SEMIANNUAL REPORT
February 28, 1995
INVESCO INCOME FUNDS, INC.
Smart Choices For Seeking Current Income
INVESCO FUNDS
<PAGE>
Market Overview March 1995
Perversely, to the securities markets, strong economic growth can be
viewed as a negative, a harbinger of inflation. Some analysts are worried about
the figures for late 1994: Gross domestic product (GDP) rose 4.6% for the fourth
quarter. That was the sixth straight quarter in which the GDP growth rate was
2.7% or better, and current indications are that growth will be as much as 3% in
the current quarter. Corporate earnings growth continued strong throughout the
fourth quarter for industries as diverse as airlines, entertainment, and
packaging. And 1994 showed the biggest leap in corporate profits for at least
two decades.
Recently we have seen signs that economic growth is slowing, though. For
instance, hourly wages and hours worked remained flat or dropped through
February. These factors work together in relieving pressure for increases in
wages and benefits -- key contributors to rising inflation. In fact,
employer-paid health care costs actually decreased about 1% last year.
Another encouraging sign, relative to inflation, is industrial production.
The output at U.S. factories and mines grew at just 0.4% in January, half the
rate of each of the two preceding months. New factory orders slowed even more.
Finally, consumer confidence -- and spending plans -- are also softening.
There are still legitimate concerns regarding inflation. The most widely used
index, the CPI, rose 0.3% in January. Moreover, unemployment surprisingly
dropped to 5.4% in February. As a consequence of these and other signs, the next
few months may bring additional modest increases in the Fed Funds rate.
By increasing short-term rates, the Federal Reserve is attempting a "soft
landing" -- that is, to moderate the current economic expansion before inflation
heats up. Over the past twelve months, the Fed has doubled short-term rates.
Particularly during the first half of 1994, the markets reacted poorly to
these increases -- the Lehman Government/Corporate Bond Index had a total return
of negative 4.36% over the six months ended 6/30/94. Bond prices made up some of
the lost ground during the latter half of 1994; still, for all of 1994, the
Lehman Index dropped 3.53%. Last year was the worst performance ever by bonds, a
strong contrast to normal fixed-income returns over the past 50 years.
Stocks took the initial increases to interest rates poorly, and the S&P 500
lost 3.35% over the first six months of 1994. But they rebounded, gaining 4.87%
over the following six months.
While inflation is not likely to approach the eight percent-plus levels seen
in the early 1980s, it will probably be higher than the 2.5% to 3% range seen
during recent years. The INVESCO economic forecast calls for steadily increasing
inflation. We anticipate that consumer prices will rise as much as 3.5% to 4.0%
year-over-year by the fourth quarter of 1995; that compares to an increase of
just 2.7% in 1993 and 2.8% in 1994.
In 1994, the markets' performance reflected concern that the Fed would
overshoot its goal, bringing growth lower than the 2.5% target -- or worse,
induce a recession. Now, however, investors appear to be gaining confidence that
interest rates are
<PAGE>
stabilizing. Investors should keep in mind that any inflation
surprises, or a spate of disappointing corporate earnings reports, could trigger
corrections.
One final factor to bear in mind is the decline of the U.S. dollar against
major world currencies. It works in favor of U.S. companies exporting goods and
services, but it simultaneously discourages foreign investment in U.S.
fixed-income securities -- and may encourage the Federal Reserve Board to
increase short-term interest rates.
Investment Expertise From The Top Down
INVESCO's Income Funds are managed by two industry veterans. Richard R.
Hinderlie began his investment career in 1973 and has extensive experience in
all facets of fixed-income analysis. He earned an MBA from Arizona State
University and a BA in Economics from Pacific Lutheran University. He was
previously associated with Bank Western. Mr. Hinderlie joined INVESCO in 1993
and manages Short-Term Bond Fund and U.S. Government Securities Fund.
INVESCO Senior Vice President Donovan "Jerry" Paul joined the firm in 1994 as
head of the fixed-income department. He also serves as portfolio manager for
INVESCO's Select Income and High Yield Funds. Beginning his investment career in
1976, Mr. Paul was previously director of fixed-income research at Stein Roe &
Farnham Inc. He holds an MBA from the University of Northern Iowa and a BBA from
the University of Iowa. In addition, he is a Chartered Financial Analyst and
Certified Public Accountant.
Short-Term Bond Fund
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the INVESCO Short-Term Bond Fund to the value of a $10,000
investment in the Lehman Government/ Corporate-Intermediate Index,
assuming in each case reinvestment of all dividends and capital gain
distributions, for the period from inception (10/93) through
2/28/95.
The line graph above illustrates the value of a $10,000 investment in the
fund, plus reinvested dividends and capital gain distributions, for the period
from inception (10/93) through 2/28/95. (Of course, past performance is not a
guarantee of future results.)*
The chart and other total return figures cited reflect the fund's operating
expenses, but the index does not have expenses, which would, of course, have
lowered its performance.
Short-Term Bond Fund
Average Annualized Total Return*
12/31/94 2/28/95
1 Year -0.61% 1.42%
Since Inception (10/93) -0.31% 1.43%
<PAGE>
For the six months ended 2/28/95, INVESCO Short-Term Bond Fund had a total
return of 2.78%. During the same period, the Lehman Intermediate Government/
Corporate Bond Index had a total return of 2.72%. (Of course, past performance
is not a guarantee of future results.)*
Money funds attempt (although they do not guarantee) to maintain price
stability at $1 per share. These portfolios have an average weighted maturity
under 90 days, and thus, under normal circumstances, yields tend to be lower.
Long-term bond funds seek higher current income, but must accept higher risk
from changes in interest rates. On the risk spectrum, Short-Term Bond Fund is
managed to fall between money market funds and bond funds with longer
maturities. The last three months have seen price advances for fixed-income
investments, a trend in which shorter-term bonds -- and your fund -- have
participated.
At the end of February, the fund's duration was slightly lower than the prior
month. This modest shortening reflects our belief that short-term interest rate
increases are not quite over for 1995.
For similar reasons, many short-term bond funds have gone to significantly
higher cash levels. In order to support income levels, we are instead putting
more emphasis on very liquid U.S. Treasury notes. At 8/31/94, corporate bonds
represented 73.8% of fund holdings; that figure had been reduced to 60.0% by
2/28/95.
U.S. Government Securities Fund
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the INVESCO U.S. Government Securities Fund to the value of
a $10,000 investment in the Lehman Government Bond-Long Index, assuming in
each case reinvestment of all dividends and capital gain distributions,
for the period from inception (01/86) through 2/28/95.
The line graph above illustrates the value of a $10,000 investment in the
fund, plus reinvested dividends and capital gain distributions, for the period
from inception (1/86) through 2/28/95. (Of course, past performance is not a
guarantee of future results.)*
U.S. Government Securities Fund
Average Annualized Total Return*
12/31/94 2/28/95
1 Year -7.19% -1.56%
5 Years 6.03% 7.52%
Since Inception (1/86) 6.33% 6.76%
The chart and other total return figures cited reflect the fund's operating
expenses, but the index does not have expenses, which would, of course, have
lowered its performance.
<PAGE>
For the six months ended 2/28/95, INVESCO U.S. Government Securities Fund had
a total return of 2.88%. During the same period, the Lehman Government Bond-Long
Index had a total return of 4.02%. (Of course, past performance is not a
guarantee of future results.)*
Among the fixed-income investments offered by INVESCO, U.S. Government
Securities Fund is managed to be the most sensitive to changes in interest
rates. (Credit risk, on the other hand, is negligible, because its investment
strategy focuses on U.S. government and agency obligations.) The fund is seeking
a duration average within the range of seven to eight years. During the first
three months of 1995, the fund achieved a total return of 5.78%.
In the short-term, our strategy has led to underperformance relative to the
index. However, while one or more moves in 1995 by the Federal Reserve Board to
counter the inflation threat may be anticipated, we do not believe that the
current bond rally will stall for long. The fund is thus better positioned to
benefit from market advances.
As of 2/28/95, the fund's portfolio included no derivative securities, thus
limiting what is known as "optional" risk. At 2/28/95, the fund's holdings were
split between direct U.S. government obligations (49.3%), which provide
liquidity and duration features to the mix; and mortgage-backed government
agency obligations (43.8%), which offer higher interest income. The latter
include obligations issued by GNMA and Freddie Mac (the Government National
Mortgage Association and Federal Home Loan Mortgage Association, respectively).
Select Income Fund
The line graph (upper right) illustrates the value of a $10,000 investment in
the fund, plus reinvested dividends and capital gain distributions, for the
10-year period ended 2/28/95. (Of course, past performance is not a guarantee of
future results.)*
The chart and other total return figures cited reflect the fund's operating
expenses, but the index does not have expenses, which would, of course, have
lowered its performance.
For the six months ended 2/28/95, INVESCO Select Income Fund had a total
return of 4.40%. During the same period, the Lehman Government/Corporate Bond
Index had a total return of 3.09%. (Of course, past performance is not a
guarantee of future results.)*
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the INVESCO Select Income Fund to the value of a $10,000
investment in the Lehman Government/Corporate Bond Index, assuming in each
case reinvestment of all dividends and capital gain distributions, for the
ten-year period ended 2/28/95.
