm equipment, office equipment, and electrical
and telecommunications equipment, as well as components and sub-assemblies of
such products. Raw materials and intermediate goods include chemicals, timber,
paper, metals, textiles, cement, gypsum and other commodities.

INVESCO WORLDWIDE COMMUNICATIONS FUND

The Communications Fund seeks to achieve a high total return on investment
through capital appreciation and current income by investing, under normal
circumstances, at least 65% of its total assets in companies that are primarily
engaged in the design, development, manufacture, distribution or sale of
communications services and equipment. The foregoing investment objective is
fundamental and may not be changed in any material respect without the approval
of the Communications Fund's shareholders. The Communications Fund may invest in
companies involved in services and products such as long distance, local and
cellular telephone service; wireless communications systems such as personal
communications networks, paging and special mobile radio; local and wide area
networks; fiber optic transmission; satellite communication; microwave
transmission; television and movie programming; broadcasting; and cable
television.

Up to 35% of the Communications Fund's assets will be invested, under
normal circumstances, in companies that are engaged in developing, constructing
or operating infrastructure projects throughout the world, or in supplying
equipment or services to such companies. Infrastructure projects include
communications systems such as those described above, as well as electric
utilities, water and sewer projects, natural gas and oil pipelines,
environmental projects, housing, and transportation projects such as airports,
railroads, highways, bridges and ports.

Investment Policies Applicable to Both Funds

Each Fund has a policy regarding concentration of its investments which is
fundamental and may not be changed without the approval of the respective Fund's
shareholders. The Capital Goods Fund will concentrate its investments (i.e.,
invest more than 25% of its total assets) in the capital goods, raw materials
and intermediate goods industries described above. The Communications Fund will
concentrate its investments (i.e., invest more than 25% of its total assets) in

<PAGE>

the communications industries described above. A particular company will be
deemed to be primarily engaged in the group of industries designated for
investment by a Fund if, in the determination of the Funds' investment adviser,
more than 50% of its gross income or net sales are derived from activities in
such industries or more than 50% of its assets are dedicated to the production
of revenues from such industries. In circumstances where, based on available
financial information, a question exists whether a company meets one of these
standards, the Fund may invest in equity securities of such company only if
INVESCO determines, after review of information describing the company and its
business activities, that the company's primary business is within the group of
industries designated for investment by that Fund, as such industries are
described above.

Under normal circumstances, each Fund will invest at least 65% of its
total assets in issuers domiciled in at least three countries, one of which may
be the United States, although INVESCO expects each Fund's investments to be
allocated among a larger number of countries. The percentage of each Fund's
assets invested in securities of issuers domiciled in the United States normally
will be higher than that invested in securities issued by companies in any other
single country. However, it is possible that at times a Fund may have 65% or
more of its total assets invested in foreign securities. Investments in foreign
securities involve certain risks which are discussed below under "Risk Factors."

Under normal conditions, each Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, preferred stocks and
securities convertible into common stocks, such as rights, warrants and
convertible debt securities) which are discussed more fully in the Statement of
Additional Information. In selecting the equity securities in which the Funds
invest, INVESCO attempts to identify companies that in INVESCO's opinion have
demonstrated or, are likely to demonstrate in the future, strong earnings growth
relative to other companies in the same industry. The dividend payment records
of companies are also considered. Equity securities may be issued by either
established, well-capitalized companies or newly-formed, small-cap companies,
and may trade on regional or national stock exchanges or in the over-the-counter
market. The risks of investing in small capitalization companies are discussed
below under "Risk Factors."

Consistent with its investment objective, each Fund also may invest in
fixed-income securities (corporate bonds, commercial paper, debt securities
issued by the U.S. government, its agencies and instrumentalities, or foreign
governments and, to a lesser extent, municipal bonds, asset-backed securities
and zero coupon bonds). Each Fund may invest no more than 15% of its total
assets in debt securities that are rated below BBB by Standard & Poor's, a

<PAGE>

division of The McGraw-Hill Companies, Inc. ("S&P") or Baa by Moody's
Investors Service, Inc. ("Moody's") or, if unrated, judged by INVESCO to be
equivalent in quality to debt securities having such ratings (commonly referred
to as "junk bonds"). In no event will a Fund ever invest in a debt security
rated below CCC by S&P or Caa by Moody's or, if unrated, judged by INVESCO to be
equivalent in quality to debt securities having such ratings. The risks of
investing in lower rated debt securities are discussed below under "Risk
Factors."

Each Fund may invest up to 35% of its total assets in securities of
companies that are engaged in businesses outside the field of business activity
in which at least 65% of the Fund's total assets is invested. These investments
may include equity securities or fixed-income securities selected to meet the
Capital Goods Fund's investment objective of capital appreciation or the
Communications Fund's objective of achieving a high total return on investment
through capital appreciation and current income, as the case may be. Such equity
securities may be issued by either established, well-capitalized companies or
newly-formed, small-cap companies, and may trade on regional or national stock
exchanges or in the over-the-counter market. Such fixed-income securities must
meet the quality standards described above. These equity and fixed-income
securities may be issued by either U.S. or foreign companies or governments. The
risks of investing in lower rated debt securities and in foreign securities are
discussed below under "Risk Factors." In addition, the Funds may hold certain
cash and cash equivalent securities as cash reserves ("cash securities").

The amounts invested in stocks, bonds and cash securities may vary from
time to time, depending upon INVESCO's assessment of business, economic and
market conditions. In periods of unfavorable economic and market conditions, as
determined by INVESCO, either Fund may depart from its basic investment
objective and 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. The Funds reserve the right to
hold equity, fixed-income and cash securities in whatever proportion is deemed
desirable at any given time for temporary defensive purposes. While a Fund is in
a defensive position, the opportunity to achieve capital appreciation will be
limited; however, the ability to maintain a defensive position enables the Funds
to seek to avoid capital losses during market downturns. Under normal market
conditions, the Funds do not expect to have a substantial portion of their
assets invested in cash securities.

In order to hedge their portfolios, the Funds may purchase and write
options on securities (including index options and options on foreign
securities), and may invest in futures contracts for the purchase or sale of
foreign currencies, fixed-income securities and instruments based on financial
indices (collectively, "futures contracts"), options on futures contracts,

<PAGE>

forward contracts and interest rate swaps and swap-related products.
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments. These practices and securities, some of
which are known as derivatives, and their risks are discussed below under "Risk
Factors" and in the Statement of Additional Information.

Additional information on certain of the types of securities in which the
Funds may invest is set forth below:

U.S. Government and Agency Securities. Investments in U.S. government
securities may consist of securities issued or guaranteed by the United States
government or any agency or instrumentality of the United States government. In
some cases, these securities are direct obligations of the U.S. government, such
as U.S. Treasury bills, notes and bonds. In other cases, these securities are
obligations guaranteed by the U.S. government, such as Government National
Mortgage Association obligations, or obligations of U.S. government authorities,
agencies or instrumentalities, such as Fannie Mae (formerly, Federal National
Mortgage Association), Federal Home Loan Banks, Federal Financing Bank and
Federal Farm Credit Bank, which are supported only by the creditworthiness of
the issuer.

When-Issued Securities. Each Fund may make commitments in an amount of up
to 10% of the value of its total assets at the time any commitment is made to
purchase or sell equity or debt securities on a when-issued or delayed delivery
basis (i.e., securities may be purchased or sold by the Fund with settlement
taking place in the future, often a month or more later). The payment obligation
and, in the case of debt securities, the interest rate that will be received on
the securities generally are fixed at the time the Fund enters into the
commitment. During the period between purchase and settlement, no payment is
made by the Fund and no interest accrues to the Fund. At the time of settlement,
the market value of the security may be more or less than the purchase price,
and the Fund bears the risk of such market value fluctuations. Each Fund
maintains cash, U.S. government securities, or other liquid securities having an
aggregate value equal to the amount of such purchase commitments, in a
segregated account until payment is made.

Illiquid and Rule 144A Securities. The Funds may invest in securities which
are illiquid because they are subject to restrictions on their resale
("restricted securities") or because, based upon their nature or the market for

<PAGE>

such securities, they are not readily marketable. However, a Fund will not
purchase any such security if the purchase would cause the Fund to invest more
than 15% of its net assets in illiquid securities. Repurchase agreements
maturing in more than seven days will be considered as illiquid for purposes of
this restriction. Investments in illiquid securities involve certain risks to
the extent that a Fund may be unable to dispose of such a security at the time
desired or at a reasonable price. In addition, in order to resell a restricted
security, a Fund might have to bear the expense and incur the delays associated
with effecting registration.

The Funds may purchase certain restricted securities that are not
registered for sale to the general public, but that can be resold to
institutional investors ("Rule 144A Securities"), ^ without regard to the
foregoing 15% limitation, if a liquid institutional trading market exists. The
liquidity of the Fund's investments in Rule 144A Securities could be impaired if
dealers or institutional investors become uninterested in purchasing these
securities. The Company's board of directors has delegated to INVESCO the
authority to determine the liquidity of Rule 144A Securities pursuant to
guidelines approved by the board. For more information concerning Rule 144A
Securities, see the Statement of Additional Information.

Repurchase Agreements. The Funds may enter into repurchase agreements with
respect to debt instruments eligible for investment by the Funds with member
banks of the Federal Reserve System, registered broker-dealers and registered
government securities dealers, which are deemed creditworthy. A repurchase
agreement, which may be considered a "loan" under the Investment Company Act of
1940, is a means of investing monies for a short period. In a repurchase
agreement, a Fund acquires a debt instrument (generally a security issued by the
U.S. government or an agency thereof, a banker's acceptance, or a certificate of
deposit) subject to resale to the seller at an agreed-upon price and date
(normally, the next business day). In the event that the original seller
defaults on its obligation to repurchase the security, the Fund could incur
costs or delays in seeking to sell such security. To minimize risk, the
securities underlying each repurchase agreement will be maintained with the
Fund's custodian in an amount at least equal to the repurchase price under the
agreement (including accrued interest), and such agreements will be effected
only with parties that meet certain creditworthiness standards established by
the Company's board of directors. A Fund will not enter into a repurchase
agreement maturing in more than seven days if as a result more than 15% of its
net assets would be invested in such repurchase agreements and other illiquid
securities. The Funds have not adopted any limit on the amount of their net
assets that may be invested in repurchase agreements maturing in seven days or
less.

<PAGE>

Securities Lending. The Funds also may lend their securities to qualified
brokers, dealers, banks, or other financial institutions. This practice permits
the Funds to earn income, which, in turn, can be invested in additional
securities of the type described in this Prospectus in pursuit of the Funds'
investment objectives. Loans of securities by a Fund will be collateralized by
cash, letters of credit, or securities issued or guaranteed by the U.S.
government or its agencies equal to at least 100% of the current market value of
the loaned securities, determined on a daily basis. Cash collateral will be
invested only in high quality short-term investments offering maximum liquidity.
Lending securities involves certain risks, the most significant of which is the
risk that a borrower may fail to return a portfolio security. The Funds monitor
the creditworthiness of borrowers in order to minimize such risks. A Fund will
not lend any security if, as a result of the loan, the aggregate value of
securities then on loan would exceed 33-1/3% of the Fund's total assets (taken
at market value).

Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for the Funds' portfolios. Although the Funds do not trade for
short-term profits, securities may be sold without regard to the time they have
been held in a Fund when, in the opinion of INVESCO, investment considerations
warrant such action. In addition, portfolio turnover rates may increase as a
result of large amounts of purchases or redemptions of Fund shares due to
economic, market or other factors that are not within the control of INVESCO. As
a result, while it is anticipated that the portfolio turnover rates for the
Funds' portfolios generally will not exceed 200%, under certain market
conditions these portfolio turnover rates may exceed 200%. Increased portfolio
turnover would cause a Fund to incur greater brokerage costs than would
otherwise be the case, and may result in the acceleration of capital gains that
are taxable when distributed to shareholders. The Funds' portfolio turnover
rates are set forth under "Financial Highlights" and, along with the Funds'
brokerage allocation policies, are discussed in the Statement of Additional
Information.

Investment Restrictions. The Funds are subject to a variety of
restrictions regarding their investments that are set forth in this Prospectus
and in the Statement of Additional Information. Certain of the Funds' investment
restrictions are fundamental, and may not be altered without the approval of the
respective Fund's shareholders. Such fundamental investment restrictions include
the restrictions which prohibit a Fund from: lending more than 33-1/3% of its
total assets to other parties (excluding purchases of commercial paper, debt
securities and repurchase agreements); with respect to 75% of its total assets,
purchasing the securities of any one issuer (other than cash items and

<PAGE>

government securities) if the purchase would cause the Fund to have more
than 5% of its total assets invested in the issuer or to own more than 10% of
the outstanding voting securities of the issuer; and borrowing money or issuing
senior securities except that a Fund may borrow money for temporary or emergency
purposes (not for leveraging or investment) and may enter into reverse
repurchase agreements in an aggregate amount not exceeding 33-1/3% of its total
assets. However, unless otherwise noted, the Funds' investment restrictions and
their investment policies are not fundamental and may be changed by action of
the Company's board of directors. Unless otherwise noted, all percentage
limitations contained in the Funds' investment policies and restrictions apply
at the time an investment is made. Thus, subsequent changes in the value of an
investment after purchase or in the value of the Funds' total assets will not
cause any such limitation to have been violated or to require the disposition of
any investment, except as otherwise required by law. If the credit ratings of an
issuer are lowered below those specified for investment by the Funds, the Funds
are not required to dispose of the obligations of that issuer. The determination
of whether to sell such an obligation will be made by INVESCO based upon an
assessment of credit risk and the prevailing market price of the investment. If
a Fund borrows money, its share price may be subject to greater fluctuation
until the borrowing is repaid. Each Fund attempts to minimize such fluctuations
by not purchasing additional securities when borrowings, including reverse
repurchase agreements, are greater than 5% of the value of the Fund's total
assets. As a fundamental policy in addition to the above, each Fund may,
notwithstanding any other investment policy or limitation (whether or not
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund. See "Additional Information
- -Master/Feeder Option."

RISK FACTORS

There can be no assurance that the Funds will achieve their investment
objectives. The Funds' investments in common stocks and other equity securities
may, of course, decline in value.

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 Funds invest 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 may be affected by
remediation costs, which may be substantial. The Funds' investments may be
adversely affected.

<PAGE>

Debt Securities. The Funds' investments in fixed-income securities
generally are subject to both credit risk and market risk. Credit risk relates
to the ability of the issuer to meet interest or principal payments, or both, as
they come due. The ratings given a security by S&P or Moody's provide a
generally useful guide to such credit risk. The lower the rating given a
security by such rating service, the greater the credit risk such rating service
perceives to exist with respect to such security. Increasing the amount of Fund
assets invested in unrated or lower grade securities, while intended to increase
the yield produced by those assets, also will increase the credit risk to which
those assets are subject.

Market risk relates to the fact that the market values of the debt
securities in which the Fund invests generally will be affected by changes in
the level of interest rates. An increase in interest rates will tend to reduce
the market values of debt securities, whereas a decline in interest rates will
tend to increase their values. Although INVESCO limits the Funds' investments in
fixed-income securities to securities it believes are not highly speculative,
both kinds of risk are increased by investing in debt securities rated below the
top three grades by S&P or Moody's or, if unrated, securities determined by ^
INVESCO to be of equivalent quality. Although bonds in the lowest investment
grade debt category (those rated BBB by S&P or Baa by Moody's) are regarded as
having adequate capability to pay principal and interest, they have speculative
characteristics. Adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make principal and interest payments
than is the case for higher rated bonds. Lower rated bonds by Moody's
(categories Ba, B, Caa) are of poorer quality and also have speculative
characteristics. Bonds rated Caa may be in default or there may be present
elements of danger with respect to principal or interest. Lower rated bonds by
S&P (categories BB, B, CCC) include those which are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with their terms; BB indicates the lowest
degree of speculation and CCC a high degree of speculation. While such bonds
likely will have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
For a specific description of each corporate bond rating category, please refer
to Appendix B to the Statement of Additional Information.

<PAGE>

Industry Concentration. While the Funds diversify their investments by
investing, with respect to 75% of their total assets, not more than 5% of their
total assets in the securities of any one issuer, ^ INVESCO normally will invest
each Fund's assets primarily in companies engaged in the particular fields of
business activity designated for investment by that Fund. As a result of this
investment policy, an investment in a Fund may be subject to greater
fluctuations in value than generally would be the case if an investment were
made in an investment company that did not concentrate its investments in a
similar manner. Certain economic factors or specific events may exert a
disproportionate impact upon the prices of equity securities of companies within
a particular industry relative to their impact on the prices of securities of
companies engaged in other industries. For example, the success of the companies
in which the Capital Goods Fund may invest is closely related to overall capital
spending levels. Capital spending is influenced by broad factors such as
economic cycles, interest rates, technological obsolescence, foreign competition
and governmental regulation, as well as individual company factors such as
profitability. The Communications Fund may invest in companies that are
developing new technologies and, accordingly, are subject to the risks of
intense competition, failure to obtain adequate financing or necessary
regulatory approvals and rapid product obsolescence. In addition, the types of
companies in which the Communications Fund may invest generally are subject to
substantial government regulation. Companies engaged in infrastructure projects
are subject to various risks, including difficulties in securing financing for
large projects and costs and delays resulting from environmental considerations.
In addition, changes in the market price of the equity securities of a
particular company which occupies a dominant position in an industry may tend to
influence the market prices of other companies within the same industry. As a
result of the foregoing factors, an investment in one or both of the Funds may
not constitute a complete, balanced investment program.

Foreign Securities. For U.S. investors, the returns on foreign securities
are influenced not only by the returns on the foreign investments themselves,
but also by currency risk (i.e., changes in the value of the currencies in which
the securities are denominated relative to the U.S. dollar). In a period when
the U.S. dollar generally rises against 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, the
returns on foreign securities generally are enhanced.

<PAGE>

foreign portfolio transactions and longer settlement periods; the smaller
trading volumes and generally lower liquidity of foreign stock markets, which
may result in greater price volatility; foreign withholding taxes payable on a
Fund's investment income on foreign securities, which may reduce dividend income
payable to shareholders; the possibility of expropriation or confiscatory
taxation; adverse changes in investment or exchange control regulations;
political instability which could affect U.S. investment in foreign countries;
potential restrictions on the flow of international capital; and the possibility
^ that a Fund ^ may experience difficulties in pursuing legal remedies and
collecting judgments. The Fund's investments in foreign securities may include
investments in developing countries. Many of these securities are speculative
and their prices may be more volatile than those of securities issued by
companies located in more developed countries.

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
The Netherlands, Portugal and Spain are presently members of the European
Economic and Monetary Union (the "EMU"). The EMU intends to establish a common
European currency for EMU countries which will be known as the "euro." Each
participating country presently plans to adopt the euro as its currency on
January 1, 1999. The old national currencies will be sub-currencies of the euro
until July 1, 2002, at which time the old currencies will disappear entirely.
Other European countries may adopt the euro in the future.

After January 1, 1999, the introduction of the euro is expected to impact
European capital markets in ways that it is impossible to quantify at this time.
For example, investors may begin to view EMU countries as a single market, and
that may impact future investment decisions for the Fund. As the euro is
implemented, there may be changes in the relative strength and value of the U.S.
dollar and other major currencies, as well as possible adverse tax consequences.
The Euro transition by EMU countries - present and future - may impact the
fiscal and monetary policies of those participating countries. There may be
increased levels of price competition among business firms within EMU countries
and between businesses in EMU and non-EMU countries. The outcome of these
uncertainties could have unpredictable effects on trade and commerce and result
in increased volatility for all financial markets.

<PAGE>

Small Capitalization Companies. The Funds may invest in equity securities
issued by small-cap companies. The Funds' investments in small capitalization
stocks may include companies that have limited operating histories, product
lines, and financial and managerial resources. These companies may be subject to
intense competition from larger companies, and their stock may be subject to
more abrupt or erratic market movements than the stocks of larger, more
established companies. Due to these and other factors, small cap companies may
suffer significant losses as well as realize substantial growth.

Futures, Options and Other Derivative Instruments. The use of futures,
options, forward contracts and swaps exposes the Funds to additional investment
risks and transaction costs, and as a result, no more than 5% of each Fund's
total assets will be committed to such investments. If Fund Management seeks to
protect the Funds against potential adverse movements in the securities, foreign
currency or interest rate markets using these instruments, and such markets do
not move in a direction adverse to the Funds, the Funds could be left in a less
favorable position than if such strategies had not been used. Risks inherent in
the use of futures, options, forward contracts and swaps include (1) the risk
that interest rates, securities prices and currency markets will not move in the
directions anticipated; (2) imperfect correlation between the price of futures,
options and forward contracts and movements in the prices of the securities or
currencies being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
and (5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences. Further information on the use of futures, options,
forward foreign currency contracts and swaps and swap-related products, and the
associated risks, is contained in the Statement of Additional Information.

THE FUNDS AND THEIR MANAGEMENT

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

<PAGE>

Pursuant to an agreement with the Company, INVESCO Distributors, Inc.
("IDI") is 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 Funds' distributor.

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 had approximately ^
$241 billion in assets under management as of ^ September 30, 1998. INVESCO was
established in 1932 and, as of July 31, 1998, managed 14 mutual funds,
consisting of 49 separate portfolios, with combined assets of approximately
$19.6 billion on behalf of 884,099 shareholders.

Prior to February 3, 1998, Institutional Trust Company ^ doing business as
INVESCO Trust Company ("ITC") provided sub-advisory services to the Funds;
termination of its sub-advisory services in no way changed the basis upon which
investment advice is provided to the Funds, the cost of those services to the
Funds 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 Funds.

The Funds are managed by members of INVESCO's Sector Team, which is headed
by Daniel B. Leonard and John Schroer. The following individuals are primarily
responsible for the day-to-day management of the Funds' portfolio holdings:

Worldwide Capital Goods Fund: John Segner has been the portfolio manager of
the Fund since January 1998. Mr. Segner also manages INVESCO Energy Portfolio.
Mr. Segner is also a vice president of INVESCO. Mr. Segner was previously the
managing director and principal with The Mitchell Group, Inc. (1990-1997),
manager of marketing development (1988-1990) and manager of financial analysis
(1986-1988) with First Tennessee National Corporation, and a financial
analyst with Amerada Hess Corporation (1985-1986). Mr. Segner received an M.B.A.
in Finance from the University of Funds' investment adviser; it is primarily
responsible for providing the Funds with portfolio management and various
administrative services. Texas-Austin and a B.S. in Civil Engineering from the
University of Alabama.

<PAGE>

Worldwide Communications Fund: Brian B. Hayward, a Chartered Financial
Analyst, has been portfolio manager of the Fund since July 1997. Mr. Hayward
also manages INVESCO Strategic Utilities Portfolio and INVESCO VIF - Utilities
Fund. Mr. Hayward began his investment career in 1985 and was most recently the
senior equity analyst with Mississippi Valley Advisors in St. Louis, Missouri.
Mr. Hayward received an M.A. in Economics and a B.A. in Mathematics from the
University of Missouri.

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

Each Fund pays INVESCO a monthly management fee which is based upon a
percentage of each Fund's average net assets, determined daily. The management
fee is computed at the annual rate of 0.65% on the first $500 million of each
Fund's average net assets, 0.55% on the next $500 million of each Fund's average
net assets and 0.45% on each Fund's average net assets over $1 billion.

The Company also has entered into an Administrative Services Agreement (the
"Administrative Agreement") with INVESCO. Pursuant to the Administrative
Agreement, INVESCO performs certain administrative, recordkeeping and internal
sub-accounting services, including without limitation, maintaining general
ledger and capital stock accounts, preparing a daily trial balance, calculating
net asset value daily, providing selected general ledger reports and providing
sub-accounting and recordkeeping services for Fund shareholder accounts
maintained by certain retirement and employee benefit plans for the benefit of
participants in such plans. For such services, each Fund pays INVESCO a fee
consisting of a base fee of $10,000 per year, plus an additional incremental fee
computed at the annual rate of 0.015% per year of the average net assets of the
Fund. INVESCO also is paid a fee by each Fund for providing transfer agent
services. See "Additional Information."

The management and custodial services provided to the Funds by INVESCO and
the Funds' 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

<PAGE>

were encoded and are calculated. That failure could have a negative impact on
the handling of the Funds' securities trades, their share pricing and their
account services. The Funds and their 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 the 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.

Each Fund's expenses, which are accrued daily, are deducted from each
Fund's total income before dividends are paid. Total expenses (prior to any
expense offset arrangements) of the Capital Goods Fund and the Communications
Fund for the fiscal year ended July 31, 1998 including investment management
fees (but excluding brokerage commissions, which are included as a cost of
acquiring securities), amounted to 1.97% and 1.32%, respectively, of each Fund's
average net assets. Certain expenses for the Capital Goods Fund and the
Communications Fund are voluntarily absorbed by INVESCO pursuant to a commitment
to the Fund in order to ensure that each Fund's total operating expenses do not
exceed 2.00%. 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 Shares Can Be
Purchased - Distribution Expenses," the Company may market shares of the Funds
through intermediary brokers and dealers that have entered into Dealer
Agreements with INVESCO or IDI, as the Funds' distributor. The Funds may place
orders for portfolio transactions with qualified brokers and dealers that
recommend the Funds, or sell shares of the Funds to clients, or act as agent in
the purchase of Fund shares for clients, if INVESCO believes that the quality of
execution of the transaction and level of commission are comparable to those
available from other qualified brokerage firms.

HOW SHARES CAN BE PURCHASED

Shares of each Fund are sold on a continuous basis by IDI, as the Funds'
distributor, at the net asset value per share next calculated after receipt of a
purchase order in good form. No sales charge is imposed upon the sale of shares
of the Funds. To purchase shares of either or both Funds, send a check made
payable to INVESCO Funds Group, Inc., together with a completed application
form, to:

INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
<PAGE>

Purchase orders must specify the Fund in which the investment is to be
made.

The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the section entitled "Services Provided By The Funds," may open an account
without making any initial investment if they agree to make regular, minimum
purchases of at least $50; (2) those shareholders investing in an Individual
Retirement Account ("IRA"), or through omnibus accounts where individual
shareholder recordkeeping and sub-accounting are not required, may make initial
minimum purchases of $250; (3) INVESCO may permit a lesser amount to be invested
in a Fund under a federal income tax-deferred retirement plan (other than an IRA
account), or under a group investment plan qualifying as a sophisticated
investor; and (4) INVESCO reserves the right to increase, reduce or waive the
minimum purchase requirements in its sole discretion where it determines such
action is in the best interests of the Fund.

The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire order or telephone order
be in an amount less than $1,000. For further information, the purchaser may
call the Funds' office by using the telephone number on the back cover of this
Prospectus. Orders sent by overnight courier, including Express Mail, should be
sent to the street address, not ^ post office box, of INVESCO, at 7800 E. Union
Avenue, Denver, CO 80237.

Orders to purchase shares of either Fund can be placed by telephone.
Shares of the Funds will be issued at the net asset value per share next
determined after receipt of telephone instructions. Generally, payments for
telephone orders must be received by the respective Fund within three business
days or the transaction may be canceled. In the event of such cancellation, the
purchaser will be held responsible for any loss resulting from a decline in the
value of the shares. In order to avoid such losses, purchasers should send
payments for telephone purchases by overnight courier or bank wire. INVESCO has
agreed to indemnify the Funds for any losses resulting from such cancellations
of telephone purchases.

<PAGE>

If your check does not clear, or if a telephone purchase must be canceled
due to nonpayment, you will be responsible for any related loss a Fund or
INVESCO incurs. If you are already a shareholder in the INVESCO funds, the Funds
have the option to redeem shares from any identically registered account in the
Funds or any other INVESCO fund as reimbursement for any loss incurred. You also
may be prohibited or restricted from making future purchases in any of the
INVESCO funds.

Persons who invest in the Funds through a securities broker may be charged
a commission or transaction fee by the broker for the handling of the
transaction if the broker so elects. Any investor may deal directly with a Fund
in any transaction. In that event, there is no such charge. IDI or 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 Funds.

Each Fund reserves the right in its sole discretion to reject any order
for purchase of its shares (including purchases by exchange) when, in the
judgment of INVESCO, such rejection is in the best interest of the Fund.

Net asset value per share is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange
(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for each Fund is
calculated by dividing the market value of the Fund's securities plus the value
of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of that Fund. If market quotations are not readily available,
a security or other asset will be valued at fair value as determined in good
faith by the board of directors. Debt securities with remaining maturities of 60
days or less at the time of purchase will be valued at amortized cost, absent
unusual circumstances, so long as the Company's board of directors believes that
such value represents fair value.

Distribution Expenses. Each Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under the Plan, monthly payments may be
made by the Fund to 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

<PAGE>

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 Funds as may from time to time
be agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors. These services and activities may be conducted by the
staff of INVESCO, IDI or their affiliates or by third parties.