Select Income Fund represents INVESCO's moderate fixed-income philosophy. Our
outperformance against the index was due to several factors. A primary focus is
the identification of
<PAGE>
corporations which are improving their credit lines. The
bonds of these firms tend to increase in value because investors demand lower
yields in response to such improved fundamentals. For the fund, these situations
may result in capital appreciation, as well as high current income.
Investments in "special situations" have contributed to fund gains. Among
others, these are firms involved in recapitalization plans, or which are
acquisition targets. Current holdings designated "special situation" include RJR
Nabisco, Delaware Management Holdings, and HealthTrust Inc-Hospital Co.
Select Income Fund
Average Annualized Total Return*
12/31/94 2/28/95
1 Year -1.20% 2.41%
5 Years 8.61% 9.88%
10 Years 10.00% 10.49%
Additionally, the fund has employed a "barbell" strategy in proportioning
credit risk. Among lower-rated issuers, we seek companies with improving
fundamentals. These corporate bonds are balanced at the other end of the credit
risk spectrum by government and government agency obligations.
The mix is further refined by continuous monitoring, in which we attempt to
identify sectors which are undervalued relative to historical trading ranges.
Over the past few months, investment grade corporate bonds have become less
attractive relative to government securities. The fund has accordingly shifted
more attention to government and government agency obligations -- 41.52% at
2/28/95, compared to 31.83% at 8/31/94. Simultaneously, corporate exposure was
reduced to 53.42%, compared to 59.95%. This shift paid off: The government index
has outperformed the corporate sector for four months running.
As interest rates fluctuate, we actively modify our investment strategy.
During periods of increasing yields, we prefer to trade credit risk for interest
rate risk.
High Yield Fund
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the INVESCO High Yield Fund to the value of a $10,000
investment in the Lehman BAA Long-Term Corporate Index, assuming in each
case reinvestment of all dividends and capital gain distributions, for the
ten-year period ended 2/28/95.
The line graph above illustrates the value of a $10,000 investment in the
fund, plus reinvested dividends and capital gain distributions, for the 10-year
period ended 2/28/95. (Of course, past performance is not a guarantee of future
results.)*
<PAGE>
The chart and other total return figures cited reflect the fund's operating
expenses, but the index does not have expenses, which would, of course, have
lowered its performance.
For the six months ended 2/28/95, INVESCO High Yield Fund had a total return
of 2.62%. During the same period, the Merrill Lynch High Yield Index achieved a
total return of 3.18%, while the Lehman BAA Long-Term Corporate Bond Index had a
total return of 4.67%. (Of course, past performance is not a guarantee of future
results.)*
As tracked by Lehman Brothers, the high yield and Treasury markets have been
unusually linked over the past 12 months. This is not surprising, because higher
interest rates will more quickly penalize companies with lower credit ratings.
High Yield Fund
Average Annualized Total Return*
12/31/94 2/28/95
1 Year -4.98% -2.39%
5 Years 8.24% 9.93%
10 Years 10.13% 10.18%
Credit risk and sector selection are critical elements of our high yield
investment strategy. We successfully avoided several problem situations,
enabling the fund to outperform the "junk" market last summer. Relative to other
high yield portfolios, INVESCO High Yield Fund maintains somewhat higher quality
emphasis.
Over the following three months, however, our overweighting in cable
television and television broadcasting resulted in underperformance relative to
the market. We expect that, in the longer-term, improving fundamentals may
result in credit upgrades and higher valuations. In addition, each of these
industries is and will continue to undergo consolidations and mergers, which can
lead to significant quality improvement, as well as subsequent price advances.
Time Warner, for example, recently announced the acquisition of Cablevision
Industries. This resulted in price advances for the latter's debentures, which
we owned. With investment grade companies, joint ventures are another avenue to
stronger credit ratings.
We continue to underweight consumer and industrial cyclical issuers, as well
as supermarkets. These sectors appear over-valued relative to historical
pricing.
Investments in "special situations" have contributed to fund gains. Among
others, these are firms which are involved in recapitalization plans, may face
onerous indenture provisions, or are acquisition targets. The fund's special
situations holdings presently include Trident NGL, HealthTrust Inc-Hospital Co,
and Hillhaven Corp.
<PAGE>
* Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. The S&P 500 is an
unmanaged index of common stocks considered representative of the broad market.
The Lehman Government/Corporate Bond Index is an unmanaged index considered
representative of the broad bond market; the Intermediate Bond Index reflects
performance of issues with maturities of 3-10 years. The Government-Long Bond
Index reflects the long-term Treasury market. The Lehman BAA Long-Term Corporate
and the Merrill Lynch High Yield indices reflect the long-term, high yield bond
market.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Statement of Investment Securities
February 28, 1995
UNAUDITED
Shares or
Principal
Description Amount Cost Value
<S> <C> <C> <C>
HIGH YIELD Fund
FIXED INCOME SECURITIES 93.51%
US Government Obligations 1.13%
US Treasury Notes, 7.750%, 1/31/2000 $3,000,000 $3,039,844 $3,084,375
-------------------------
Corporate Bonds 90.25%
BROADCASTING 6.67%
Act III Broadcasting, Sr Sub Notes,
9.625%, 12/15/2003 $5,600,000 5,662,625 5,208,000
Allbritton Communications, Sr Sub Deb,
11.500%, 8/15/2004 $3,000,000 3,138,750 3,045,000
NWCG Holdings, Sr Secured
Discount Notes, Series B, 13.500%,
6/15/1999 $5,000,000 2,854,919 2,887,500
SCI Television
1st Secured Loan Facility Step-Up
Coupon, 7.500%+, 6/30/1998 $2,848,600 2,784,424 2,795,189
Sr Secured Notes, 11.000%, 6/30/2005 $4,180,000 4,247,528 4,294,950
------------------------
18,688,246 18,230,639
------------------------
BUILDING & CONSTRUCTION PRODUCTS 5.42%
Building Materials of America,
Sr Deferred Step-Up Notes
Zero Coupon+, 7/1/2004 $5,000,000 2,888,452 2,675,000
Nortek Inc, Sr Sub Notes, 9.875%, 3/1/2004 $2,000,000 1,847,995 1,830,000
Presley Cos, Sr Notes, 12.500%, 7/1/2001 $4,000,000 4,000,000 3,380,000
USG Corp Deb, 8.750%, 3/1/2017 $2,000,000 1,745,254 1,772,500
Sr Notes, 10.250%, 12/15/2002 $1,000,000 1,015,670 1,013,750
Sr Notes, Series B, 10.250%, 12/15/2002 $1,190,000 1,209,040 1,206,362
Sr Notes, Series B, 9.250%, 9/15/2001 $3,000,000 2,938,443 2,921,250
------------------------
15,644,854 14,798,862
------------------------
CABLE TELEVISION 13.60%
CF Cable TV, Sr Secured 2nd Priority Notes,
11.625%, 2/15/2005 $3,175,000 3,199,750 3,309,937
Cablevision Industries, Sr Deb, Series B,
9.250%, 4/1/2008 $3,500,000 3,172,550 3,412,500
Century Communications, 9.500%, 3/1/2005 $4,975,000 4,866,047 4,866,047
Diamond Cable Communications PLC,
Sr Step-Up Notes, 13.250%+, 9/30/2004 $9,960,000 5,560,997 5,739,450
Jones Intercable, Sr Sub Deb
11.500%, 7/15/2004 $1,000,000 1,072,500 1,067,500
10.500%, 3/1/2008 $5,500,000 5,588,125 5,637,500
Le Groupe Videotron Ltee, Sr Notes,
10.625%, 2/15/2005 $1,975,000 1,962,656 2,034,250
<PAGE>
Marcus Cable Operating LP/Marcus Cable
Capital II Sr Sub Gtd Discount Step-Up
Notes, Zero Coupon+, 8/1/2004 $4,500,000 2,526,666 2,677,500
Viacom Inc, Sub Deb, 8.000%, 7/7/2006 $4,500,000 3,775,904 4,055,625
Videotron Holdings PLC, Sr Discount Notes,
11.125%, 7/1/2004 $7,450,000 4,347,658 4,358,250
------------------------
36,072,853 37,158,559
------------------------
CHEMICALS & PLASTICS 3.67%
Buckeye Cellulose, Sr Notes, 10.250%,
5/15/2001 $3,395,000 3,577,481 3,318,613
Harris Chemical North America,
Gtd Sr Secured Step-Up Notes
Zero Coupon+, 7/15/2001 $3,000,000 2,492,436 2,670,000
Rexene Corp, Sr Notes, 11.750%, 12/1/2004 $1,000,000 1,000,000 1,040,000
UCC Investors Holdings, Sr Sub Notes,
11.000%, 5/1/2003 $2,975,000 3,023,775 2,989,875
------------------------
10,093,692 10,018,488
------------------------
COMPUTER RELATED 1.80%
Anacomp Inc, Sr Sub Notes, 15.000%,
11/1/2000 $4,923,000 5,662,187 4,923,000
------------------------
CONTAINERS 2.27%
Anchor Glass Container, Sr Sub Deb, 9.875%,
12/15/2008 $3,000,000 $2,760,000 $2,565,000
Owens-Illinois Inc, Sr Sub Deb, 9.950%,
10/15/2004 $1,000,000 996,250 992,500
Silgan Holdings, Sr Discount Deb,
Zero Coupon, 12/15/2002 $2,975,000 2,586,476 2,632,875
------------------------
6,342,726 6,190,375
------------------------
COSMETICS & TOILETRIES 2.37%
Chattem Inc, Sr Sub Notes, Series B,
12.750%, 6/15/2004 $4,000,000 3,942,991 3,600,000
JB Williams Holdings, Sr Notes, 12.000%,
3/1/2004 $3,000,000 2,880,000 2,880,000
------------------------
6,822,991 6,480,000
------------------------
ENERGY DEVELOPMENT 1.09%
Calpine Corp, Sr Notes, 9.250%, 2/1/2004 $3,500,000 3,500,000 2,975,000
------------------------
FOOD PRODUCTS & BEVERAGES 1.55%
Coca Cola Bottling Group, Sr Sub Notes,
9.000%, 11/15/2003 $2,560,000 2,566,869 2,380,800
Texas Bottling Group, Sr Sub Notes, 9.000%,
11/15/2003 $2,000,000 1,812,069 1,865,000
------------------------
4,378,938 4,245,800
------------------------
<PAGE>
FOOD STORES - WHOLESALE 0.75%
Fleming Cos, Sr Notes, 10.625%, 12/15/2001 $2,000,000 1,998,000 2,045,000
------------------------
HEALTH CARE RELATED 6.29%
Healthtrust Inc, Sub Notes, 8.750%,
3/15/2005 $2,875,000 2,774,758 2,882,188
Health Trust Inc - Hospital Co, Sub Notes,
10.750%, 5/1/2002 $4,000,000 4,365,000 4,340,000
Hillhaven Corp, Sr Sub Notes, 10.125%,
9/1/2001 $4,810,000 4,912,212 4,906,200
National Medical Enterprises, Sr Sub Notes,
10.125%, 3/1/2005 $4,975,000 4,975,000 5,074,500
------------------------
17,026,970 17,202,888
------------------------
HOTELS 1.15%
Embassy Suites, Gtd Sr Sub Notes, 10.875%,
4/15/2002 $2,975,000 3,149,781 3,153,500
------------------------
INSURANCE 0.27%
Home Holdings, Sr Notes, 7.875%, 12/15/2003 $1,000,000 858,093 739,841
------------------------
INVESTMENT BROKERS 0.78%
Delaware Management Holdings, Gtd Sr Notes,
Series B, 10.250%, 3/15/2004 $2,000,000 2,105,000 2,135,000
------------------------
MANUFACTURING 3.53%
American Standard, Sr Deb, 11.375%,
5/15/2004 $2,975,000 3,153,500 3,209,281
JB Poindexter, Sr Notes, 12.500%, 5/15/2004 $4,000,000 4,005,000 3,800,000
Plastic Specialties & Technologies,
Sr Secured Notes, 11.250%, 12/1/2003 $2,975,000 2,598,980 2,647,750
------------------------
9,757,480 9,657,031
------------------------
OIL & GAS RELATED 4.15%
Mesa Capital, Step-Up Notes, Zero Coupon+,
6/30/1998 $2,980,000 2,805,272 2,790,025
NorAm Energy, Deb, 10.000%, 11/15/2019 $4,000,000 4,174,140 4,247,864
Trident NGL, Sub Notes, 10.250%, 4/15/2003 $4,175,000 4,255,781 4,289,813
------------------------
11,235,193 11,327,702
------------------------
PAPER & PAPER PRODUCTS 2.68%
Fort Howard, Jr Sub Discount Step-Up Deb,
14.125%+, 11/1/2004 $3,000,000 3,000,176 3,022,500
Repap Wisconsin, 2nd Priority Sr Secured
Notes, 9.875%, 5/1/2006 $1,250,000 1,073,788 1,168,750
SD Warren, Sr Sub Notes, 12.000%,
12/15/2004& $2,980,000 2,980,000 3,143,900
------------------------
7,053,964 7,335,150
------------------------
POLLUTION CONTROL EQUIPMENT & SERVICES 0.96%
<PAGE>
Envirotest Systems, Sr Sub Notes,
9.625%,
4/1/2003 $3,500,000 3,156,733 2,616,250
------------------------
PUBLISHING 4.02%
Bell & Howell, Sr Discount Deb, Series B,
11.500%, 3/1/2005 $5,700,000 3,011,855 2,935,500
News America Holdings, Deb, 8.500%,
2/23/2025 $2,000,000 1,998,750 2,014,784
Time Warner, Conv Sub Deb, 8.750%, 1/10/2015 $2,975,000 2,874,594 2,986,156
Valassis Inserts, Sr Sub Notes, 9.375%,
3/15/1999 $3,000,000 3,036,150 3,064,407
------------------------
10,921,349 11,000,847
------------------------
REAL ESTATE RELATED 1.04%
BF Saul Real Estate Investment Trust,
Sr Secured Notes Series B, 11.625%,
4/1/2002 $3,000,000 $2,955,000 $2,846,250
------------------------
RECREATION PRODUCTS & SERVICES 8.68%
Bally's Casino Holdings, Sr Discount Notes,
10.500%, 6/15/1998 $4,975,000 3,262,457 3,233,750
Bally's Grand, 1st Mortgage Notes, Series B,
10.375%, 12/15/2003 $4,000,000 3,786,732 3,750,000
Boomtown Inc, 1st Mortgage Notes, 11.500%,
11/1/2003 $1,000,000 1,010,000 990,000
Caesars World, Sr Sub Notes, 8.875%,
8/15/2002 $5,425,000 5,479,250 5,533,500
Empress River Casino Finance, Gtd Sr Notes,
10.750%, 4/1/2002 $2,000,000 1,892,747 1,900,000
Kloster Cruise Ltd, Sr Secured Notes,
13.000%, 5/1/2003 $3,000,000 3,030,000 2,317,500
MGM Grand Hotel Finance, 1st Mortgage Notes,
12.000%, 5/1/2002 $1,000,000 1,090,000 1,095,000
Plitt Theatres, Sr Sub Notes, 10.875%,
6/15/2004 $4,000,000 4,000,000 3,810,000
Royal Caribbean Cruises Ltd, Sr Sub Notes,
11.375%, 5/15/2002 $1,000,000 1,065,000 1,080,000
------------------------
24,616,186 23,709,750
------------------------
RESTAURANTS 0.63%
Flagstar Corp, Sr Sub Deb, 11.375%,
9/15/2003 $2,000,000 1,899,264 1,720,000
------------------------
RETAIL 6.17%
Penn Traffic, Sr Notes, 10.650%, 11/1/2004 $1,000,000 1,000,000 1,027,500
Petro PSC Properties LP/Petro Financial,
Sr Notes, 12.500%, 6/1/2002 $4,000,000 4,040,000 3,900,000
Petroleum Heat & Power, Sub Deb, 9.375%,
2/1/2006 $5,400,000 5,108,823 4,644,000
Smitty's Super Valu, Sr Sub Notes, Series B,
12.750%, 6/15/2004 $2,500,000 2,500,000 2,350,000
<PAGE>
Southland Corp, 2nd Priority Sr Sub Deb,
Series A, 4.500%, 6/15/2004 $7,795,000 5,012,217 4,940,081
------------------------
17,661,040 16,861,581
------------------------
STEEL 1.36%
AK Steel, Gtd Sr Notes, 10.750%, 4/1/2004 $1,750,000 1,778,437 1,789,375
WCI Steel, Sr Notes, Series B, 10.500%,
3/1/2002 $2,000,000 1,912,705 1,930,000
------------------------
3,691,142 3,719,375
------------------------
TELECOMMUNICATIONS 3.67%
Centennial Cellular, Sr Notes, 8.875%,
11/1/2001 $5,500,000 4,955,963 5,115,000
USA Mobile Communications, Sr Notes, 9.500%,
2/1/2004 $5,700,000 5,762,233 4,902,000
------------------------
10,718,196 10,017,000
------------------------
TEXTILES & APPAREL MANUFACTURERS 1.04% Guess Inc, Sr Sub Notes, Series B,
9.500%,
8/15/2003 $2,975,000 2,811,745 2,841,125
------------------------
TRANSPORTATION 3.36%
Burlington Motor Holdings, Sr Sub Notes,
11.500%, 11/1/2003 $4,300,000 4,236,812 3,848,500
Gearbulk Holding, Sr Notes, 11.250%,
12/1/2004 $1,000,000 1,000,000 1,045,000
Moran Transportation, 1st Preferred Ship
Mortgage Notes, 11.750%, 7/15/2004 $4,500,000 4,500,000 4,286,250