Under the Plan, the Funds' payments to IDI are limited to an amount
computed at an annual rate of 0.25% of each 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 Funds. Payment
amounts by each 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 Funds 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 Funds.
No further payments will be made by a Fund under the Plan in the event of the
Plan's termination. Payments made by a 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 became 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 each Fund under the Plan for
compensation of marketing personnel, as noted above, are based on an allocation

<PAGE>

formula designed to ensure that all such payments are appropriate. IDI will
bear any distribution-and service-related expenses in excess of the amounts
which are compensated pursuant to the Plan. The Plan also authorizes any
financing of distribution which may result from ^ INVESCO's or IDI's use of fees
received from the Funds for services rendered by INVESCO, 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.

SERVICES PROVIDED BY THE FUNDS

Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Since certificates must be carefully safeguarded, and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Funds. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Funds' office by using the telephone number on the cover of this Prospectus.

Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund making the
distribution at the net asset value per share of that Fund in effect on the
ex-dividend or ex-distribution date. A shareholder may, however, elect to
reinvest dividends and other distributions in certain of the other no-load
mutual funds advised by INVESCO and distributed by IDI, or to receive payment of
all dividends and other distributions in excess of $10.00 by check by giving
written notice to INVESCO at least two weeks prior to the record date on which
the change is to take effect. Further information concerning these options can
be obtained by contacting INVESCO.

<PAGE>

payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by INVESCO at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting INVESCO.

Exchange Policy. Shares of either Fund may be exchanged for shares of any
other Fund of the Company, as well as for shares of any of the following other
no-load mutual funds, which are also advised by INVESCO and distributed by IDI,
on the basis of their respective net asset values at the time of the exchange:
INVESCO Bond Funds, Inc. (formerly INVESCO Income Funds, Inc.), INVESCO
Combination Stock & Bond Funds, Inc. (formerly INVESCO Flexible Funds, Inc.),
INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc.,
INVESCO ^ Growth Funds, Inc. (formerly^ INVESCO Growth Fund, ^ Inc.), INVESCO
Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money
Market Funds, Inc., INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic
Portfolios, ^ Inc.), INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds,
Inc.), INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.

An exchange involves the redemption of shares in a Fund and investment of
the redemption proceeds in shares of another Fund of the Company or in shares of
one of the funds listed above. Exchanges will be made at the net asset value per
share next determined after receipt of an exchange request in proper order. Any
gain or loss realized on such an exchange is recognizable for federal income tax
purposes by the shareholder. Exchange requests may be made either by telephone
or by written request to INVESCO, using the telephone number or address on the
back cover of this Prospectus. Exchanges made by telephone must be in an amount
of at least $250, if the exchange is being made into an existing account of one
of the INVESCO funds. All exchanges that establish a new account must meet the
Fund's applicable minimum initial investment requirements. Written exchange
requests into an existing account have no minimum requirements other than the
Fund's applicable minimum subsequent investment requirements.

<PAGE>

written confirmations of exchange transactions. As a result of this policy,
the investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if a Fund fails to follow these or other
reasonable procedures, the Fund may be liable.

In order to prevent abuse of this policy to the disadvantage of other
shareholders, each Fund reserves the right to terminate the exchange option of
any shareholder who requests more than four exchanges in a year. A Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange policy also may be modified or terminated at any
time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the Investment Company Act of
1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange policy will be given at least 60 days prior to the date of termination
or the effective date of the modification.

<PAGE>

Tax-Deferred Retirement Plans. Shares of either Fund may be purchased for
self-employed individual retirement plans, various ^ IRAs, simplified employee
pension plans and corporate retirement plans. In addition, shares can be used to
fund tax qualified plans established under Section 403(b) of the Internal
Revenue Code by educational institutions, including public school systems and
private schools, and certain kinds of non-profit organizations, which provide
deferred compensation arrangements for their employees.

Prototype forms for the establishment of these various plans, including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from INVESCO. ITC, an affiliate of INVESCO, is qualified
to serve as trustee or custodian under these plans and provides the required
services at competitive rates. Retirement plans (other than IRAs) receive
monthly statements reflecting all transactions in their Fund accounts. IRAs
receive the confirmations and quarterly statements described under "Shareholder
Accounts." For complete information, including prototype forms and service
charges, call INVESCO at the telephone number listed on the back cover of this
Prospectus or send a written request to: Retirement Services, INVESCO Funds
Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.

HOW TO REDEEM SHARES

Shares of either Fund may be redeemed at any time at their current net
asset value per share next determined after a request in proper form is received
at the Funds' office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance.

<PAGE>

certificates have been issued, a written redemption request signed by each
registered owner of the account may be submitted to INVESCO at the post office
box address noted above. If shares are held in the name of a corporation,
additional documentation may be necessary. Call or write for specific
information. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), the signature(s) must be guaranteed by a financial
institution which qualifies as an eligible guarantor institution. Redemption
procedures with respect to accounts registered in the names of broker-dealers
may differ from those applicable to other shareholders.

Be careful to specify the account from which the redemption is to be made.
Shareholders have a separate account for each Fund in which they invest.

Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange, or when an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which will take up to 15 days).

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

Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to
INVESCO, using the telephone number on the back cover of this Prospectus. The
redemption proceeds, at the shareholder's option, either will be mailed to the
address listed for the shareholder's Fund account, or wired (minimum of $1,000)
or mailed to the bank which the shareholder has designated to receive the
proceeds of telephone redemptions. The Funds charge no fee for effecting such
telephone redemptions. Unless INVESCO permits a larger redemption request to

<PAGE>

be placed by telephone, a shareholder may not place a redemption request by
telephone in excess of $25,000. These telephone redemption privileges may be
modified or terminated in the future at the discretion of INVESCO.

For ITC-sponsored federal income tax-deferred retirement plans, the term
"shareholders" is defined to mean plan trustees that file a written request to
be able to redeem Fund shares by telephone. Shareholders should understand that,
while the Funds will attempt to process all telephone redemption requests on an
expedited basis, there may be times, particularly in periods of severe economic
or market disruption, when (a) they may encounter difficulty in placing a
telephone redemption request, and (b) processing telephone redemptions will
require up to seven days following receipt of the redemption request, or
additional time because of the unusual circumstances set forth above.

Redeeming Fund shares by telephone is available to shareholders
automatically unless expressly declined. By signing a New Account Application, a
Telephone Transaction Authorization Form or otherwise utilizing telephone
redemption privileges, the shareholder has agreed that the Funds will not be
liable for following instructions communicated by telephone that they reasonably
believe to be genuine. The Funds employ procedures, which they believe are
reasonable, designed to confirm that telephone instructions are genuine. These
may include recording telephone instructions and providing written confirmation
of transactions initiated by telephone. As a result of this policy, the investor
may bear the risk of any loss due to unauthorized or fraudulent instructions;
provided, however, that if a Fund fails to follow these or other reasonable
procedures, the Fund may be liable.

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS

Taxes. Each Fund intends to distribute to shareholders substantially all
of its net investment income, net capital gains and net gains from certain
foreign currency transactions, if any. Distribution of substantially all net
investment income to shareholders allows the Funds to maintain their tax status
as regulated investment companies. The Funds do not expect to pay any federal
income or excise taxes because of their distribution policy and tax status as
regulated investment companies.

<PAGE>

Net realized capital gains of the Funds are classified as short-term and
long-term gains depending upon how long a 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. ^
During 1997, the Taxpayer Relief Act established a new maximum capital gains tax
rate of 20%. Depending on the holding period of the asset giving rise to the
gain, a capital gain was taxable at a maximum rate of ^ either 20% or 28%.
Beginning January 1, 1998, ^ all long-term gains realized ^ on the sale of
securities held ^ more than 12 months will be taxable at a maximum rate of 20%.
In addition, legislation signed in October of 1998 provides that all capital
gain distributions from a mutual fund paid to shareholders during 1998 will be
taxed at a maximum rate of 20%. Accordingly, capital gain distributions paid in
1998 will be taxable at a maximum rate of 20%. Note that the rate of capital
gains tax is dependent on the shareholder's marginal tax rate and may be lower
than the above rates. 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.

Each 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 Funds.

Individuals and certain other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital gain ^ distributions and other
distributions and redemption proceeds. Shareholders can avoid backup withholding
on their Fund account by ensuring that INVESCO has a correct, certified tax
identification number, unless the shareholder is subject to backup withholding
for other reasons.

Shareholders should 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. Each Fund earns ordinary or net
investment income in the form of interest and dividends on ^ investments.
Dividends paid by each Fund will be based solely on net investment income earned
by it. Each Fund's policy is to distribute substantially all of this income,
less expenses, to shareholders on an annual basis, at the 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.

<PAGE>

In addition, each 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
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 distribution, regardless of how long the Fund shares have
been held by the shareholder. The Fund's share price will then drop by the
amount of the distribution on the ex-dividend or ex-distribution date. If a
shareholder purchases shares immediately prior to the distribution, the
shareholder will, in effect, have "bought" the distribution by paying the full
purchase price, a portion of which is then returned in the form of a taxable
distribution.

ADDITIONAL INFORMATION

Voting Rights. All shares of the Funds have equal voting rights, based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all funds of the Company voting together. In other cases, such as voting upon
an investment advisory contract, voting is on a fund-by-fund basis. When not all
funds are affected by a matter to be voted upon, only shareholders of the fund
or funds affected by the matter will be entitled to vote thereon. The Company is
not generally required, and does not expect, to hold regular annual meetings of
shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of a Fund or as may be required
by applicable law or the Company's Articles of Incorporation. The Company will
assist shareholders in communicating with other shareholders as required by the
Investment Company Act of 1940. Directors may be removed by action of the
holders of a majority or more of the outstanding shares of the Company.

<PAGE>

Master/Feeder Option. The Company may in the future seek to achieve a
Fund's investment objective by investing all of the Fund's assets in another
investment company having the same investment objective and substantially the
same investment policies and restrictions as those applicable to the Fund. It is
expected that any such investment company would be managed by INVESCO in
substantially the same manner as the existing Fund. If permitted by applicable
laws and policies then in effect, any such investment may be made in the sole
discretion of the Company's board of directors without further approval of the
shareholders of the affected Fund. However, Fund shareholders will be given at
least 30 days prior notice of any such investment. Such investment would be made
only if the Company's board of directors determines it to be in the best
interests of the respective Fund and its shareholders. In making that
determination, the board will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. No assurance can be given that costs will be materially reduced if
this option is implemented.

Shareholder Inquiries. All inquiries regarding the Funds should be
directed to the Funds at the telephone number or mailing address set forth on
the back cover ^ of this Prospectus.

Transfer and Dividend Disbursing Agent. INVESCO, 7800 E. Union Ave.,
Denver, Colorado 80237, also acts as registrar, transfer agent, and dividend
disbursing agent for the Funds pursuant to a Transfer Agency Agreement which
provides that each Fund will pay an annual fee of $20.00 per shareholder account
or, where applicable, per participant in an omnibus account. The transfer agency
fee is not charged to each shareholder's or participant's account, but is an
expense of each Fund to be paid from the Fund's assets. Registered
broker-dealers, third party administrators of tax-qualified retirement plans and
other entities, including affiliates of INVESCO, may provide sub-transfer agency
or recordkeeping services to a Fund which reduce or eliminate the need for
identical services to be provided on behalf of the Fund by INVESCO. In such
cases, INVESCO may pay the third party an annual sub-transfer agency or
recordkeeping fee out of the transfer agency fee which is paid to INVESCO by
each Fund.

<PAGE>

INVESCO SPECIALTY FUNDS, INC.
INVESCO Worldwide Capital Goods Fund
INVESCO Worldwide Communications Fund

Two no-load mutual funds investing
globally in designated market sectors.

PROSPECTUS
December 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>

STATEMENT OF ADDITIONAL INFORMATION
December 1, 1998

INVESCO SPECIALTY FUNDS, INC.
INVESCO Asian Growth Fund
INVESCO European Small Company Fund
INVESCO Latin American Growth Fund
INVESCO Realty Fund
INVESCO S&P 500 Index Fund
INVESCO Worldwide Capital Goods Fund
INVESCO Worldwide Communications 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 SPECIALTY FUNDS, INC. (the "Company") is a no-load, open-end,
diversified, management investment company currently consisting of seven
separate portfolios of investments: INVESCO Asian Growth Fund (the "Asian Growth
Fund"); INVESCO European Small Company Fund (the "European Small Company Fund");
INVESCO Latin American Growth Fund (the "Latin American Growth Fund"); INVESCO
Realty Fund (the "Realty Fund"); INVESCO S&P 500 Index Fund (the "S&P 500 Index
Fund"); INVESCO Worldwide Capital Goods Fund (the "Capital Goods Fund") and
INVESCO Worldwide Communications Fund (the "Communications Fund") (collectively,
the "Funds" and individually, a "Fund").

The Asian Growth Fund seeks to achieve capital appreciation by investing,
under normal circumstances, at least 65% of its total assets in equity
securities of companies domiciled or with primary operations in Asia and the
Pacific Rim, excluding Japan. For purposes of this Statement of Additional
Information, Asia and Pacific Rim territories will include, but not necessarily
be limited to: China, Hong Kong, India, Indonesia, Malaysia, Philippines,
Singapore, South Korea, Taiwan and Thailand, as well as Pakistan and Indochina
as their markets become more accessible.

<PAGE>

The European Small Company Fund seeks to achieve capital appreciation by
investing, under normal circumstances, at least 65% of its total assets in
equity securities of European companies whose individual equity market
capitalizations would place them (at the time of purchase) in the same size
range of companies in approximately the lowest 25% of market capitalization of
companies that have equity securities listed on a U.S. national securities
exchange. Under normal circumstances, the European Small Company Fund will
invest at least 65% of its total assets in securities of issuers domiciled in at
least five different countries, although the European Small Company Fund's
investment adviser expects the European Small Company Fund's investments to be
allocated among a larger number of countries. In this regard, no more than 50%
of the European Small Company Fund's total assets will be invested in issuers
domiciled in any one country.

The Latin American Growth Fund seeks to achieve capital appreciation by
investing, under normal circumstances, at least 65% of its total assets in
securities of issuers domiciled in Latin America. For purposes of this Fund,
Latin America will include: Mexico, Central America, South America, and the
Spanish speaking islands of the Caribbean.

The Realty Fund seeks to achieve above average current income by
investing, under normal circumstances, at least 65% of its total assets in
publicly-traded stocks of companies primarily engaged in the real estate
industry.

The S&P 500 Index Fund seeks to provide both price performance and income
comparable to the Standard & Poor's 500 Composite Index (the "Index" or the "S&P
500") by investing in the equity securities that comprise the S&P 500 in
approximately the same proportion that they are represented in the Index and in
other instruments whose value depends upon or derives from the value of the
Index.