------------------------
9,736,812 9,179,750
------------------------
UTILITIES 1.28%
Midland Funding II, Sub Secured Lease
Oblig Bonds, Series B 13.250%, 7/23/2006 $3,500,000 3,622,500 3,510,857
------------------------
TOTAL CORPORATE BONDS 252,180,935 246,639,620
------------------------
Asset-Backed Securities 2.13% RECREATION PRODUCTS & SERVICES 2.13% Resorts
International, Secured Non-Recourse
Pass-Through Notes Zero Coupon, 6/30/2000 $6,930,000 6,394,375 5,819,926
------------------------
TOTAL FIXED INCOME SECURITIES 261,615,154 255,543,921
------------------------
COMMON STOCKS 0.00%
RETAIL 0.00%
Smitty's Supermarkets Class B*@ 2,500 0 0
------------------------
PREFERRED STOCKS 0.39%
COMPUTER RELATED 0.39%
Unisys Corp, $3.75, Series A, Conv Pfd 30,000 1,048,200 1,068,750
------------------------
<PAGE>
OTHER SECURITIES 1.10%
OIL & GAS RELATED 1.10%
WRT Energy Units (Each unit consists of one
Sr Note, 13.875%, 3/1/2002 and eight
warrants to buy one shr of cmn stock) 2,975,000 $2,975,000 $3,012,188
------------------------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 5.00%
FINANCE RELATED 5.00%
Associates Corp of North America, 6.050%,
3/1/1995 $13,660,000 13,660,000 13,660,000
------------------------
TOTAL INVESTMENT SECURITIES 100.00%# $279,298,354^ $273,284,859
========================
SELECT INCOME Fund FIXED INCOME SECURITIES 92.17% US Government Obligations
11.69% US Treasury Notes
7.750%, 1/31/2000 $5,000,000 $5,066,406 $5,140,625
6.500%, 5/15/1997 $3,000,000 3,005,156 2,979,375
5.875%, 2/15/2004 $8,500,000 8,506,250 7,740,313
4.750%, 2/15/1997 $3,000,000 2,938,702 2,887,500
US Treasury Security Stripped Interest
Payment, Generic Tint Payment
5/15/2012 $5,000,000 1,625,901 1,344,595
8/15/2012 $5,000,000 1,643,515 1,318,750
11/15/2012 $5,000,000 1,539,332 1,294,245
------------------------
TOTAL US GOVERNMENT OBLIGATIONS 24,325,262 22,705,403
------------------------
US Government Agency Obligations 28.85%
Federal Home Loan Mortgage, Gold, 7.000%,
5/1/2024 $4,819,928 4,520,188 4,530,732
Federal Home Loan Mortgage, Gold Pool
8.000%, 12/1/2024 $2,997,723 2,881,561 2,966,994
7.500%, 10/1/2024 $3,041,812 2,900,178 2,939,847
7.000%, 4/1/2024 $5,047,738 4,753,549 4,744,873
7.000%, 5/1/2024 $5,007,188 4,709,886 4,706,757
7.000%, 6/1/2024 $4,883,006 4,587,737 4,590,026
Federal Home Loan Mortgage, Step-Up Deb,
5.630%+, 1/5/1999 $2,000,000 1,997,500 1,857,028
Federal National Mortgage Association,
Pool, 7.500%, 12/1/2024 $3,045,178 2,853,427 2,939,538
Government National Mortgage Association I
Modified Pass-Through Certificates
8.000%, 7/15/2024 $7,629,704 7,500,953 7,549,126
7.500%, 5/15/2022 $4,943,207 4,673,647 4,772,414
7.500%, 10/15/2023 $1,970,864 1,821,201 1,898,767
7.500%, 11/15/2023 $10,098,523 9,554,416 9,729,109
7.500%, 5/15/2024 $2,940,000 2,730,066 2,830,570
------------------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS 55,484,309 56,055,781
------------------------
<PAGE>
Corporate Bonds 51.15%
AUTOMOBILE RELATED 0.57%
Chrysler Corp, Deb, 10.950%, 8/1/2017 $1,000,000 1,107,800 1,108,620
------------------------
BANKING 1.01%
Sovereign Bancorp, Medium Term Sub Notes,
8.000%, 3/15/2003 $2,000,000 1,952,139 1,969,862
------------------------
BROADCASTING 3.01%
Act III Broadcasting, Sr Sub Notes,
9.625%, 12/15/2003 $1,650,000 1,530,131 1,534,500
Allbritton Communications, Sr Sub Deb,
11.500%, 8/15/2004 $2,000,000 2,078,750 2,030,000
SCI Television, Sr Secured Notes, 11.000%,
6/30/2005 $2,223,000 2,258,845 2,284,132
------------------------
5,867,726 5,848,632
------------------------
BUILDING & CONSTRUCTION PRODUCTS 3.26%
USG Corp
Deb, 8.750%, 3/1/2017 $1,000,000 $872,627$ 886,250
Sr Notes, Series B, 10.250%, 12/15/2002 $2,500,000 2,540,000 2,534,375
Sr Notes, Series B, 9.250%, 9/15/2001 $3,000,000 2,894,249 2,921,250
------------------------
6,306,876 6,341,875
------------------------
CABLE TELEVISION 4.33%
Cablevision Industries, Sr Deb, Series B,
9.250%, 4/1/2008 $830,000 727,662 809,250
Century Communications, Sr Notes, 9.500%,
3/1/2005 $2,000,000 1,956,200 1,956,200
Diamond Cable Communications PLC,
Sr Step-Up Notes, 13.250%+, 9/30/2004 $2,000,000 1,129,566 1,152,500
Jones Intercable, Sr Sub Deb, 11.500%,
7/15/2004 $2,000,000 2,145,000 2,135,000
Le Groupe Videotron Ltee, Sr Notes,
10.625%, 2/15/2005 $1,000,000 993,750 1,030,000
Viacom Inc, Sub Deb, 8.000%, 7/7/2006 $1,480,000 1,234,796 1,333,850
------------------------
8,186,974 8,416,800
------------------------
DIVERSIFIED 0.92%
Philip Morris, Notes, 9.800%, 12/15/1998 $1,750,000 1,933,750 1,788,614
------------------------
FINANCE RELATED 5.07%
Chrysler Financial, Notes, 6.500%,
6/15/1998 $3,000,000 3,005,625 2,900,976
General Motors Acceptance, Medium Term
Notes, 7.500%, 5/25/2000 $5,000,000 4,905,499 4,892,070
Westinghouse Credit, Deb, 8.875%,
6/14/2014 $2,000,000 1,997,280 2,067,500
------------------------
9,908,404 9,860,546
------------------------
<PAGE>
HEALTH CARE RELATED 5.31%
HealthTrust Inc - Hospital Co, Sub Notes
10.750%, 5/1/2002 $2,500,000 2,726,250 2,712,500
8.750%, 3/15/2005 $2,000,000 1,930,774 2,005,000
Hillhaven Corp, Sr Sub Notes, 10.125%,
9/1/2001 $3,000,000 3,063,750 3,060,000
National Medical Enterprises, Sr Notes,
9.625%, 9/1/2002 $2,500,000 2,500,000 2,546,875
------------------------
10,220,774 10,324,375
------------------------
HOUSEHOLD & HARDWARE PRODUCTS 0.32%
Singer Co NV, Notes, 7.000%, 4/1/2003 $700,000 655,426 621,535
------------------------
INSURANCE 0.75%
Home Holdings, Sr Notes, 8.625%, 12/15/2003 $1,980,000 1,694,398 1,464,885
------------------------
INVESTMENT BROKERS 1.10%
Delaware Management Holdings, Gtd Sr Notes,
Series B 10.250%, 3/15/2004 $2,000,000 2,105,000 2,135,000
------------------------
MANUFACTURING 0.56%
American Standard, Sr Deb, 11.375%,
5/15/2004 $1,000,000 1,082,500 1,078,750
------------------------
OIL & GAS RELATED 2.90%
Arkla Inc, Deb, 8.900%, 12/15/2006 $4,750,000 4,731,998 4,664,310
Louis Dreyfus Natural Gas, Sr Sub Notes,
9.250%, 6/15/2004 $1,000,000 954,921 965,000
------------------------
5,686,919 5,629,310
------------------------
PAPER & PAPER PRODUCTS 1.11%
Fort Howard, Jr Sub Discount Step-Up Deb,
14.125%+, 11/1/2004 $2,150,000 2,150,130 2,166,125
------------------------
PUBLISHING 3.92%
News America Holdings, Deb, 8.500%,
2/23/2025 $2,000,000 1,998,750 2,014,784
Valassis Communications, Sr Notes,
9.550%, 12/1/2003 $2,480,000 2,478,487 2,577,191
Valassis Inserts, Sr Sub Notes, 9.375%,
3/15/1999 $1,000,000 1,012,050 1,021,469
Time Warner, Conv Sub Deb, 8.750%,
1/10/2015 $2,000,000 1,932,500 2,007,500
------------------------
7,421,787 7,620,944
------------------------
RECREATION PRODUCTS & SERVICES 4.04%
Caesars World, Sr Sub Notes, 8.875%,
8/15/2002 $3,000,000 3,030,000 3,060,000
MGM Grand Hotel Finance, 1st Mortgage
Notes, 12.000%, 5/1/2002 $1,750,000 1,907,500 1,916,250
<PAGE>
Royal Caribbean Cruises Ltd, Sr Sub Notes,
11.375%, 5/15/2002 $2,654,000 2,840,165 2,866,320
------------------------
7,777,665 7,842,570
------------------------
RETAIL 4.09%
Kroger Co, Lease Certificates, 6.000%,
4/1/2003 $3,650,000 $2,834,155$ 2,828,750
Paul Harris Stores, Notes, 11.375%,
1/31/2000 $1,000,000 1,001,250 985,000
Southland Corp, 2nd Priority Sr Sub Deb,
Series A, 4.500%, 6/15/2004 $6,500,000 4,397,739 4,119,375
------------------------
8,233,144 7,933,125
------------------------
SAVINGS & LOAN 0.99%