The Capital Goods Fund seeks to achieve capital appreciation by investing,
under normal circumstances, at least 65% of its total assets in companies that
are primarily engaged in the design, development, manufacture, distribution,
sale or service of capital goods, or in the mining, processing, manufacture or
distribution of raw materials and intermediate goods used by industry and
agriculture. The Communications Fund seeks to achieve a high total return on
investment through capital appreciation and current income by investing, under
normal circumstances, at least 65% of its total assets in companies that are
primarily engaged in the design, development, manufacture, distribution or sale
of communications services and equipment. Up to 35% of the Communication Fund's

<PAGE>

total assets will be invested, under normal circumstances, in companies
that are engaged in developing, constructing or operating communications
infrastructure projects throughout the world, or in supplying equipment or
services to such companies. Under normal circumstances, the Capital Goods Fund
and Communications Fund will each invest at least 65% of their total assets in
securities of issuers of at least three different countries, one of which may be
the United States, although the Funds' investment adviser expects the Funds'
investments to be allocated among a larger number of countries. The percentage
of each Fund's assets invested in securities of issuers domiciled in the United
States normally will be higher than the percentage invested in securities issued
by companies domiciled in any other single country. However, it is possible that
at times either Fund may have 65% or more of its total assets invested in
foreign securities.

Investors may purchase shares of any or all of the Funds. Additional funds
may be added in the future.

Prospectuses for the Funds, dated December 1, 1998, which provide the
basic information you should know before investing in a Fund, may be obtained
without charge from INVESCO Distributors, Inc., P.O. 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 Prospectus. It is intended to provide you with additional
information regarding the activities and operations of the Funds and should be
read in conjunction with the Prospectus.

Investment Adviser: INVESCO FUNDS GROUP, INC.
Distributor: INVESCO DISTRIBUTORS, INC.

<PAGE>

TABLE OF CONTENTS
Page

INVESTMENT POLICIES AND RESTRICTIONS 5

THE FUNDS AND THEIR MANAGEMENT 21

HOW SHARES CAN BE PURCHASED 41

HOW SHARES ARE VALUED 46

FUND PERFORMANCE 48

SERVICES PROVIDED BY THE FUNDS 50

TAX-DEFERRED RETIREMENT PLANS 51

HOW TO REDEEM SHARES 51

DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES 52

INVESTMENT PRACTICES 55

ADDITIONAL INFORMATION 60

APPENDIX A 66

APPENDIX B 71

<PAGE>

INVESTMENT POLICIES AND RESTRICTIONS

As discussed in each Fund's Prospectus, 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
behavior). 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.

Foreign Securities. Up to 25% of the Realty and S&P 500 Index Funds' total
assets, measured at the time of purchase, may be invested directly in foreign
equity or corporate debt securities. An unlimited percentage of the Worldwide
Capital Goods, Worldwide Communications, European Small Company, Latin American
Growth and Asian Growth Funds' total assets may be invested directly in foreign
equity or 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;

<PAGE>

-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 or interest 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; foreign currencies fluctuations; 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.

Restricted/144A Securities. As discussed in the Funds' Prospectuses, each
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.

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

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

<PAGE>

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.

Municipal Bonds. Except for the S&P 500 Index Fund, the Funds may invest
in municipal bonds, the interest from which is exempt from federal income taxes,
when their investment adviser and sub-adviser (collectively, "Fund Management")
believes that the potential total return on the investment is better than the
return that otherwise would be achieved by investing in fixed-income securities
issued by corporations or the U.S. government or its agencies, the interest from
which is not exempt from federal income taxes. Municipal bonds are issued by or
on behalf of states, territories and possessions of the United States and the
District of Columbia, and their political subdivisions, agencies and
instrumentalities, to obtain funds for various public purposes, including: the
construction of a wide range of public facilities such as airports, bridges,
highways, housing, hospitals, mass transportation, schools, streets, and water
and sewer works; refunding outstanding obligations; and obtaining funds for
general operating expenses. The Funds' investments in municipal bonds, as is
true for any investments in debt securities, generally will be subject to both
credit risk and market risk. See the section of the Prospectuses entitled "Risk
Factors."

Obligations of Domestic Banks. These obligations consist of certificates
of deposit ("CDs") and banker's acceptances issued by domestic banks (including
their foreign branches) having total assets in excess of $5 billion, which meet
the Funds' minimum rating requirements. CDs are issued against deposits in a
commercial bank for a specified period and rate and are normally negotiable.
Eurodollar CDs are certificates issued by a foreign branch (usually London) of a
U.S. domestic bank, and, as such, the credit is deemed to be that of the
domestic bank.

<PAGE>

Bankers' acceptances are short-term credit instruments evidencing the
promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a
draft which has been drawn on it by a customer (the "drawer"). These instruments
are used to finance the import, export, transfer, or storage of goods and
reflect the obligation of both the bank and the drawer to pay the face amount.

Commercial Paper. The Funds may invest in these obligations, which are
short-term promissory notes issued by domestic corporations to meet current
working capital requirements. Such paper may be unsecured or backed by a letter
of credit. Commercial paper issued with a letter of credit is, in effect, "two
party paper," with the issuer directly responsible for payment, plus a bank's
guarantee that if the note is not paid at maturity by the issuer, the bank will
pay the principal and interest to the buyer. Commercial paper is sold either as
interest-bearing or on a discounted basis, with maturities not exceeding 270
days. The Funds will only invest in commercial paper which at the date of
purchase is rated A-2 or higher by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc. ("S&P") or Prime-2 or higher by Moody's Investors
Service, Inc. ("Moody's") or, if unrated, commercial paper that is judged by
Fund Management to be equivalent in quality to commercial paper having such
ratings. A commercial paper rating of A-2 or Prime-2 indicates a strong capacity
for repayment of short-term promissory obligations.

Mortgage-Backed Securities. Except for the S&P 500 Index Fund, the Funds
may invest in mortgage-backed securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or institutions such as banks,
insurance companies, and savings and loans. Some of these securities, such as
Government National Mortgage Association ("GNMA") certificates, are backed by
the full faith and credit of the U.S. Treasury while others, such as Federal
Home Loan Mortgage Corporation ("Freddie Mac") certificates, are not. The Funds,
with the exception of the Realty Fund, currently do not intend to invest more
than 5% of their respective net assets in mortgage-backed securities.

Mortgage-backed securities represent interests in a pool of mortgages.
Principal and interest payments made on the mortgages in the underlying mortgage
pool are passed through to the Funds. Unscheduled prepayments of principal
shorten the securities' weighted average life and may lower their total return.
The value of these securities also may change because of changes in the market's
perception of the creditworthiness of the federal agency or private institution
that issued them. In addition, the mortgage securities market in general may be
adversely affected by changes in interest rates, governmental regulation or tax
policies.

The Realty Fund also may invest in a variety of mortgage-backed securities
known as commercial mortgage-backed securities ("CMBs"). CMBs are derivative
multiple-class mortgage-backed securities. CMBs are generally structured with
two classes, each receiving a different proportion of interest and principal
distributions on a pool of mortgage assets. In general, one class will receive
most of the principal payments and some of the interest, with the other class
receiving some of the principal and most of the interest payments.

<PAGE>

Asset-Backed Securities. Except for the S&P 500 Index Fund, the Funds may
invest in asset-backed securities. Asset-backed securities represent interests
in pools of consumer loans (other than mortgage loans) and most often are
structured as pass-through securities. Interest and principal payments
ultimately depend on payment of the underlying loans by individuals, although
the securities may be supported by letters of credit or other credit
enhancements. The underlying assets (e.g., loans) are subject to prepayments
which shorten the securities' weighted average life and may lower their returns.
If the credit support or enhancement is exhausted, losses or delays in payment
may result if the required payments of principal and interest are not made. The
value of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the pool, the
originator of the pool, or the financial institution providing the credit
support or enhancement. The Funds currently do not intend to invest more than 5%
of their respective net assets in asset-backed securities.

The Realty Fund may invest in real estate mortgage investment conduit
certificates ("REMICs"). REMICs are a specialized form of Collateralized
Mortgage Obligations ("CMOs") that qualify for favorable tax treatment because
they invest in certain mortgages secured by interests in real estate and other
permitted investments. Investors may purchase "regular" and "residual" shares of
beneficial interest in REMICs. REMICs are subject to the same general risks as
CMOs.

Zero Coupon Bonds and Pay-In-Kind Bonds. Except for the S&P 500 Index
Fund, the Funds may invest in zero coupon bonds or "strips." Zero coupon bonds
do not make regular interest payments; rather, they are sold at a discount from
face value. Principal and accredited discount (representing interest accrued but
not paid) are paid at maturity. "Strips" are debt securities that are stripped
of their interest after the securities are issued, but otherwise are comparable
to zero coupon bonds. The issuers of all zero coupon bonds, and the obligor of
all "strips" purchased by the Funds, will be the U.S. government or its agencies
or instrumentalities. The market value of "strips" and zero coupon bonds
generally fluctuates in response to changes in interest rates to a greater
degree than interest-paying securities of comparable term and quality. In order

<PAGE>

for a Fund to maintain its qualification as a regulated investment company,
it may be required to distribute income recognized on zero coupon bonds or
"strips" even though no cash may be paid to the Fund until the maturity or call
date of the bond, and any such distribution could reduce the amount of cash
available for investment by the Fund. The Funds currently do not intend to
invest more than 5% of their respective net assets in zero coupon bonds or
"strips."

The Realty Fund may invest in zero coupon bonds and pay-in-kind ("PIK")
bonds if Fund Management determines that the risk of a default on the security,
which could result in adverse tax consequences, is not significant. PIK bonds
pay interest in cash or additional securities, at the issuer's option, for a
specified period. Because they are extremely responsive to changes in interest
rates, the market price of zero coupon and PIK bonds may be more volatile than
other bonds. The Realty Fund may be required to distribute income recognized on
these bonds, even though no cash interest payments are received, which could
reduce the amount of cash available for investment by the Fund.

Securities Lending. The Funds also may lend their securities to qualified
brokers, dealers, banks, or other financial institutions. This practice permits
a Fund to earn income, which, in turn, can be invested in additional securities
of the type described in the Fund's Prospectus in pursuit of the Fund's
investment objective. Loans of securities by the Funds will be collateralized by
cash, letters of credit, or securities issued or guaranteed by the U.S.
government or its agencies equal to at least 100% of the current market value of
the loaned securities, plus accrued interest and dividends, determined on a
daily basis. Cash collateral will be invested only in high quality short-term
investments offering maximum liquidity. Lending securities involves certain
risks, the most significant of which is the risk that a borrower may fail to
return a portfolio security. Fund Management monitors the creditworthiness of
borrowers in order to minimize such risks. The Funds will not lend any security
if, as a result of the loan, the aggregate value of securities then on loan
would exceed 33-1/3% of each Fund's total assets (taken at market value).

Futures and Options on Futures, Securities and Indices. As ^ discussed in
each Fund's Prospectus, the Funds may enter into futures contracts, and purchase
and sell ("write") options to buy or sell futures contracts and other securities
or indices, which are included in the types of instruments sometimes referred to
as "derivatives," because their value depends upon or derives from the value of
an underlying asset, reference rate or index. The Funds will comply with and
adhere to all limitations in the manner and extent to which they effect
transactions in futures and options on such futures currently imposed by the
rules and policy guidelines of the Commodity Futures Trading Commission (the

<PAGE>

"CFTC") as conditions for exemption of a mutual fund, or investment
advisers thereto, from registration as a commodity pool operator. A 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 the Fund's total 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 Funds 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. The S&P 500 Fund may also use futures and options for
liquidity.

Unlike when a Fund purchases or sells a security, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Instead, the
Fund will be required to deposit in a segregated asset account an amount of cash
or qualifying securities (currently U.S. Treasury bills). This is called
"initial margin." Such initial margin is in the nature of a performance bond or
good faith deposit on the contract. However, since losses on open contracts are
required to be reflected in cash in the form of variation margin payments, 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 a 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 a Fund, an amount of cash together with such other
securities as permitted by applicable regulatory authorities to be utilized for
such purpose, at least equal to the market value of the futures contracts, will
be deposited in a segregated account with 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 A ("Description of Futures and Options
Contracts").

Where futures are purchased to hedge against a possible increase in the
price of a security before a Fund is able in an orderly fashion to invest in the
security, it is possible that the market may decline instead. If the Fund, as a
result, determined 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.

<PAGE>

In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contract 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 the underlying securities 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 value of the underlying
securities and movements in the prices of futures contracts, the value of
futures contracts as a hedging device may be reduced.

In addition, if a Fund has insufficient available cash, it may at times
have to sell securities to meet variation margin requirements. Such sales may
have to be effected at a time which may be disadvantageous to the Fund.

Options on Futures Contracts. The Funds 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 a Fund is not fully invested it may buy a
call option on a futures contract to hedge against a market advance.

The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium which provides a partial

<PAGE>

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,
a Fund will retain the full amount of the option premium which provides a
partial hedge against any increase in the price of securities which the Fund is
considering buying. If a call or put option a 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 change in the value of
its portfolio securities and changes in the value of the futures positions, a
Fund's losses from existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.

The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a 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 a Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected 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 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

<PAGE>

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 their investment adviser or
sub-adviser. The Funds will not enter into forward contracts for a term of more
than one year.

Swaps and Swap-Related Products. Interest rate swaps involve the exchange
by a Fund with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed rate payments.
The exchange commitments can involve payments to be made in the same currency or
in different currencies. The purchase of an interest rate cap entitles the
purchaser, to the extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually-based principal amount
from the party selling the interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a
contractually-based principal amount from the party selling the interest rate
floor.

The Funds may enter into interest rate swaps, caps and floors, which are
included in the types of instruments sometimes known as derivatives, on either
an asset-based or liability-based basis, depending upon whether they are hedging
their assets or their liabilities, and usually will enter into interest rate
swaps on a net basis, i.e., the two payment streams are netted out, with a Fund
receiving or paying, as the case may be, only the net amount of the two
payments. The net amount of the excess, if any, of a Fund's obligations over its
entitlement with respect to each interest rate swap will be calculated on a
daily basis, and an amount of cash or liquid assets having an aggregate net
asset value at least equal to the accrued excess will be maintained in a
segregated account by the Funds' custodian. If a Fund enters into an interest
rate swap on other than a net basis, the Fund would maintain a segregated
account in the full amount accrued on a daily basis of the Fund's obligations
with respect to the swap. The Funds will not enter into any interest rate swap,
cap or floor transaction unless the unsecured senior debt or the claims-paying
ability of the other party thereto is rated in one of the three highest
rating categories of at least one nationally recognized statistical rating
organization at the time of entering into such transaction. The Funds' adviser
or sub-adviser will monitor the creditworthiness of all counterparties on an
ongoing basis. If there is a default by the other party to such a transaction, a
Fund would have contractual remedies pursuant to the agreements related to the
transaction.