Webster Financial, Sr Notes, 8.750%,
6/30/2000 $1,000,000 998,240 990,000
Western Financial Savings Bank, Sub
Capital Deb, 8.500%, 7/1/2003 $1,000,000 969,069 930,000
------------------------
1,967,309 1,920,000
------------------------
STEEL 0.53%
AK Steel, Gtd Sr Notes, 10.750%, 4/1/2004 $1,000,000 1,000,000 1,022,500
------------------------
TELECOMMUNICATIONS 0.96%
Centennial Cellular, Sr Notes, 8.875%,
11/1/2001 $2,000,000 1,817,990 1,860,000
------------------------
TEXTILES & APPAREL MANUFACTURERS 0.49% Guess Inc, Sr Sub Notes, Series B,
9.500%, 8/15/2003 $1,000,000 945,124 955,000
------------------------
TOBACCO 1.32%
RJR Nabisco, Gtd Sr Notes, 8.750%,
4/15/2004 $2,625,000 2,509,233 2,559,866
------------------------
TRANSPORTATION 1.94%
Delta Air Lines, Equipment Trust Certificates
Series 1991K, 9.480%, 6/5/2006& $1,000,000 963,323 1,012,120
Series 1992C, 9.300%, 1/2/2010 $2,800,000 2,719,752 2,755,253
------------------------
3,683,075 3,767,373
------------------------
UTILITIES 2.65%
Cleveland Electric Illuminating,
1st Mortgage, 9.375%, 3/1/2017 $1,575,000 1,426,764 1,390,653
Commonwealth Edison, 1st Mortgage,
Series 22, 7.500%, 1/1/2001 $1,920,000 1,962,816 1,860,964
Niagara Mohawk Power, 1st Mortgage,
8.000%, 6/1/2004 $2,000,000 1,878,899 1,904,238
------------------------
5,268,479 5,155,855
<PAGE>
------------------------
TOTAL CORPORATE BONDS 99,482,622 99,392,162
------------------------
Asset-Backed Securities 0.48% PAPER & PAPER PRODUCTS 0.48% Scotia Pacific
Holding, Timber
Collateralized Notes, 7.950%, 7/20/2015 $977,365 902,259 937,798
------------------------
TOTAL FIXED INCOME SECURITIES 180,194,452 179,091,144
------------------------
OTHER SECURITIES 0.52%
OIL & GAS RELATED 0.52%
WRT Energy Units (Each unit consists of
one Sr Note, 13.875%, 3/1/2002 and eight
warrants to buy one shr of cmn stock) 1,000,000 1,000,000 1,012,500
------------------------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 7.31%
FINANCE RELATED 7.31%
Associates Corp of North America, 6.050%,
3/1/1995 $7,100,000 7,100,000 7,100,000
ITT Financial, 6.050%, 3/1/1995 $7,100,000 7,100,000 7,100,000
------------------------
TOTAL SHORT-TERM INVESTMENTS 14,200,000 14,200,000
------------------------
TOTAL INVESTMENT SECURITIES 100.00%# $195,394,452^ $194,303,644
========================
SHORT-TERM BOND Fund
FIXED INCOME SECURITIES 70.89%
US Government Obligations 6.20%
US Treasury Notes, 7.750%, 11/30/1999 $500,000 $501,065 $513,593
------------------------
US Government Agency Obligations 10.88%
Federal Home Loan Mortgage, Gold Pool,
6.500%, 4/1/2009 $951,260 918,263 901,013
------------------------
Corporate Bonds 53.81%
BANKING 5.26%
NationsBank Corp, Sr Notes, 4.750%,
8/15/1996 $450,000 $442,733 $435,352
------------------------
BUSINESS SERVICES 5.71%
Associates Corp of North America, Notes,
4.750%, 8/1/1996 $200,000 196,326 193,726
CIT Group Holdings, Notes, 8.875%, 6/15/1996 $85,000 93,592 86,799
Tenneco Credit, Sr Notes, 9.250%, 11/1/1996 $187,000 206,111 192,338
------------------------
496,029 472,863
------------------------
FINANCE RELATED 19.97%
AVCO Financial Services, Notes, 7.500%,
11/15/1996 $350,000 374,865 351,434
Chrysler Financial, Notes, 6.500%, 6/15/1998 $470,000 477,954 454,486
<PAGE>
Ford Motor Credit, Medium-Term Notes,
6.860%, 11/9/1998 $400,000 400,720 399,576
General Motors Acceptance, Notes,
7.750%, 4/15/1997 $450,000 462,537 448,828
------------------------
1,716,076 1,654,324
------------------------
HOUSEHOLD & HARDWARE PRODUCTS 2.41%
Singer Co NV, Notes, 7.000%, 4/1/2003 $225,000 210,967 199,779
------------------------
INVESTMENT BROKERS 4.64%
Merrill Lynch & Co, Notes, 5.000%,
12/15/1996 $400,000 391,113 384,094
------------------------
LEASING COMPANIES 4.82%
United States Leasing International,
Medium-Term Notes, 6.978%, 11/16/1998 $400,000 399,940 399,510
------------------------
OIL & GAS RELATED 0.86%
Tennessee Gas Pipeline, Notes, 9.250%,
5/15/1996 $70,000 76,292 71,461
------------------------
POLLUTION CONTROL EQUIPMENT & SERVICES 2.64%
WMX Technologies, Notes, 4.875%, 6/15/1996 $225,000 225,713 218,970
------------------------
UTILITIES 7.50%
Detroit Edison, 1st Mortgage, 6.000%,
12/1/1996 $296,000 295,676 289,658
Jersey Central Power & Light, 1st Mortgage,
6.125%, 8/1/1996 $250,000 251,912 247,053
Public Service Electric & Gas, 1st Ref
Mortgage, Series GG, 7.125%, 11/1/1997 $85,000 90,877 84,371
------------------------
638,465 621,082
------------------------
TOTAL CORPORATE BONDS 4,597,328 4,457,435
------------------------
TOTAL FIXED INCOME SECURITIES 6,016,656 5,872,041
------------------------
SHORT-TERM INVESTMENTS 29.11%
Corporate Bonds 6.23%
TOBACCO 1.15%
RJR Nabisco, Notes, 9.250%, 5/1/1995 $95,000 99,854 95,296
------------------------
UTILITIES 5.08%
Commonwealth Edison, 1st Mortgage, Series 82,
6.125%, 5/15/1995 $54,000 55,202 53,927
Georgia Power, 1st Mortgage, 5.125%,
9/1/1995 $220,000 222,266 218,395
Pacific Power & Light, 1st Mortgage,
5.000%, 10/1/1995 $150,000 150,375 148,889
------------------------
427,843 421,211
------------------------
<PAGE>
TOTAL CORPORATE BONDS 527,697 516,507
------------------------
Repurchase Agreements 22.88%
Repurchase Agreement with State Street Bank
& Trust Co dated 2/28/1995 due 3/1/1995 at 6.000%, repurchased at $1,895,316
(Collateralized by US Treasury Notes due 2/15/1996 at 4.625%, value
$1,935,355) $1,895,000 1,895,000 1,895,000
------------------------
TOTAL SHORT-TERM INVESTMENTS 2,422,697 2,411,507
------------------------
TOTAL INVESTMENT SECURITIES 100.00%# $8,439,353^ $8,283,548
========================
U.S. GOVERNMENT SECURITIES Fund
FIXED INCOME SECURITIES 93.10%
US Government Obligations 49.27%
US Treasury Notes
7.875%, 11/15/2004 $2,000,000 $2,013,438 $2,088,750
US Treasury Bonds
8.500%, 2/15/2020 $3,000,000 3,074,531 3,296,250
8.125%, 8/15/2019 $3,500,000 3,475,727 3,699,062
8.125%, 8/15/2021 $3,000,000 3,094,688 3,178,125
7.625%, 2/15/2025 $4,000,000 4,025,625 4,078,744
7.500%, 11/15/2024 $4,000,000 3,854,062 3,988,744
6.250%, 8/15/2023 $1,000,000 865,469 850,625
------------------------
TOTAL US GOVERNMENT OBLIGATIONS 20,403,540 21,180,300
------------------------
US Government Agency Obligations 43.83%
Federal Home Loan Mortgage, Gold Pool,
7.500%, 6/1/2024 $2,992,358 2,960,564 2,893,004
Government National Mortgage Association I
Modified Pass-Through Certificates
7.500%, 5/15/2022 $10,248,881 10,157,587 9,894,772
7.500%, 7/15/2023 $1,003,362 946,923 966,658
7.500%, 11/15/2023 $1,019,348 963,761 982,059
7.000%, 5/15/2023 $1,461,756 1,353,038 1,364,504
7.000%, 2/15/2024 $2,940,005 2,639,573 2,741,375
------------------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS 19,021,446 18,842,372
------------------------
TOTAL FIXED INCOME SECURITIES 39,424,986 40,022,672
------------------------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 6.90%
Repurchase Agreement with State Street Bank & Trust Co dated 2/28/1995 due
3/1/1995 at 6.000%, repurchased at $2,965,494 (Collateralized by US Treasury
Notes due 2/15/1996 at 4.625%, value
$3,028,610) $2,965,000 2,965,000 2,965,000
------------------------
TOTAL INVESTMENT SECURITIES 100.00%# $42,389,986^ $42,987,672
========================
<PAGE>
<FN>
+Step-up bonds are obligations which increase the interest payment rate at
specified points in time. Rate shown reflects current rate which may step up at
a future date.