<PAGE>

The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent a
Fund sells (i.e., writes) caps and floors, it will maintain in a segregated
account cash or liquid assets having an aggregate net asset value at least equal
to the full amount, accrued on a daily basis, of the Fund's obligations with
respect to any caps or floors.

There is no limit on the amount of interest rate swap transactions that
may be entered into by a Fund. These transactions may in some instances involve
the delivery of securities or other underlying assets by a Fund or its
counterparty to collateralize obligations under the swap. The documentation
currently used in those markets attempts to limit the risk of loss with respect
to interest rate swaps to the net amount of the payments that a party is
contractually obligated to make. If the other party to an interest rate swap
that is not collateralized defaults, the Fund would anticipate losing the net
amount of the payments that the Fund contractually is entitled to receive over
the payments that the Fund is contractually obligated to make. The Funds may buy
and sell (i.e., write) caps and floors without limitation, subject to the
segregated account requirement described above as well as the Funds' other
investment restrictions set forth below.

Investment Restrictions As discussed^ in the Funds' Prospectuses, the
Funds operate under certain investment restrictions. For purposes of the
following investment restrictions, all percentage limitations apply immediately
after a purchase or initial investment. Any subsequent change in a particular
percentage resulting from fluctuations in value does not require elimination of
any security from a Fund.

The following restrictions are fundamental and may not be changed with
respect to a particular Fund without the prior approval of the holders of a
majority, as defined in the Investment Company Act of 1940 (the "1940 Act"), of
the outstanding voting securities of that Fund. Under these restrictions each
Fund may not:

1. With respect to seventy-five percent (75%) of its Fund's total
assets, purchase the securities of any one issuer (except cash items and
"government securities" as defined under the 1940 Act), if the purchase
would cause the Fund to have more than 5% of the value of its total assets
invested in the securities of such issuer or to own more than 10% of the
outstanding voting securities of such issuer;

<PAGE>

2. Borrow money or issue senior securities (as defined in the 1940
Act), except that the Fund may borrow money for temporary or emergency
purposes (not for leveraging or investment) and may enter into reverse
repurchase agreements in an aggregate amount not exceeding 33-1/3% of the
value of its total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that come to exceed 33-1/3% of the
value of the Fund's total assets by reason of a decline in total assets
will be reduced within three business days to the extent necessary to
comply with the 33-1/3% limitation. This restriction shall not prohibit
deposits of assets to margin or guarantee positions in futures, options,
swaps or forward contracts, or the segregation of assets in connection with
such contracts.

3. Invest directly in real estate or interests in real estate;
however, the Fund may own debt or equity securities issued by companies
engaged in those businesses. This restriction shall not prohibit the Realty
Fund from directly holding real estate if such real estate is acquired by
that Fund as a result of a default on debt securities held by that Fund.

4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this shall not
prevent the Fund from purchasing or selling options, futures, swaps and
forward contracts or from investing in securities or other instruments
backed by physical commodities.)

5. Lend any security or make any other loan if, as a result, more than
33-1/3% of its total assets would be lent to other parties (but this
limitation does not apply to purchases of commercial paper, debt securities
or to repurchase agreements.)

6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund.

7. The European Small Company Fund, the Latin American Growth Fund and
the Asian Growth Fund may not invest more than 25% of the value of their
respective total assets in any particular industry (other than government
securities). The Realty Fund may invest more than 25% of the value of its
total assets in securities of the Real Estate Industry.

<PAGE>

As a fundamental policy in addition to the above, each Fund may,
notwithstanding any other investment policy or limitation (whether or not
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund.

In applying restriction 2 above, if the Fund has borrowed money in an
amount exceeding 5% of the value of the Fund's net assets, the Fund will not
purchase additional securities while any such borrowings exist.

In applying restriction 7 above, the European Small Company Fund, the
Latin American Growth Fund and the Asian Growth Fund use an industry
classification system for international securities based on the information
obtained from Bloomberg L.P., Moody's International and a modified S&P industry
code classification schema which uses various sources to classify securities.

Furthermore, the board of directors has adopted additional investment
restrictions for each Fund, unless specifically noted to the contrary. These
restrictions are operating policies of each Fund and may be changed by the board
of directors without shareholder approval. The additional investment
restrictions adopted by the board of directors to date with respect to each Fund
include the following:

(1) The Fund's investments in warrants, valued at the lower of cost or
market, may not exceed 5% of the value of its net assets. Included within
that amount, but not to exceed 2% of the value of the Fund's net assets,
may be warrants that are not listed on the New York or American Stock
Exchanges. Warrants acquired by the Fund in units or attached to securities
shall be deemed to be without value unless such warrants are separately
transferable and current market prices are available, or unless otherwise
determined by the board of directors.

(2) The Fund will not (i) enter into any futures contracts or options
on futures contracts if immediately thereafter the aggregate margin
deposits on all outstanding futures contracts positions held by the Fund
and premiums paid on outstanding options on futures contracts, after taking
into account unrealized profits and losses, would exceed 5% of the market
value of the total assets of the Fund,

<PAGE>

or (ii) enter into any futures contracts if the aggregate net amount
of the Fund's commitments under outstanding futures contracts positions of
the Fund would exceed the market value of the total assets of the Fund.

(3) The Fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short without the payment of any additional
consideration therefor, and provided that transactions in futures, options,
swaps and forward contracts are not deemed to constitute selling securities
short.

(4) The Fund does not currently intend to purchase securities on
margin, except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments and other deposits in connection with transactions in options,
futures, swaps and forward contracts shall not be deemed to constitute
purchasing securities on margin.

(5) The Fund does not currently intend to (i) purchase securities of
closed end investment companies, except in the open market where no
commission except the ordinary broker's commission is paid, or (ii)
purchase or retain securities issued by other open-end investment
companies. Limitations (i) and (ii) do not apply to money market funds or
to securities received as dividends, through offers of exchange, or as a
result of a reorganization, consolidation, or merger. If the Fund invests
in a money market fund, the Fund's investment adviser will waive its
advisory fee on the assets of the Fund which are invested in the money
market fund during the time that those assets are so invested.

(6) The Fund may not mortgage or pledge any securities owned or held
by the Fund in amounts that exceed, in the aggregate, 15% of the Fund's net
assets, provided that this limitation does not apply to reverse repurchase
agreements or in the case of assets deposited to margin or guarantee
positions in futures, options, swaps or forward contracts or placed in a
segregated account in connection with such contracts.

<PAGE>

(7) The Fund does not currently intend to purchase securities of any
issuer (other than U.S. Government agencies and instrumentalities or
instruments guaranteed by an entity with a record of more than three years'
continuous operation, including that of predecessors) with a record of less
than three years' continuous operation (including that of predecessors) if
such purchase would cause the Fund's investments in all such issuers to
exceed 5% of the Fund's total assets taken at market value at the time of
such purchase.

(8) The Fund does not currently intend to invest directly in oil, gas,
or other mineral development or exploration programs or leases; however,
the Fund may own debt or equity securities of companies engaged in those
businesses.

(9) The Fund does not currently intend to purchase any security or
enter into a repurchase agreement if, as a result, more than 15% of its net
assets would be invested in repurchase agreements not entitling the holder
to payment of principal and interest within seven days and in securities
that are illiquid by virtue of legal or contractual restrictions on resale
or the absence of a readily available market. The board of directors, or
the Fund's investment adviser acting pursuant to authority delegated by the
board of directors, may determine that a readily available market exists
for securities eligible for resale pursuant to Rule 144A under the 1933
Act, or any successor to such rule, and therefore that such securities are
not subject to the foregoing limitation.

(10) The Fund may not invest in companies for the purpose of
exercising control or management, except to the extent that exercise by the
Fund of its rights under agreements related to portfolio securities would
be deemed to constitute such control.

With respect to investment restriction (9) above, under the guidelines
established by the board of directors, Fund Management 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>

The Company has voluntarily undertaken that the Worldwide Capital Goods and
Worldwide Communications Funds will invest no more than 15%, the European Small
Company Fund will invest in no more than 15%, the Latin American Growth Fund
will invest no more than 25%, the Asian Growth Fund will invest no more than 30%
and the Realty Fund will invest no more than 15% of their respective total
assets in lower rated debt securities, commonly known as "junk bonds."

THE FUNDS AND THEIR MANAGEMENT

The Company. The Company was incorporated on April 12, 1994,
under the laws of Maryland.

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 Bond
Funds, Inc. (formerly, INVESCO Income Funds, Inc.), INVESCO Combination Stock &
Bond Funds, Inc. (formerly, INVESCO Flexible Funds, Inc.), INVESCO Diversified
Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO ^ Growth Funds,
Inc. (formerly, ^ INVESCO Growth Fund, ^ Inc.), INVESCO Industrial Income Fund,
Inc., INVESCO International Funds, Inc., INVESCO Money Market Funds, Inc.,
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios, ^ Inc.),
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.), INVESCO
Tax-Free Income Funds, Inc., INVESCO Value Trust, and INVESCO Variable
Investment Funds, Inc.

The Investment Sub-Advisers. INVESCO has contracted with INVESCO Asset
Management Limited ("IAML") to provide investment advisory and research services
on behalf of the European Small Company Fund and Latin American Growth Fund.
IAML has the primary responsibility for providing portfolio investment
management services to these Funds. IAML is an indirect, wholly-owned subsidiary
of AMVESCAP PLC.

INVESCO has contracted with INVESCO Asia Ltd. ("INVESCO Asia") to provide
investment advisory and research services on behalf of the Asian Growth Fund.
INVESCO Asia has primary responsibility for providing portfolio investment
management services to this Fund. INVESCO Asia is an indirect wholly-owned
subsidiary of AMVESCAP PLC.

INVESCO has contracted with INVESCO Realty Advisors, Inc. ("IRAI") to
provide investment advisory and research services on behalf of the Realty Fund.
IRAI has the primary responsibility for providing portfolio investment
management services to the Fund. IRAI is an indirect, wholly-owned subsidiary of
AMVESCAP PLC.

INVESCO has contracted with World Asset Management ("World") to provide
investment advisory and certain recordkeeping services to the S&P 500 Index
Fund. World has the primary responsibility for providing portfolio investment
management services to this Fund. World is unaffiliated with any INVESCO entity.

<PAGE>

Prior to February 3, 1998, Institutional Trust Company d/b/a INVESCO Trust
Company ("ITC") provided sub-advisory services to the Capital Goods and
Communications Funds. Effective February 3, 1998, ITC no longer provided
sub-advisory services to those Funds and INVESCO provides such day-to-day
portfolio management services as the investment adviser to the Funds. This
change did not affect the basis upon which investment advice is provided to the
Capital Goods and Communications Funds, the cost of those services to those
Funds or the persons actually performing the investment advisory and other
services previously provided by ITC.

The Distributor. ^ INVESCO Distributors, Inc. ("IDI") ^ is 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 Funds' distributor.

INVESCO, IAML, INVESCO Asia, IRAI 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 ^ $241 billion in assets under management as of ^ September 30,
1998. INVESCO was established in 1932 and as of July 31, 1998, managed 14 mutual
funds, consisting of 49 separate portfolios, on behalf of over 884,099
shareholders.

AMVESCAP PLC's other North American subsidiaries include the following:

--INVESCO Retirement and Benefit Services, Inc. ("IRBS"), Atlanta, Georgia,
develops and provides domestic and international defined contribution retirement
plan services to plan sponsors, institutional retirement plan sponsors,
institutional plan providers and foreign governments.

--INVESCO Retirement Plan Services, Atlanta, Georgia, a division of IRBS,
provides recordkeeping and investment selection services to defined contribution
plan sponsors of plans with between $2 million and $200 million in assets.
Additionally, IRPS provides investment consulting services to institutions
seeking to provide INVESCO products and services in their retirement plan
products and services.

<PAGE>

--^ Institutional Trust Company doing business as INVESCO Trust Company
("ITC") of Denver, Colorado, a division of IRBS, 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., 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 one registered investment company.

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

--INVESCO (NY), Inc., New York, is an investment adviser for separately
managed accounts, such as corporate and municipal pension plans, Taft-Hartley
Plans, insurance companies, charitable institutions and private individuals.
INVESCO NY also offers the opportunity for its clients to invest both directly
and indirectly through partnerships in primarily private investments or
privately negotiated transactions. INVESCO NY further serves as investment
adviser to several closed-end investment companies, and as sub-adviser with
respect to certain commingled employee benefit trusts. INVESCO NY specializes in
the fundamental research investment approach, with the help of quantitative
tools, and currently has approximately $26 billion in assets under management.

--PRIMCO Capital Management, Inc. of Louisville, Kentucky specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.

--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
insurance companies ^ that issue variable annuity and/or variable life products.

<PAGE>

--A I M Distributors, Inc. and Fund Management Company of Houston, Texas
are registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.

The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England.

As indicated in the Funds' Prospectuses, INVESCO and IRAI permit investment
and other personnel to purchase and sell securities for their own accounts in
accordance with a compliance policy governing personal investing by directors,
officers and employees of 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 if, 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. INVESCO Asia,
IAML and World are subject to similar policies.

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 this policy are administered by and subject to
exceptions authorized by INVESCO.

Investment Advisory Agreement. INVESCO serves as investment adviser to each
of 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 Capital Goods Fund, the Communications Fund, the
European Small Company Fund, the Latin American Growth Fund and the Asian Growth
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 Realty Fund, the
Agreement was approved by INVESCO on December 9, 1996 for an initial term
expiring December 9, 1998. On May 13, 1998, this period was extended by the
Company's board of directors to May 15, 1999. With respect to the S&P 500 Index
Fund, the Agreement was approved by INVESCO on October 1, 1997 for an initial

<PAGE>

term ending October 1, 1999. Thereafter, the Agreement may be continued
from year to year as 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 (either directly
or by delegation to a sub-adviser, which may be a party affiliated with
INVESCO). 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
any separate agreement between the Company and INVESCO or any affiliate thereof,
including the distribution and sale of Fund 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 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. The fee is based upon a percentage of each Fund's
average net assets, determined daily. With respect to the Capital Goods Fund and
the Communications Fund, the fee is calculated at the annual rate of: 0.65% on

<PAGE>

the first $500 million of each Fund's average net assets; 0.55% on the next
$500 million of each Fund's average net assets; and 0.45% on each Fund's average
net assets over $1 billion. With respect to the European Small Company Fund, the
Latin American Growth Fund and the Asian Growth Fund, the fee is calculated at
the annual rate of: 0.75% on the first $500 million of each Fund's average net
assets; 0.65% on the next $500 million of each Fund's average net assets; and
0.55% on each Fund's average net assets over $1 billion. With respect to the
Realty Fund, the fee is calculated at the annual rate of 0.75% of the Fund's
average net assets. With respect to the S&P 500 Index Fund, the fee is
calculated at the annual rate of 0.25% of the Fund's average net assets.