*Security is non-income producing.
@Security has no market value as of February 28, 1995.
#Percentages are expressed in relation to total investment value.
^Also represents cost for income tax purposes.
&As of February 28, 1995 the following were restricted securities:
</FN>
</TABLE>
Value as
Acquisition Acquisition % of
Security Name Date Cost Net Assets
High Yield Fund
SD Warren, Sr Sub Notes, 12.000%,
12/15/2004 12/13/1994 -
12/15/1994 $2,980,000 1.15%
=====
Select Income Fund
Delta Air Lines, Equipment Trust
Certificates Series 1991K,
9.480%, 6/5/2006 1/19/1995 $963,323 1.99%
=====
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Statement of Assets and Liabilities
February 28, 1995
UNAUDITED
U.S.
High Select Short-Term Government
Yield Income Bond Securities
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS
Investment Securities:
At Cost $279,298,354 $195,394,452 $6,544,353 $39,424,986
=========================================================
At Value $273,284,859 $194,303,644 $6,388,548 $40,022,672
Repurchase Agreements at Value~ 0 0 1,895,000 2,965,000
Receivables:
Investment Securities Sold 18,278,022 13,788,296 0 0
Fund Shares Sold 2,248,827 838,739 19,691 3,480,504
Dividends and Interest 6,015,453 2,959,685 89,770 300,034
Prepaid Expenses and Other Assets 254,891 270,632 89,055 124,759
---------------------------------------------------------
TOTAL ASSETS 300,082,052 212,160,996 8,482,064 46,892,969
---------------------------------------------------------
LIABILITIES
Payables:
Custodian 359,902 13,134 14,612 614
Distributions to Shareholders 334,512 114,026 1,620 9,839
Investment Securities Purchased 23,921,510 21,752,585 0 0
Fund Shares Repurchased 1,543,923 521,703 20,773 197,077
Accrued Distribution Expenses 47,194 33,365 1,583 7,604
Accrued Expenses and Other Payables 14,648 9,828 9,612 3,724
---------------------------------------------------------
TOTAL LIABILITIES 26,221,689 22,444,641 48,200 218,858
---------------------------------------------------------
Net Assets at Value $273,860,363 $189,716,355 $8,433,864 $46,674,111
=========================================================
NET ASSETS
Paid-in Capital* $293,648,672 $194,644,350 $8,894,184 $47,809,969
Accumulated Undistributed Net Realized
Loss on Investment Securities (13,774,814) (3,837,187) (304,515) (1,733,544)
Net Appreciation (Depreciation)
of Investment Securities (6,013,495) (1,090,808) (155,805) 597,686
---------------------------------------------------------
Net Assets at Value $273,860,363 $189,716,355 $8,433,864 $46,674,111
=========================================================
Shares Outstanding 41,997,090 30,544,930 894,916 6,605,796
Net Asset Value, Offering and
Redemption Price per Share $6.52 $6.21 $9.42 $7.07
=========================================================
<FN>
~Also represents cost.
*The Fund has 600 million authorized shares of common stock, par value of $0.01 per share. Of such shares, 100 million have been
allocated to each individual Fund.
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Statement of Operations
Six Months Ended February 28, 1995
UNAUDITED
U.S.
High Select Short-Term Government
Yield Income Bond Securities
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INTEREST INCOME $13,098,707 $6,167,584 $278,759 $1,201,181
--------------------------------------------------
EXPENSES
Investment Advisory Fees 563,292 387,540 20,890 87,476
Distribution Expenses 281,646 176,154 10,445 39,762
Transfer Agent Fees 297,443 250,495 23,040 93,737
Administrative Fees 21,899 15,569 5,627 7,386
Custodian Fees and Expenses 17,940 5,693 1,509 2,592
Directors' Fees and Expenses 12,033 8,143 2,788 4,248
Professional Fees and Expenses 13,000 10,765 6,275 7,812
Registration Fees and Expenses 37,586 20,042 12,484 15,754
Reports to Shareholders 33,414 26,535 3,271 10,730
Other Expenses 9,387 7,055 2,592 2,639
--------------------------------------------------
TOTAL EXPENSES 1,287,640 907,991 88,921 272,136
Fees and Expenses Absorbed
by Investment Adviser (161,148) (203,459) (76,387) (113,016)
--------------------------------------------------
NET EXPENSES 1,126,492 704,532 12,534 159,120
--------------------------------------------------
NET INVESTMENT INCOME 11,972,215 5,463,052 266,225 1,042,061
--------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Loss on Investment
Securities (10,562,384) (1,819,252) (25,912) (1,070,248)
Change in Net Appreciation
(Depreciation) of Investment
Securities 5,236,751 3,275,259 (6,110) 950,958
--------------------------------------------------
NET GAIN (LOSS) ON INVESTMENT SECURITIES (5,325,633) 1,456,007 (32,022) (119,290)
--------------------------------------------------
Net Increase in Net Assets from
Operations $6,646,582 $6,919,059 $234,203 $922,771
==================================================
<FN>
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Statement of Changes in Net Assets
High Yield Fund Select Income Fund
Six-Months Year Six-Months Year
Ended Ended Ended Ended
February 28 August 31 February 28 August 31
1995 1994 1995 1994
UNAUDITED UNAUDITED
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $11,972,215 $23,854,164 $5,463,052 $10,499,197
Net Realized Loss on Investment
Securities (10,562,384) (2,011,785) (1,819,252) (1,608,909)
Change in Net Appreciation
(Depreciation)of Investment
--------------------------- ---------------------------
Securities 5,236,751 (20,602,555) 3,275,259 (7,715,299)
--------------------------- ---------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 6,646,582 1,239,824 6,919,059 1,174,989
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (11,972,215) (23,854,164) (5,463,052) (10,499,313)
Net Realized Gain on Investment
Securities (1,057,759) 0 0 (2,086,344)
In Excess of Net Realized Gain
on Investment Securities 0 0 0 (2,283,516)
--------------------------- ---------------------------
TOTAL DISTRIBUTIONS (13,029,974) (23,854,164) (5,463,052) (14,869,173)
--------------------------- ---------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 166,207,910 393,566,409 85,958,415 89,568,106
Reinvestment of Distributions 10,445,014 17,297,182 4,802,035 12,731,158
--------------------------- ---------------------------
176,652,924 410,863,591 90,760,450 102,299,264
Amounts Paid for Repurchases
of Shares (140,181,963) (453,421,671) (40,837,300) (109,048,165)
--------------------------- ---------------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM FUND SHARE
TRANSACTIONS 36,470,961 (42,558,080) 49,923,150 (6,748,901)
--------------------------- ---------------------------
Total Increase (Decrease) in
Net Assets 30,087,569 (65,172,420) 51,379,157 (20,443,085)
NET ASSETS
Beginning of Period 243,772,794 308,945,214 138,337,198 158,780,283
--------------------------- ---------------------------
End of Period $273,860,363 $243,772,794 $189,716,355 $138,337,198
=========================== ===========================
Accumulated Undistributed Net
Investment Income Included in
Net Assets at End of Period $0 $0 $0 $0
FUND SHARE TRANSACTIONS
Shares Sold 25,580,808 55,009,097 14,088,432 13,786,356
Shares Issued from Reinvestment
of Distributions 1,607,744 2,432,595 788,746 1,961,637
--------------------------- ---------------------------
27,188,552 57,441,692 14,877,178 15,747,993
Shares Repurchased (21,408,861) (63,431,573) (6,703,019) (16,727,058)
--------------------------- ---------------------------
Net Increase (Decrease) in
Fund Shares 5,779,691 (5,989,881) 8,174,159 (979,065)
=========================== ===========================
<FN>
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Statement of Changes in Net Assets (Continued)
Short-Term U.S. Government
Bond Fund Securities Fund
Six-Months Period Six-Months Year
Ended Ended Ended Ended
February 28 August 31 February 28 August 31
1995 1994 1995 1994
UNAUDITED (Note 1) UNAUDITED
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $266,225 $351,973 $1,042,061 $1,803,728
Net Realized Loss on Investment
Securities (25,912) (287,314) (1,070,248) (655,475)
Change in Net Appreciation
(Depreciation) of Investment
Securities (6,110) (149,695) 950,958 (3,406,957)
--------------------------- ---------------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS 234,203 (85,036) 922,771 (2,258,704)
--------------------------- ---------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (266,394) (343,093) (1,042,061) (1,803,728)
Net Realized Gain on Investment
Securities 0 0 0 (689,815)
--------------------------- ---------------------------
TOTAL DISTRIBUTIONS (266,394) (343,093) (1,042,061) (2,493,543)
--------------------------- ---------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 6,943,051 23,726,787 48,400,290 58,224,960
Reinvestment of Distributions 245,477 309,681 946,244 2,221,390
--------------------------- ---------------------------
7,188,528 24,036,468 49,346,534 60,446,350
Amounts Paid for Repurchases
of Shares (6,600,349) (15,730,463) (39,292,951) (55,344,956)
--------------------------- ---------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 588,179 8,306,005 10,053,583 5,101,394
--------------------------- ---------------------------
Total Increase in Net Assets 555,988 7,877,876 9,934,293 349,147
NET ASSETS
Beginning of Period 7,877,876 0 36,739,818 36,390,671
--------------------------- ---------------------------
End of Period $8,433,864 $7,877,876 $46,674,111 $36,739,818
=========================== ===========================
Accumulated Undistributed Net
Investment Income Included in
Net Assets at End of Period $0 $169 $0 $0
FUND SHARE TRANSACTIONS
Shares Sold 742,105 2,419,269 7,030,425 7,747,289
Shares Issued from Reinvestment
of Distributions 26,242 32,201 137,527 291,897
--------------------------- ---------------------------
768,347 2,451,470 7,167,952 8,039,186
Shares Repurchased (706,286) (1,618,615) (5,739,660) (7,306,328)
--------------------------- ---------------------------
Net Increase in Fund Shares 62,061 832,855 1,428,292 732,858
=========================== ===========================
<FN>
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
INVESCO Income Funds, Inc.