Sub-Advisory Agreements. IAML serves as sub-adviser to the European Small
Company Fund and the Latin American Growth Fund pursuant to a sub-advisory
agreement with INVESCO dated February 28, 1997 (the "European and Latin American
Sub-Agreement"). The European and Latin American Sub-Agreement was approved by
the board of directors of the Company 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, INVESCO or IAML
at a meeting called for such purpose. Shareholders of the European Small Company
and Latin American Growth Funds approved the European and Latin American
Sub-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. Thereafter, the European and Latin American
Sub-Agreement may be continued from year to year as to each Fund as long as each
such continuance is specifically approved by the board of directors of the
Company, or by a vote of the holders of a majority, as defined in the Investment
Company Act of 1940, of the outstanding shares of the Fund. Each such
continuance also must be approved by a majority of the directors who are not
parties to the European and Latin American Sub-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 European and Latin
American Sub-Agreement may be terminated at any time without penalty by either
party or the Company 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.

INVESCO Asia serves as sub-adviser to the Asian Growth Fund pursuant to a
sub-advisory agreement dated February 28, 1997 (the "Asian Growth
Sub-Agreement") with INVESCO. The Asian Growth Sub-Agreement was approved by the
board of directors of the Company on November 6, 1996 by a vote cast in person
by a majority of the directors, including a majority of the directors who are
not "interested persons" of the Company, INVESCO or INVESCO Asia at a meeting

<PAGE>

called for such purpose. Shareholders of the Asian Growth Fund approved the
Asian Growth Sub-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. Thereafter the Asian Growth Sub-Agreement
may be continued from year to year as long as it is specifically approved 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 Fund. Any such
continuance also must be approved by a majority of directors who are not parties
to the Asian Growth Sub-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 Asian Growth Sub-Agreement may be terminated at
any time without penalty by either party or the Company 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.

IRAI serves as sub-adviser to the Realty Fund pursuant to a sub-advisory
agreement dated December 9, 1996 (the "Realty Sub-Agreement") with INVESCO. The
Realty Sub-Agreement was approved by the board of directors of the Company on
November 6, 1996 by a vote cast in person by a majority of the directors
including a majority of the directors who are not "interested persons" of the
Company, INVESCO or IRAI at a meeting called for such purpose and approved by
INVESCO as the then sole shareholder of the Realty Fund on December 9, 1996. The
Realty Sub-Agreement was approved for an initial term expiring December 9, 1998.
On May 13, 1998, this period was extended by the Company's board of directors to
May 15, 1999. Thereafter, the Realty Sub-Agreement may be continued from
year-to-year as long as it is specifically approved 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 Fund. Any such continuance also must be
approved by a majority of directors who are not parties to the Realty
Sub-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 Realty Sub-Agreement may be terminated at any time without
penalty by either party or the Company 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.

World serves as sub-adviser to the S&P 500 Index Fund pursuant to a
sub-advisory agreement dated October 1, 1997 (the "S&P 500 Index Sub-Agreement")
with INVESCO which was approved by the board of directors on August 12, 1996, by
a vote cast in person by a majority of the directors, including a majority of
the directors who are not "interested persons" of the Company, INVESCO or World
at a meeting called for such purpose. INVESCO approved the S&P 500 Index

<PAGE>

Sub-Agreement on October 1, 1997, for an initial term expiring October 1,
1999. Thereafter, the S&P 500 Index Sub-Agreement may be continued from year to
year as long as it is specifically approved 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 Fund. Any such continuance also must be
approved by a majority of directors who are not parties to the S&P 500 Index
Sub-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 S&P 500 Index Sub-Agreement may be terminated at any time
without penalty by either party or the Company upon sixty (60) days' written
notice, and terminates automatically in the event of an assignment to the extent
required by the 1940 Act and the rules thereunder.

The Sub-Agreements provide that IAML, INVESCO Asia, IRAI and World,
subject to the supervision of INVESCO, shall manage the investment portfolios of
the respective Funds in conformity with each Fund's investment policies. These
management services include: (a) managing the investment and reinvestment of all
the assets, now or hereafter acquired, of the Funds, and executing all purchases
and sales of portfolio securities; (b) maintaining a continuous investment
program for the Funds, consistent with (i) each Fund's investment policies as
set forth in the Company's Articles of Incorporation, Bylaws, and Registration
Statement, as from time to time amended, under the 1940 Act, and in any
prospectus and/or statement of additional information of the Company, as from
time to time amended and in use under the 1933 Act, and (ii) the Company's
status as a regulated investment company under the Internal Revenue Code of
1986, as amended; (c) determining what securities are to be purchased or sold
for each of the Funds, unless otherwise directed by the directors of the Company
or INVESCO, and executing transactions accordingly; (d) providing the Funds the
benefit of all of the investment analysis and research, the reviews of current
economic conditions and trends, and the consideration of long-range investment
policy now or hereafter generally available to investment advisory customers of
the Sub-Advisers; (e) determining what portion of each of the Funds should be
invested in the various types of securities authorized for purchase by each
Fund; and (f) making recommendations as to the manner in which voting rights,
rights to consent to Company action and any other rights pertaining to the
portfolio securities of each Fund shall be exercised.

The European and Latin American Sub-Agreement provides that as
compensation for its services, IAML shall receive from INVESCO, at the end of
each month, a fee based upon the average daily value of the European Small
Company Fund's and Latin American Growth Fund's net assets. Based upon approval
of the Company's board of directors at a meeting held May 13, 1998, the
calculation of the sub-advisory fees of each Fund has been changed from 33.33%

<PAGE>

of the advisory fee (0.25% on the first $500 million of each Fund's average
net assets, 0.2167% on the next $500 million of the Fund's average net assets
and 0.1833% on each Fund's average net assets in excess of $1 billion) to 40% of
the advisory fee (0.30% on the first $500 million of each Fund's average net
assets, 0.26% on the next $500 million of each Fund's average net assets and
0.22% of each Fund's average net assets in excess of $1 billion). The Asian
Growth Sub-Agreement provides that as compensation for its services, INVESCO
Asian shall receive from INVESCO at the end of each month, a fee based upon the
average daily value of the Asian Growth Fund's net assets. Based upon approval
of the Company's board of directors at a meeting held May 13, 1998, the
calculation of the sub-advisory fees of each Fund has been changed from 33.33%
of the advisory fee (0.25% on the first $500 million of the Fund's average net
assets, 0.2167% on the next $500 million of the Fund's average net assets and
0.1833% on the Fund's average net assets in excess of $1 billion) to 40% of the
advisory fee (0.30% on the first $500 million of the Fund's average net assets,
0.26% on the next $500 million of the Fund's average net assets and 0.22% on the
Fund's average net assets in excess of $1 billion). The Realty Sub-Agreement
provides that as compensation for its services, IRAI shall receive from INVESCO
at the end of each month, a fee based upon the average daily value of the Realty
Fund's net assets. Based upon approval of the Company's board of directors at a
meeting held May 13, 1998, the calculation of the sub-advisory fees of each Fund
has been changed from 33.33% of the advisory fee (0.25% on the Fund's average
daily net assets) to 40% of the advisory fee (0.25% on the Fund's average daily
net assets). The S&P 500 Index Fund Sub-Agreement provides that as compensation
for its services, World shall receive from INVESCO, at the end of each month, a
fee based upon the average daily value of the S&P 500 Index Fund's net assets at
the rate of 0.07% on the first $10 million of the Fund's average net assets,
0.05% on the next $40 million of the Fund's average net assets, and 0.03% on the
Fund's average net assets in excess of $50 million. The Sub-Advisory fees are
paid by INVESCO, NOT the Funds.

Administrative Services Agreement. INVESCO, either directly or through
affiliated companies, 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 by the board of directors 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 thereafter 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 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such continuance. The
Administrative Agreement may be terminated at any time without penalty by
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.

<PAGE>

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.

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
Fund.

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. The Transfer Agency Agreement was for an
initial term expiring February 28, 1998 and has been extended by the board of
directors until May 15, 1999. Thereafter, the Transfer Agency Agreement may be
continued from year to year as to each Fund as long as such continuance is
specifically approved at least annually by the board of directors of the
Company, or by a vote of the holders of a majority of the outstanding shares of
the 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 each Fund will 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 a rate of 1/12 of
the annual fee and is based upon the actual number of shareholder accounts and
omnibus account participants in existence during each month.

Rule 18f-3 under the 1940 Act ("Rule 18f-3") permits a fund to use a
multiclass system, including separate class arrangements for distribution of
shares and related exchange privileges applicable to the classes. The S&P 500
Index Fund's Plan Pursuant to Rule 18f-3 provides that advisory and
administrative services fees that are expenses of the Fund but are not otherwise
attributable to a particular class of Fund shares shall be allocated to each
class on the basis of its net asset value relative to the net asset value of the
Fund.

<PAGE>

Set forth below is a table showing the advisory fees, administrative
services fees, and transfer agency fees paid by each of the Funds for the period
shown.
<TABLE>
<CAPTION>

Year Ended July 31, 1998 Year Ended July 31, 1997 Year Ended July 31, 1996(1)
----------------------------- ----------------------------- -----------------------------
Adminis- Adminis- Adminis-
Transfer trative Transfer trative Transfer trative
Advisory Agency Services Advisory Agency Services Advisory Agency Services
Fees Fees Fees Fees Fees Fees Fees Fees Fees
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Worldwide Capital Goods $117,345 $86,976 $12,708 $48,575 $42,296 $11,121 $52,495 $35,801 $11,211
Worldwide
Communications $917,111 $405,886 $31,164 $358,300 $261,010 $18,269 $255,873 $151,435 $15,905
European Small Company $499,912 $382,417 $19,998 $928,226 $353,726 $28,565 $271,008 $66,181 $15,420
Latin American Growth $552,409 $338,846 $21,048 $485,690 $177,930 $19,714 $130,913 $47,581 $12,618
Asian Growth Fund $130,604 $156,273 $12,612 $218,813 $113,451 $14,376 $26,564(2) $16,399(2) $3,031(2)
Realty Fund(3) $275,574 $215,561 $15,511 $112,846 $74,155 $7,257 -0- -0- -0-
S&P 500 Index Fund(4) $13,759 $7,897 $6,874 -0- -0- -0- -0- -0- -0-

</TABLE>

(1) These amounts do not reflect the voluntary expense limitations described in
the Funds' prospectuses.

(2) For the five month period beginning March 1, 1996 (commencement of
operations).

(3) For the period January 1, 1997 (commencement of operations) through July 31,
1997.

(4) For the period December 23, 1997 (commencement of operations) through July
31, 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 are paid by, INVESCO, are responsible for the day-to-day
administration of the Company and each of the Funds. The investment sub-adviser
for each Fund for which a sub-adviser has been approved 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 Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.), INVESCO
Combination Stock & Bond Funds, Inc. (formerly, INVESCO Flexible Funds, Inc.),
INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc.,
INVESCO ^ Growth Funds, Inc. (formerly, ^ INVESCO Growth Fund, ^ Inc.), INVESCO
Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money
Market Funds, Inc., INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic
Portfolios, ^ Inc.), INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds,
Inc.), INVESCO Tax-Free Income Funds, Inc. and INVESCO Variable Investment
Funds, Inc. All of the officers and directors 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 the past five years.

CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of AMVESCAP PLC, London, England, and of various subsidiaries thereof,
Chairman of the Board of INVESCO Global Health Sciences Fund. 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.

<PAGE>

(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, Savannah,
Georgia. Born: June 23, 1930.

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: ^ 1600
Pierce Street, #1000, ^ Lakewood, 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.

<PAGE>

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.

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 IDI; President, CEO and Director of INVESCO 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 and Senior Vice
President, General Counsel and Secretary of IDI (since 1997); Vice President
(May 1989 to April 1995) of INVESCO; Senior Vice President, (since 1995),
General Counsel (since 1989) and Secretary (1989 to 1998) of ITC. 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
(since 1988). Senior Vice President and Treasurer of IDI (since 1997). Senior
Vice President and Treasurer of ITC (1988 to 1998) Born: October 1, 1946.

WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO (since 1995) and of IDI (since 1997) and Trust Officer of ITC (1995 to
1998) and formerly (August 1992 to July 1995) Vice President of INVESCO.
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 (since
1984). Formerly, Trust Officer of ITC. Born: September 14, 1941.

JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO (since 1984)
and of IDI (since 1997). Formerly, Trust Officer of ITC. Born: February 3, 1948.

<PAGE>

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

#Member of the audit committee of the Company.

@Member of the derivatives committee of the Company.

@@Member of the soft dollar brokerage committee of the Company.

+Member of the executive committee of the Company. 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.

**Member of the management liaison committee of the Company.

As of September 16, 1998, officers and directors of the Company, as a
group, beneficially owned less than 1% of the Company's outstanding shares.

Director Compensation

The following table sets forth, for the fiscal year ending July 31, 1998:
the compensation paid by the Company to its eligible 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 Fund Upon Re- Paid To
Position Fund(1) Expenses(2) tirement(3) Directors(1)
- -------- --------- ----------- ----------- ------------
Fred A. Deering, $6,892 $862 $553 $113,350
Vice Chairman of
the Board

Victor L. Andrews 6,845 815 640 92,700

Bob R. Baker 6,920 727 858 96,050

Lawrence H. Budner 6,793 815 640 91,000

Daniel D. Chabris(4) 6,852 880 478 89,350

Wendy L. Gramm 6,700 0 0 39,000

Kenneth T. King 6,753 895 502 94,350

John W. McIntyre 6,744 0 0 104,000

Larry Soll 6,744 0 0 78,000
------- ------ ------ --------

Total $61,243 $4,994 $3,671 $797,800

% of Net Assets 0.0136%(5) 0.0011%(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 this 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
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

<PAGE>

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 retired as a director effective September 30, 1998.

(5)Totals as a percentage of the Company's net assets as of July 31, 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 and
of 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 upon retiring from the boards at the retirement age of 72,
the retirement age of 73 to 74, if the retirement date is extended by the boards
for one or two years, but less than three years) continuation of payment for one
year (the "first year retirement benefit") of the annual basic retainer and
annualized board meeting fees payable by the funds to the qualified director at
the time of his 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 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/her 74th year while still a director of the funds, the director

<PAGE>

will not be entitled to receive the first year retirement benefit; however,
the reduced retainer payments will be made to his/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 INVESCO Treasurer's Series Trust funds
in a manner determined to be fair and equitable by the committee. The Company
began making payments to Mr. Chabris under the plan as of October 1, 1998. 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 certain
of the INVESCO Funds. The deferred amounts are being invested in the shares of
all of the INVESCO and INVESCO Treasurer's Series Trust Funds. Each independent
director is, therefore, an indirect owner of shares of each INVESCO Fund.