Notes to Financial Statements
UNAUDITED
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES. INVESCO Income Funds, Inc. (the
"Fund") a Maryland Corporation, consists of four separate Funds: High Yield
Fund, Select Income Fund, Short-Term Bond Fund and U.S. Government Securities
Fund. The Fund is registered under the Investment Company Act of 1940 (the
"Act") as a diversified, open-end management investment company. Investment
operations of Short-Term Bond Fund commenced on September 30, 1993. The High
Yield, Select Income and U.S. Government Securities Fund's fiscal year-ends were
changed from December 31 to August 31 in 1993.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
A. SECURITY VALUATION - Debt securities are valued at evaluated bid prices as
determined by a pricing service approved by the Fund's board of directors. If
evaluated bid prices are not available, debt securities are valued by
averaging the bid prices obtained from one or more dealers making a market for
such securities.
Equity securities traded on national securities exchanges or in the over-
the-counter market are valued at the last sale price in the market where such
securities are primarily traded. If last sale prices are not available,
securities are valued at the highest closing bid price obtained from one or more
dealers making a market for such securities or by a pricing service approved
by the Fund's board of directors.
If marketquotations or pricing service valuations are not readily available,
securities are valued at fair value as determined in good faith by the Fund's
board of directors. Restricted securities are valued in accordance with
procedures established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which approximates
market value) if maturity is 60 days or less, or at market value if maturity is
greater than 60 days.
B. REPURCHASE AGREEMENTS - Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Fund's custodian. The collateral is evaluated daily to ensure
its market value exceeds the current market value of the repurchase agreements
including accrued interest.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security
transactions are accounted for on the trade date and dividend income is recorded
on the ex dividend date. Interest income, which may be comprised of stated
coupon rate, market discount and original issue discount is recorded on the
accrual basis. Discounts on debt securities purchased are amortized over the
life of the respective security as adjustments to interest income. Cost is
determined on the specific identification basis.
Investments in securities of governmental agencies may only be guaranteed by
the respective agency's limited authority to borrow from the U.S. Government
and may not be guaranteed by the full faith and credit of the United States.
The High Yield Fund invests primarily in high yield bonds, some of which
may be rated below investment grade. These high yield bonds may be more
susceptible than higher grade bonds, to real or perceived adverse economic or
industry conditions. The secondary market, on which high yield bonds are
traded, may also be less liquid than the market for higher grade bonds.
Restricted securities held by the High Yield and Select Income Funds may not
be sold except in exempt transactions or in a public
offering registered under the Securities Act of 1933. The risk of investing in
such securities is generally greater than the risk of investing in the
securities of widely held, publicly traded companies. Lack of a secondary market
and resale restrictions may result in the inability of each Fund to sell a
security at a fair price and may substantially delay the sale of the security
which each Fund seeks to sell. In addition, these securities may exhibit greater
price volatility than securities for which secondary markets exist.
D. FEDERAL AND STATE TAXES - The Fund has complied with the provisions of
the Internal Revenue Code applicable to regulated investment companies and,
accordingly, has made or intends to make sufficient distributions of net
investment income and
<PAGE>
net realized capital gains, if any, to relieve it from all federal and state
income taxes and federal excise taxes. At August 31, 1994, Short-Term Bond and
U.S. Government Securities Funds had $64 and $72,920, respectively, in net
capital loss carryovers which expire in the year 2002. Net capital loss
carryovers utilized in 1994 by High Yield Fund amounted to $124,136.
High Yield, Select Income, Short-Term Bond and U.S. Government Securities
Funds incurred and elected to defer post-October 31 net capital losses of
$3,030,890, $2,019,088, $278,538 and $578,434, respectively, to the period
ended August 31, 1995. To the extent future capital gains are offset by capital
loss carryovers and deferred post-October 31 losses, such gains will not be
distributed to shareholders.
Dividends paid by the Fund from netinvestment income and distributions
of net realized short-term capital gains are,for federal income tax purposes,
taxable as ordinary income to shareholders.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - All the Fund's net
investment income is distributed to shareholders by dividends declared
daily and paid monthly. Reinvestment of dividends is effected at the month-end
net asset value. The Fund distributes net realized capital gains, if any, to
its shareholders at least annually, if not offset by capital loss carryovers.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for mortgage-backed securities, market discounts,
nontaxable dividends, net operating losses, expiring capital loss carry
forwards and deferral of wash sales.
F. EXPENSES-Each of the Funds bears expenses incurred specifically on its
behalf and, in addition, each Fund bears a portion of general expenses, based
on the relative net assets of each Fund. NOTE 2 - INVESTMENT ADVISORY AND
OTHER AGREEMENTS.INVESCO Funds Group, Inc. ("IFG") serves as the Fund's
investment adviser. As compensation for its services to the Fund, IFG receives
an investment advisory fee which is accrued daily at the applicable rate and
paid monthly. The fee is based on the annual rate of each Fund's average net
assets as follows:
AVERAGE NET ASSETS
$0 to $300 Million Over
$300 to $500 $500
Fund Million Million Million
High Yield Fund 0.50% 0.40% 0.30%
Select Income Fund 0.55% 0.45% 0.35%
Short-Term Bond Fund 0.50% 0.40% 0.30%
U.S. Government Securities Fund 0.55% 0.45% 0.35%
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of each
Fund are made by ITC. Fees for such sub-advisory services are paid by IFG.
In accordance with an Administrative Agreement, each Fund pays IFG an annual
fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services.The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee at an annual rate of $20.00 per
shareholder account, or per participant in an omnibus account. IFG may pay
such fee for participants in omnibus accounts to affiliates or third parties.
The fee is paid monthly at one-twelfth of the annual fee and is based upon the
actual number of accounts in existence during each month.
A plan of distribution pursuant to Rule 12b-1 of the Act provides for
reimbursement of marketing and advertising expenditures to IFG (the
"Distributor") to a maximum of 0.25% of average annual net assets. Amounts
accrued by the Fund are available to reimburse the Distributor for
actual expenditures incurred within a rolling twelve-month period.
For the six-months ended February 28, 1995, the High Yield, Select
Income, Short-Term Bond and U.S. Government Securities Funds paid the
<PAGE>
Distributor $285,794, $171,976, $10,579 and $40,162, respectively, for
reimbursement of expenses incurred.
IFG has voluntarily agreed, in some instances, to absorb certain fees
and expenses incurred by each Fund.
NOTE 3-PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six-months ended
February 28, 1995, the aggregate cost of purchases and proceeds from sales of
investmentsecurities (excluding all U.S. Government securities and short-term
securities) were as follows:
Fund Purchases Sales
High Yield Fund $203,151,087 $168,125,531
Select Income Fund 119,428,567 101,992,365
Short-Term Bond Fund 0 798,778
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities were as follows:
Fund Purchases Sales
High Yield Fund $3,039,844 $0
Select Income Fund 37,338,315 3,467,161
Short-Term Bond Fund 1,996,484 1,520,751
U.S. Government Securities Fund 25,019,123 19,853,171
NOTE 4 - APPRECIATION AND DEPRECIATION. At February 28, 1995, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation (depreciation) by Fund were as
follows:
Net
Gross Gross Appreciation
Fund Appreciation Depreciation (Depreciation)
High Yield Fund $2,935,531 $8,949,026 $(6,013,495)
Select Income Fund 1,920,769 3,011,577 (1,090,808)
Short-Term Bond Fund 12,528 168,333 (155,805)
U.S. Government
Securities Fund 942,905 345,219 597,686
NOTE 5 - TRANSACTIONS WITH AFFILIATES. Certain of the Fund's officers and
directors are also officers and directors of IFG and ITC. The Fund has adopted
an unfunded noncontributory defined benefit pension plan covering all
independent directors of the Fund who will have served as an independent
director for at least five years at the time of retirement. Benefits under this
plan are based on an annual rate equal to 25% of the retainer fee at the time of
retirement. Pension expenses for the six-months ended February 28, 1995,
included in Directors' Fees and Expenses in the Statement of Operations, prepaid
pension costs and accrued pension liability included in prepaid expenses and
accrued expenses, respectively, in the Statement of Assets and Liabilities were
as follows:
Prepaid Accrued
Pension Pension Pension
Fund Expenses Costs Liability
High Yield Fund $247 $12,433 $12,680
Select Income Fund 139 6,987 7,126
Short-Term Bond Fund 8 417 425
U.S. Government
Securities Fund 36 1,796 1,832
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Financial Highlights
(For a Fund Share Outstanding throughout Each Period)
Six-Months Year Period
Ended Ended Ended
February 28 August 31 August 31 Year Ended December 31
1995 1994 1993 1992 1991 1990
UNAUDITED (Note 1)
High Yield Fund
PER SHARE DATA
Net Asset Value --
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period $6.73 $7.32 $6.97 $6.66 $6.00 $7.16
------ ------ ------ --------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.34 0.62 0.39 0.64 0.70 0.83
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (0.18) (0.59) 0.36 0.30 0.64 (1.14)
------ ------ ------ --------------------------
Total from Investment Operations 0.16 0.03 0.75 0.94 1.34 (0.31)
------ ------ ------ --------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.34 0.62 0.40 0.63 0.68 0.85
Distributions from Capital Gains 0.03 0.00 0.00 0.00 0.00 0.00
------ ------ ------ --------------------------
Total Distributions 0.37 0.62 0.40 0.63 0.68 0.85
------ ------ ------ --------------------------
Net Asset Value-- End of Period $6.52 $6.73 $7.32 $6.97 $6.66 $6.00
====== ====== ====== ==========================
TOTAL RETURN 2.62%* 0.37% 11.01%* 14.53% 23.51% (4.57%)
RATIOS
Net Assets -- End of Period
($000 Omitted) $273,860 $243,773 $308,945 $212,172 $99,103 $40,380
Ratio of Expenses to Average
<PAGE>
Net Assets# 0.50%* 0.97% 0.97%~ 1.00% 1.05% 0.94%
Ratio of Net Investment Income
to Average Net Assets# 5.27%* 8.70% 8.28%~ 9.29% 10.57% 12.57%
Portfolio Turnover Rate 77%* 195% 45%* 120% 64% 28%
*These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
#Various expenses of the Fund were voluntarily absorbed by IFG for the six
months ended February 28, 1995 and for the year ended August 31, 1994. If such
expenses had not been voluntarily absorbed, ratio of expenses to average net
assets would have been 0.57%, (not annualized) and 0.98%, respectively, and
ratio of net investment income to average net assets would have been 5.20%, (not
annualized) and 8.69%, respectively.
<FN>
~Annualized
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding throughout Each Period)
Six-Months Year Period
Ended Ended Ended
February 28 August 31 August 31 Year Ended December 31
1995 1994 1993 1992 1991 1990
UNAUDITED (Note 1)
Select Income Fund
PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value-- Beginning of Period $6.18 $6.80 $6.53 $6.50 $5.96 $6.26
------ ------ ------ --------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.23 0.47 0.33 0.52 0.53 0.59
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 0.03 (0.43) 0.27 0.13 0.53 (0.30)
------ ------ ------ --------------------------
Total from Investment Operations 0.26 0.04 0.60 0.65 1.06 0.29
------ ------ ------ --------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.23 0.47 0.33 0.52 0.52 0.59
Distributions from Capital Gains 0.00 0.09 0.00 0.10 0.00 0.00
In Excess of Net Realized Gain on
Investment Securities 0.00 0.10 0.00 0.00 0.00 0.00
------ ------ ------ --------------------------
Total Distributions 0.23 0.66 0.33 0.62 0.52 0.59
------ ------ ------ --------------------------
Net Asset Value-- End of Period $6.21 $6.18 $6.80 $6.53 $6.50 $5.96
====== ====== ====== ==========================
TOTAL RETURN 4.40%* 0.47% 9.42%* 10.38% 18.57% 4.86%
RATIOS
Net Assets-- End of Period ($000 Omitted) $189,716 $138,337 $158,780 $123,036 $93,827 $46,423
Ratio of Expenses to Average Net Assets# 0.50%* 1.11% 1.15%~ 1.14% 1.15% 1.01%
Ratio of Net Investment Income to
Average Net Assets# 3.84%* 7.22% 7.40%~ 7.97% 8.57% 9.67%
Portfolio Turnover Rate 78%* 135% 105%* 178% 117% 38%
*These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
#Various expenses of the Fund were voluntarily absorbed by IFG for the
six-months ended February 28, 1995 and the year ended August 31, 1994. If such
expenses had not been voluntarily absorbed, ratio of expenses to average net
assets would have been 0.64%, (not annualized) and 1.15%, respectively, and
ratio of net investment income to average net assets would have been 3.70%, (not
annualized) and 7.18%, respectively.
<FN>
~Annualized
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding throughout Each Period)
Six-Months Period
Ended Ended
February 28 August 31
1995 1994
UNAUDITED (Note 1)
<S> <C> <C>
Short-Term Bond Fund
PER SHARE DATA
Net Asset Value - Beginning of Period $9.46 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.28 0.47
Net Losses on Securities
(Both Realized and Unrealized) (0.02) (0.54)
------ ------
Total from Investment Operations 0.26 (0.07)
------ ------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.30 0.47
------ ------
Net Asset Value - End of Period $9.42 $9.46
====== ======
TOTAL RETURN 2.78%* (0.72%)*
RATIOS
Net Assets - End of Period ($000 Omitted) $8,434 $7,878
Ratio of Expenses to Average Net Assets# 0.15%* 0.46%~
Ratio of Net Investment Income to
Average Net Assets# 3.16%* 5.50%~
Portfolio Turnover Rate 30%* 169%*
*These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
#Various expenses of the Fund were voluntarily absorbed by IFG for the six
months ended February 28, 1995 and for the period ended August 31, 1994. If such
expenses had not been voluntarily absorbed, ratio of expenses to average net
assets would have been 1.06%, (not annualized) and 2.04%, (annualized)
respectively, and ratio of net investment income to average net assets would
have been 2.25%, (not annualized) and 3.92%, (annualized) respectively.
<FN>
~Annualized
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Income Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding throughout Each Period)
Six-Months Year Period
Ended Ended Ended
February 28 August 31 August 31 Year Ended December 31
1995 1994 1993 1992 1991 1990
UNAUDITED (Note 1)
U.S. Government Securities Fund
PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value-- Beginning of Period $7.10 $8.19 $7.61 $7.65 $7.09 $7.14
------ ------ ------ --------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.23 0.41 0.28 0.46 0.48 0.53
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (0.03) (0.93) 0.58 (0.04) 0.57 (0.05)
------ ------ ------ --------------------------
Total from Investment Operations 0.20 (0.52) 0.86 0.42 1.05 0.48
------ ------ ------ --------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.23 0.41 0.28 0.46 0.49 0.53
Distributions from Capital Gains 0.00 0.16 0.00 0.00 0.00 0.00
------ ------ ------ --------------------------
Total Distributions 0.23 0.57 0.28 0.46 0.49 0.53
------ ------ ------ --------------------------
Net Asset Value-- End of Period $7.07 $7.10 $8.19 $7.61 $7.65 $7.09
====== ====== ====== ==========================
TOTAL RETURN 2.88%* (6.53%) 11.61%* 5.68% 15.56% 7.23%
RATIOS
Net Assets-- End of Period ($000 Omitted) $46,674 $36,740 $36,391 $35,799 $29,229 $21,247
Ratio of Expenses to Average Net Assets# 0.50%* 1.32% 1.40%~ 1.27% 1.27% 1.07%
Ratio of Net Investment Income to
Average Net Assets# 3.25%* 5.46% 5.36%~ 6.08% 6.78% 7.58%
Portfolio Turnover Rate 64%* 95% 100%* 115% 67% 38%
*These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
#Various expenses of the Fund were voluntarily absorbed by IFG for the
six-months ended February 28, 1995 and the year ended August 31, 1994. If such
expenses had not been voluntarily absorbed, ratio of expenses to average net
assets would have been 0.85%, (not annualized) and 1.42%, respectively, and
ratio of net investment income to average net assets would have been 2.90%, (not
annualized) and 5.36%, respectively.
<FN>
~Annualized
</FN>
</TABLE>
<PAGE>
INVESCO FUNDS
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information,
Call toll-free: 1-800-525-8085
To reach PAL, your 24-hour Personal Account
Line, call: 1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
7800 E. Union Avenue
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied by a current prospectus.