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 brokerage 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 derivatives 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 Company's 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 respective
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 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 each Fund's behalf. Such brokers are authorized to designate other
intermediaries to accept purchase orders on the Funds' behalf. A Fund 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
Company and bears all expenses, including the costs of printing and distributing
prospectuses, incident to direct sales and distribution of Fund shares on a
no-load basis.

Distribution Plan. As discussed in the Prospectuses, the Company has
adopted a Plan and Agreement of Distribution (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. There is no distribution fee applicable to Class I shares of
the S&P 500 Index 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 a
Fund's average net assets to permit IDI, at its discretion, to engage in certain
activities and provide certain 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 this period is extended to 24 months for obligations incurred
during the first 24 months of a Fund's operations. All distribution expenses
paid by the Funds for the fiscal year ended July 31, 1998, were paid to INVESCO
(the predecessor of IDI as distributor of shares of the Funds) and IDI. For the
fiscal year ended July 31, 1998, the Capital Goods Fund, Communications Fund,
European Small Company Fund, Latin American Growth Fund, Asian Growth Fund,
Realty Fund and Class II shares of the S&P 500 Index Fund incurred $46,220,
$309,783, $169,748, $204,643, $47,724, $92,862 and $6,942 in distribution
expenses, respectively, prior to the voluntary absorption of certain Fund
expenses by INVESCO and the applicable sub-adviser, if any. In addition, as of

<PAGE>

Communications Fund, European Small Company Fund, Latin American Growth Fund,
Asian Growth Fund, Realty Fund and Class II shares of the S&P 500 Index Fund
incurred $3,024, $57,894, $16,122, $7,703, $2,769, $6,349 and $3,071,
respectively, of additional distribution accruals had been incurred for the
Funds, and will be paid during the fiscal year ended July 31, 1999. As noted in
the Prospectuses, 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 one or
more of the Funds possibly could decrease to the extent that the banks would no
longer invest customer assets in a particular Fund. Neither the 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 July 31, 1998, allocation of 12b-1 amounts paid
by the Capital Goods Fund for the following categories of expenses were:
advertising--$3,352; sales literature, printing and postage--$10,621; direct
mail--$17,599; public relations/promotion--$4,190; compensation to securities
dealers and other organizations--$4,295; marketing personnel--$6,163. For the
fiscal year ended July 31, 1998, allocation of 12b-1 amounts paid by the
Communications Fund for the following categories of expenses were:
advertising--$42,160; sales literature, printing and postage--$2,870; direct
mail--$49,009; public relations/promotion--$17,219; compensation to securities
dealers and other organizations--$82,690; marketing personnel--$55,835. For the
fiscal year ended July 31, 1998, allocation of 12b-1 amounts paid by the
European Small Company Fund for the following categories of expenses were:
advertising--$37,844; sales literature, printing and postage--$38,990; direct
mail--$13,216; public relations/promotion--$6,672; compensation to securities
dealers and other organizations--$45,765; marketing personnel--$27,261. For the
fiscal year ended July 31, 1998, allocation of 12b-1 amounts paid by the Latin
American Growth Fund for the following categories of expenses were:

<PAGE>

advertising--$59,450; sales literature, printing and postage--$26,392;
direct mail--$9,511; public relations/promotion--$9,405; compensation to
securities dealers and other organizations--$67,797; marketing
personnel--$32,089. For the fiscal year ended July 31, 1998, allocation of 12b-1
amounts paid by the Asian Growth Fund for the following categories of expenses
were: advertising--$25,619; sales literature, printing and postage--$7,092;
direct mail--$1,591; public relations/promotion--$1,284; compensation to
securities dealers and other organizations--$6,169; marketing personnel--$5,969.
For the fiscal year ended July 31, 1998, allocation of 12b-1 amounts paid by the
Realty Fund for the following categories of expenses were: advertising--$6,080;
sales literature, printing and postage--$29,155; direct mail--$22,680; public
relations/promotion--$6,368; compensation to securities dealers and other
organizations--$15,216; marketing personnel--$13,363. For the period December
23, 1997 (commencement of operations) through July 31, 1998, allocation of 12b-1
amounts paid by Class II shares of the S&P 500 Index Fund for the following
categories of expenses were: advertising--$1,393; sales literature, printing and
postage--$3,067; direct mail--$364; public relations/promotion--$405;
compensation to securities dealers and other organizations--$472; marketing
personnel--$1,241.

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 each Fund's
transactions by customers, serving as the primary source of information to
customers in answering questions concerning each Fund, and assisting in other
customer transactions with each Fund.

The Plan was approved on April 20, 1994, 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"). The
Plan was approved by INVESCO on July 12, 1994, as the then sole shareholder of
the Capital Goods Fund and Communications Fund for an initial term expiring
April 30, 1995 and has been continued by action of the board of directors until
May 15, 1999. With respect to the INVESCO European Small Company Fund and Latin
American Growth Fund, the Plan was approved by INVESCO on February 8, 1995 as
the then sole shareholder of each Fund and has been continued by action of the
board of directors until May 15, 1999. With respect to the Asian Growth Fund,
the Plan was approved by INVESCO on September 12, 1995 as the then sole
shareholder of the Fund and has been continued by action of the board of
directors until May 15, 1999. With respect to the Realty Fund, the Plan was
approved by INVESCO on December 9, 1996 as the then sole shareholder of the Fund

<PAGE>

and has been continued by action of the board of directors until May 15,
1999. The board of directors on February 4, 1997, approved amending 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 any
Fund's payments thereunder. With respect to Class II shares of the S&P 500 Index
Fund, the Plan was approved by action of the board of directors of the Company
on August 12, 1996, and has been continued by action of the board of directors
to May 15, 1999. Pursuant to authorization granted by the Company's board of
directors on September 2, 1997, 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 also can 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 the shares of any Fund 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 Fund 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 any Fund's payments thereunder without
approval of the shareholders of that Fund, and all material amendments to the
Plan must be approved by the board of 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.

<PAGE>

To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the Act, it shall remain in effect as such, so as
to authorize the use of each Fund's assets in the amounts and for the purposes
set forth therein, notwithstanding the occurrence of an assignment, as defined
by the 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 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 under "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 and its affiliated companies:

(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of each Fund's
shareholder services (in both systems and personnel),

<PAGE>

(b) To increase the number and type of mutual funds available to
investors from INVESCO and its affiliated companies (and
support them in their infancy), and thereby expand the
investment choices available to all shareholders, and

(4) Increased Fund assets may result in reducing each investor's share
of certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially
offsetting the costs of the Plan.

HOW SHARES ARE VALUED

As ^ discussed in the Funds' Prospectuses, the net asset value of shares
or class of shares of each Fund of the Company 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 of such
Fund might be materially affected by changes in the value of the securities
held, but only if on such day that 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 or class of shares of each Fund is
calculated by dividing the value of all securities held by the Fund and its
other assets (including dividends and interest accrued but not collected), less
the liabilities of the Fund or class (including accrued expenses), by the number
of outstanding shares of the 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

<PAGE>

be valued at their fair values as determined in good faith by the Company's
board of directors or pursuant to procedures adopted by the 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 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 are normally valued at amortized cost.

The values of securities and other assets held by each Fund 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
the Funds' net asset value. However, in the event that the closing price of a
foreign security is not available in time to calculate a Fund's net asset value
on a particular day, the 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 Funds' Prospectuses, the Company advertises the total
return performance of the Funds. The total return performance for the Capital
Goods, Communications, European Small Company, Latin American Growth, Asian
Growth and Realty Funds for the fiscal year or period ended July 31, 1998, were
as follows:

Fund One Year Life of Fund
Capital Goods Fund(1) (2.06)% 9.91%
Communications Fund(1) 36.79% 26.98%
European Small Company Fund(2) 24.15% 23.75%
Latin American Growth Fund(2) (30.64)% 9.78%
Asian Growth Fund(3) (62.16)% (29.40)%
Realty Fund(4) (6.49)% 3.10%
S&P 500 Index Fund(5)
- Class I~ N/A 32.98%
- Class II(5)~ N/A 34.94%

<PAGE>

(1)Commencement of Operations: August 1, 1994
(2)Commencement of Operations: February 15, 1995
(3)Commencement of Operations: March 1, 1996
(4)Commencement of Operations: January 2, 1997
(5)Commencement of Operations: December 23, 1997
~Annualized

Average annual total return performance is computed by finding the average
annual compounded rates of return that would equate the initial amount invested
to the ending redeemable value, according to the following formula:

P(1 + T)exponent n = ERV

where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment

The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period shown.

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.

From time to time, evaluations of performance made by independent sources
may also be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Funds. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:

American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund
Performance Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth

<PAGE>

SERVICES PROVIDED BY THE FUNDS

Periodic Withdrawal Plan. As ^ discussed in the Funds' Prospectuses, each
Fund offers a Periodic Withdrawal Plan. All dividends and other 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 sending 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.

<PAGE>

Exchange Policy. As discussed in the Funds' Prospectuses, the Funds offer
shareholders the ability to exchange shares of the Funds for shares of another
fund or 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 have established a new account must meet the
fund's applicable minimum initial investment requirements. Written exchange
requests into an existing account have no minimum requirements other than the
fund's applicable minimum subsequent investment requirements. Any gain or loss
realized on such an exchange is recognized for federal income tax purposes. This
ability 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.

<PAGE>

TAX-DEFERRED RETIREMENT PLANS

As described in the Funds' Prospectuses, 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 other
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 Funds'
Prospectuses. 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 the
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. A Fund 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
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
three-month 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.

<PAGE>

DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES

^ The Company intends ^ to conduct its business and satisfy the applicable
diversification of assets, distribution 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 Company so qualified for
the taxable year ended July 31, 1998, and intends to continue to qualify during
its current taxable year. As a result, because the Company intends to distribute
all of its income and recognized gains, it is anticipated that ^the Company will
pay no federal income or excise taxes and that the ^ Company 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
how long a shareholder has held shares of the Fund. ^ During 1997, the Taxpayer
Relief Act established a new maximum capital gains tax rate of 20%. Depending on
the holding period of the asset giving rise to the gain, as capital gain was
taxable at a maximum rate of ^ either 20% or 28%. Beginning January 1, 1998, ^
all long-term gains on the sale of securities held for more than 12 months will
be taxable at a maximum rate of 20%. In addition, legislation signed in October
of 1998 provides that all capital gain distributions from a mutual fund paid to
shareholders during 1998 will be taxed at a maximum rate of 20%. Accordingly,
all long-term gain distributions paid in 1998 will be taxable at a maximum rate
of 20%. Note that the rate of capital gains tax is dependent on the
shareholder's marginal tax rate and may be lower than the above rates. At the
end of each year, information regarding the tax status of dividends and other
distributions is provided to shareholders. Shareholders should consult their tax
^ advisers as to the effect of distributions by a Fund.

<PAGE>

All dividends and other distributions are regarded as taxable to the
investor, regardless of whether such dividends and distributions are reinvested
in additional shares of 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 gains (or increase any loss) for tax purposes on any
subsequent redemption of shares.

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

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

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

Dividends and interest received by 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,

<PAGE>

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.

Each Fund, except the S&P 500 Index 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 a Fund distributes the PFIC
income as a taxable dividend to its shareholders. The balance of the PFIC income
will be included in the Fund's investment company taxable income and,
accordingly, will not be taxable to a Fund to the extent that income is
distributed to its shareholders.

Each Fund may elect to "mark-to-market" its stock in any PFIC.
Marking-to-market, in this context, means including in ordinary income for each
taxable year the excess, if any, of the fair market value of the PFIC stock over
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 the amounts
of income included and deductions taken under the election.

Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time each 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 a Fund's investment company taxable income to be
distributed to its shareholders.

Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and other
distributions generally will be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Code for federal
income tax purposes does not entail government supervision of management or
investment policies.

<PAGE>

INVESTMENT PRACTICES

Portfolio Turnover. There are no fixed limitations regarding the portfolio
turnover of the Funds. Brokerage costs to these Funds are commensurate with the
rate of portfolio activity. Portfolio turnover rates for the fiscal years ended
July 31, 1998, 1997 and 1996 were 219%, 192% and 247%, respectively, for the
Worldwide Capital Goods Fund; 55%, 96% and 157%, respectively, for the Worldwide
Communications Fund; 98%, 87% and 141%, respectively, for the European Small
Company Fund; and 33%, 72% and 29%, respectively, for the Latin American Growth
Fund. Portfolio turnover rates for the fiscal years ended July 31, 1998 and 1997
and the period March 1, 1996 (inception) through July 31, 1996 for the Asian
Growth Fund were 141%, 161% and 2%, respectively. For the fiscal year ended July
31, 1998 and the period January 1, 1997 (commencement of operations) through
July 31, 1997, the portfolio turnover rates for the Realty Fund were 258% and
70%, respectively. For the period December 23, 1997 (commencement of operations)
through July 31, 1998, the portfolio turnover rate for the S&P 500 Index Fund
was 0%. Portfolio Turnover Rate calculated to less than 0.10% for the period
ended July 31, 1998. The higher portfolio turnover rate for the Worldwide
Capital Goods Fund was primarily due to a repositioning of the Fund's portfolio.
The high portfolio turnover rate for the Asian Growth Fund was primarily due to
the increase in the size of the Fund. In computing portfolio turnover rates, all
investments with maturities or expiration dates at the time of acquisition of
one year or less are excluded. Subject to this exclusion, the turnover rate is
calculated by dividing (A) the lesser of purchases or sales of portfolio
securities for the fiscal year by (B) the monthly average of the value of
portfolio securities owned by the Fund during the fiscal year.

Placement of Portfolio Brokerage. Either INVESCO, as the Company's
investment adviser, or IAML, INVESCO Asia, IRAI or World, as certain of the
Funds' sub-advisers, places orders for the purchase and sale of securities with
brokers and dealers based upon INVESCO's, IAML's, INVESCO Asia's, IRAI's or
World's evaluation of such brokers' and dealers' financial responsibility,
subject to their ability to effect transactions at the best available prices.
Fund Management 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 each Fund's
portfolio transactions, viewed in terms of the size of transactions, prevailing
market conditions in the security purchased or sold, and general economic and
market conditions. In seeking to ensure that any commissions or discounts
charged the Funds are consistent with prevailing and reasonable commissions,
each Fund's adviser or sub-adviser, if applicable, also endeavors to monitor
brokerage industry practices with regard to the commissions charged by ^ brokers
and dealers on transactions effected for other comparable institutional
investors. While each Fund's adviser or sub-adviser, if applicable, 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, Fund Management may select brokers that provide research
services to effect such transactions. Research services consist of statistical
and analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to Fund Management in
making informed investment decisions. Research services prepared and furnished
by brokers through which the Funds effect securities transactions may be used by
Fund Management in servicing all of their respective accounts and not all such
services may be used by Fund Management in connection with the Funds.

In recognition of the value of the above-described brokerage and research
services provided by certain brokers, Fund Management, 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.

<PAGE>

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

Certain financial institutions (including brokers who may sell shares of
the Funds, or affiliates of such brokers) are paid a fee (the "Services Fee")
for recordkeeping, shareholder communications and other services provided by the
brokers to investors purchasing shares of the Funds through no transaction fee
programs ("NTF Programs") offered by the financial institution or its 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
each Fund's Services Fee, if any, that exceeds the sum of the sub-transfer
agency or recordkeeping fee and Rule 12b-1 fee. The Company's directors have
further authorized INVESCO to place a portion of each Fund's brokerage
transactions with certain NTF Program Sponsors or their affiliated brokers, if
INVESCO reasonably believes that, in effecting the Fund's transactions in
portfolio securities, the broker is able to provide the best execution of orders
at the most favorable prices. A portion of the commissions earned by such a
broker from executing portfolio transactions on behalf of the Funds may be
credited by the NTF Program Sponsor against its Services Fee. Such credit shall
be applied first against any sub-transfer agency or recordkeeping fee payable
with respect to the Funds, and second against any Rule 12b-1 fees used to pay a
portion of the Services Fee, on a basis which has resulted from negotiations
between 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 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 for
expenses incurred by IDI in engaging in the activities and providing the
services on behalf of the Funds contemplated by the Plan, subject to the maximum
Rule 12b-1 fee permitted by the Plan, notwithstanding that credits have been
applied to reduce the portion of the 12b-1 fee that would have been used to
compensate IDI for payments to such NTF Program Sponsor absent such credits.

<PAGE>

The aggregate amount of brokerage commissions paid for the fiscal years
ended July 31, 1998, 1997 and 1996 were $409,666, $109,449 and $141,314,
respectively, for the Worldwide Capital Goods Fund; $1,506,116, $397,609 and
$239,095 for the Worldwide Communications Fund; $104,573, $479,539 and $417,140,
respectively, for the European Small Company Fund; $187,853, $400,001 and
$102,029, respectively, for the Latin American Growth Fund. The aggregate amount
of brokerage commission paid for the fiscal years ended July 31, 1998 and 1997
and the period March 1, 1996 (inception) through July 31, 1996 for the Asian
Growth Fund was $74,318, $341,623 and $105,714, respectively. The aggregate
amount of brokerage commissions paid for the fiscal year ended July 31, 1998 and
the period January 2, 1997 (commencement of operations) through July 31, 1997
for the Realty Fund were $315,807 and $182,397. The aggregate amount of
brokerage commissions paid for the period December 23, 1997 through July 31,
1998 for the S&P Fund was $0. For the fiscal years ended July 31, 1998, 1997 and
1996, brokers providing research services received commissions on portfolio
transactions of $80,403, $23,278 and $32,164, respectively, for the Worldwide
Capital Goods Fund $290,690, $75,818 and $64,810, respectively, for the
Worldwide Communications Fund; $0, $0 and $0, respectively, for the European
Small Company Fund; and $0, $0, and $0, respectively, for the Latin American
Growth Fund. For the fiscal years ended July 31, 1998 and 1997 and the period
March 1, 1996 (inception) through July 31, 1996, brokers providing research
services received commissions on portfolio transactions of $0, $0 and $0 for the
Asian Growth Fund. For the fiscal year ended July 31, 1998 and the period
January 1, 1997 (commencement of operations) through July 31, 1997, brokers
providing research services received commissions on portfolio transactions of
$600 and $0 for the Realty Fund. For the period December 23, 1997 (commencement
of operations) through July 31, 1998, brokers providing research services
received no commissions on portfolio transactions of the S&P 500 Index Fund. The
aggregate amount of such portfolio transactions was $36,685,259, $11,523,672 and
$15,731,437, respectively, for the Worldwide Capital Goods Fund; $147,183,683,
$36,516,217 and $27,956,526, respectively, for the Worldwide Communications
Fund; $0, $0 and $0, respectively, for the European Small Company Fund; and $0,
$0 and $0, respectively, for the Latin American Growth Fund. For the fiscal
years ended July 31, 1998 and 1997 and the period March 1, 1996 (inception)
through July 31, 1996, the aggregate amount of such portfolio transactions was
$0, $0 and $0, respectively, for Asian Growth Fund. For the fiscal year ended
July 31, 1998 and the period January 2, 1997 (commencement of operations)
through July 31, 1997, the aggregate amount of such portfolio transactions for
the Realty Fund were $269,413 and $0. For the period December 23, 1997
(commencement of operations) through July 31, 1998, the aggregate amount of such
portfolio transactions for the S&P 500 Index Fund was $0. For the fiscal year
ended July 31, 1998, the Worldwide Capital Goods, Worldwide Communications,
European Small Company, Latin American Growth, Asian Growth, Realty and S&P 500
Index Funds paid $0, $162, $0, $0, $0, $0 and $0, respectively, as compensation
to brokers for the sales of shares of the Funds.

<PAGE>

At July 31, 1998, the Funds held securities of their regular brokers or
dealers, or their parent companies, as follows:

Value of
Securities
Fund Broker or Dealer at 7/31/98
- ---- ---------------- ----------
Capital Goods Fund State Street Bank & Trust $668

Communications Fund State Street Bank & Trust $28,957

Latin American State Street Bank & Trust $553
Growth Fund

Asian Growth Fund State Street Bank & Trust $2,442

Realty Fund State Street Bank & Trust $400

S&P 500 Index Fund State Street Bank & Trust $1,907
J. P. Morgan & Co. $39
Bear Stearns $11
Lehman Brothers Holdings $7
Merrill Lynch Pierce $51
Morgan Stanley Dean Witter $104

Neither INVESCO, IAML, INVESCO Asia, IRAI nor World receives any brokerage
commissions on portfolio transactions effected on behalf of the Funds, and there
is no affiliation between INVESCO IAML, INVESCO Asia, IRAI and World, or any
person affiliated with INVESCO, IAML, INVESCO Asia, IRAI and World, or the Funds
and any broker or dealer that executes transactions for the Funds.

ADDITIONAL INFORMATION

Common Stock. The Company has 800,000,000 authorized shares of common
stock with a par value of $0.01 per share. Of the Company's authorized shares,
100,000,000 shares have been allocated to each of the Capital Goods,
Communications, European Small Company, Latin American Growth, Asian Growth and

<PAGE>

Realty Funds, and 200,000,000 shares have been allocated to the S&P 500
Index Fund --100,000,000 to each class. As of July 31, 1998, 1,172,201 shares of
the Capital Goods Fund, 14,114,148 shares of the Communications Fund, 4,567,442
shares of the European Small Company Fund, 3,105,195 shares of the Latin
American Growth Fund, 3,622,146 shares of the Asian Growth Fund, 2,573,024
shares of the Realty Fund, 271,329 shares of Class I of the S&P 500 Index Fund
and 1,241,163 shares of Class II of the S&P 500 Index Fund were outstanding. The
board of directors has the authority to designate additional series 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 or class of series in a particular portfolio of investments of the
Company. Each series or class of series of the Company's shares is preferred
over all other series or classes of series with respect to the assets
specifically allocated to that series or class, and all income, earnings,
profits and proceeds from such assets, subject only to the rights of creditors,
are allocated to shares of that series or class. The assets of each series or
class are segregated on the books of account and are charged with the
liabilities of that series or class of 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 these
items are allocated among series and classes 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 or class. In the
unlikely event that a liability allocable to one series or class exceeds the
assets belonging to the series or class, all or a portion of such liability may
have to be borne by the holders of shares of the Company's other series or
class.

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 or classes are affected by a matter to be voted upon, such as approval of
an investment advisory contract or changes in a Fund's investment policies, only
shareholders of the series or class 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 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.

<PAGE>

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.

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

Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ----------------- --------
INVESCO Worldwide
Capital Goods Fund

Charles Schwab & Co. Inc. 219,962.4520 20.80%
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

INVESCO Worldwide
Communications Fund

Charles Schwab & Co. Inc. 3,021,442.1000 23.09%
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

Nat'l Financial Services Corp. 850,591.9900 6.50%
The Exclusive Benefit of Cust.
One World Financial Center
200 Liberty Street 5th Floor
Attn: Kate Recon
New York, NY 10281-5500

INVESCO European
Small Company Fund

Charles Schwab & Co. Inc. 1,260,273.8250 31.76%
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

Nat'l Financial Services Corp. 283,814.1440 7.15%
The Exclusive Benefit of Cust.
One World Financial Center
200 Liberty Street 5th Floor
Attn: Kate Recon
New York, NY 10281-5500

INVESCO Latin American Growth Fund

Charles Schwab & Co. Inc. 1,088,001.4410 38.49%
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

<PAGE>

INVESCO Asian Growth Fund

Charles Schwab & Co. Inc. 955,967.5380 27.11%
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

INVESCO Realty Fund

Charles Schwab & Co. Inc. 467,235.9840 18.51%
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

INVESCO S&P 500 Index Fund
Class I

INVESCO Trust Co. Cust. 119,931.9630 43.20%
Right Choice Mgd. Care Inc.
Supp Exec Retirement Plan
1831 Chestnut St.
St. Louis, MO 63103-2231

Ronald L. Grooms 53,571.9560 19.30%
7800 E. Union Ave. #800
Denver, CO 80237-2715

David Backstrom 32,943.3320 11.87%
12630 Gift Rd.
Bridgeton, MO 63044-1413

James V. Johnson 20,414.5710 7.35%
Evelyn L. Johnson Co-Trs
Johnson Living Trust
UA 10/23/96
4700 Aberfeldy Rd.
Reno, NV 89509-0943

INVESCO S&P 500 Index Fund
Class II

Harvey Manes 83,611.6490 5.54%
256 N. Wellwood Ave.
Lindenhurst, NY 11757-3758

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

<PAGE>

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 foreign securities depositories.

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 80237, 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 July 31. 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 LLP, Denver, Colorado, acts as special counsel to the Company.

Financial Statements. The audited financial statements for the Worldwide
Communications, Worldwide Capital Goods, European Small Company, Latin American
Growth, Asian Growth and Realty Funds for the fiscal year ended July 31, 1998
and for the S&P 500 Index Fund for the period ended July 31, 1998, and the notes
thereto, and the report of PricewaterhouseCoopers LLP with respect to such
financial statements, are incorporated by reference from the Company's Annual
Report to Shareholders for the fiscal year ended July 31, 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 Securities and Exchange
Commission. The complete Registration Statement may be obtained from the
Securities and Exchange Commission upon payment of the fee prescribed by the
rules and regulations of the Commission.

<PAGE>

APPENDIX A

DESCRIPTION OF FUTURES AND OPTIONS CONTRACTS

Options on Securities

An option on a security provides the purchaser, or "holder," with the
right, but not the obligation, to purchase, in the case of a "call" option, or
sell, in the case of a "put" option, the security or securities underlying the
option, for a fixed exercise price up to a stated expiration date. The holder
pays a non-refundable purchase price for the option, known as the "premium." The
maximum amount of risk the purchaser of the option assumes is equal to the
premium plus related transaction costs, although the entire amount may be lost.
The risk of the seller, or "writer," however, is potentially unlimited, unless
the option is "covered," which is generally accomplished through the writer's
ownership of the underlying security, in the case of a call option, or the
writer's segregation of an amount of cash or securities equal to the exercise
price, in the case of a put option. If the writer's obligation is not so
covered, it is subject to the risk of the full change in value of the underlying
security from the time the option is written until exercise.

Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.

Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange and the New York Stock Exchange, which are
regulated by the Securities and Exchange Commission. The Options Clearing
Corporation ("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.

<PAGE>

An option position in an exchange-traded option may be closed out only on
an exchange which provides a secondary market for an option of the same series.
Although the Funds will generally purchase or write only those options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange will exist for any particular option at
any particular time. In such event it might not be possible to effect closing
transactions in a particular option with the result that the Funds would have to
exercise the option in order to realize any profit. This would result in the
Funds 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 these Funds as
covered call option writers are unable to effect a closing purchase transaction
in a secondary market, unless the Funds are required to deliver the securities
pursuant to the assignment of an exercise notice, they will not be able to sell
the underlying security until the option expires.

Reasons for the potential absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities: (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or particular class or series of options) in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange which had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at a particular time, render certain of the facilities of any of the
clearing corporations inadequate and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. However, the 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

<PAGE>

financial institutions which have entered into direct agreements with
Company on behalf of the Funds. With OTC options, such variables as expiration
date, exercise price and premium will be agreed upon between the Funds and the
transacting dealer, without the intermediation of a third party such as the OCC.
If the transacting dealer fails to make or take delivery of the securities
underlying an option it has written, in accordance with the terms of that option
as written, the Funds 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 agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, Futures Contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.

The purchase or sale of a futures contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalent, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the futures contract fluctuates, making positions
in the futures contract more or less valuable, a process known as "marking to
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

<PAGE>

merchant which is a member of such contract market. A commission must be
paid on each completed purchase and sale transaction. The contract market
clearing house guarantees the performance of each party to a futures contract,
by in effect taking the opposite side of such Contract. At any time prior to the
expiration of a futures contract, a trader may elect to close out its position
by taking an opposite position on the contract market on which the position was
entered into, subject to the availability of a secondary market, which will
operate to terminate the initial position. At that time, a final determination
of variation margin is made and any loss experienced by the trader is required
to be paid to the contract market clearing house while any profit due to the
trader must be delivered to it.

Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury bonds, Treasury notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, 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.

<PAGE>

An option, whether based on a futures contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.

<PAGE>

APPENDIX B

BOND RATINGS

The following is a description of the Moody's and S&P bond rating
categories:

Moody's Corporate Bond Ratings

Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than in Aaa securities.

A - Bonds rated A possess many favorable investment attributes, and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa - Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any longer period of time may be small.

<PAGE>

Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

S&P Corporate Bond Ratings

AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.

AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.

A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.

BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.

BB - Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

B - Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.

CCC - Bonds rated CCC have a currently identifiable vulnerability to
default and are dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.