ANNUAL REPORT
June 30, 1995
INVESCO
INDUSTRIAL
INCOME
FUND
A Smart Choice For
The Foundation
Of Your Portfolio
INVESCO FUNDS
<PAGE>
Market Overview July 1995
Unemployment is up. The yield curve is flat. The dollar, housing starts,
and consumer confidence are leveling. Gross Domestic Product expanded by just
2.7% during the first quarter of 1995. And inflation has accelerated.
Taken altogether, this is good news. These signs may indicate that
economic growth is approaching a more moderate, sustainable level.
Analysts know that a rapidly growing economy puts stress on credit
availability. To meet increasing demand, companies may borrow to expand capacity
with new equipment and facilities. They add workers at a brisk rate, and those
workers are able to command higher wages in a "seller's market." Demand thus
outraces supply when it comes to the key resources of credit and employees.
Ultimately, something has to give u and that something is interest rates. They
rise, and eventually the increased cost of borrowing slows the entire cycle
down.
Fearing the long-term corrosive effects of inflation, the Federal Reserve
Board actively sought to slow the U.S. economy in 1994. Over a period of 12
months beginning in February 1994, they doubled short-term interest rates.
For five quarters running, the GDP had racked up impressive gains,
including a solid +5.1% for the last quarter of 1994. Then, reacting to the
relentless pressure of high short-term interest rates, growth contracted to a
more moderate 2.7% for the first three months of 1995.
To many market watchers, "moderate" is synonymous with "sustainable."
Now that they've reined in the galloping expansion, the Fed will act to
keep it going at a sustainable trot. Having cut the Fed Funds rate by 0.25% in
July, their strategy may include additional cuts over the next several months.
(This is the rate charged on overnight loans between member banks.)
In our opinion, interests rates will probably drop further in 1995. That
will ease inflationary pressure somewhat, as well as have a positive impact on
the bond market. Short-term rates could drop to 5.5% or less, compared to a
5.75% Fed Funds rate as of late July. The benchmark 30-year Treasury bond is now
yielding around 6.9%; we may expect to see that gradually decrease. Overall,
bond prices have strengthened since the fourth quarter of 1994.
Given the advances in equities during the first half of 1995, weAEre
likely to see a correction as the market odigestso its gains; this happened in
mid-July for technology stocks, for example. However, we do not anticipate a
significant setback in prices over the third and fourth quarters. Some
industrial, construction, and consumer cyclical stocks have lagged the overall
market due to earlier fears about the economy; since the recent cut in interest
rates may herald an economic rebound, these stocks may well enjoy advances over
the next few months.
<PAGE>
Performance
For the fiscal year ended 6/30/95, Industrial Income Fund had a total
return of 14.79%, compared with a total return of 25.91% for the S&P 500 Index,
a measure of the broad stock market.
(Of course, past performance is no guarantee of future results.)*
In the long run, the fund has outperformed the stock market, delivering
average annualized total returns of 12.65% and 14.96% for the five-year and
10-year periods ended 6/30/95, compared with total returns for the S&P 500 Index
of 12.04% and 14.61%.
INVESCO Industrial Income Fund aims for high quarterly income by investing
in both stocks and bonds which will provide a stable return, as well as
potential capital appreciation. The fund normally invests between 60% and 75% of
its assets in stocks, and the rest in fixed-income securities.
Ordinarily, the bond component of Industrial Income Fund acts as a
defensive element, protecting the fund from losses when the stock market drops.
However, in the six months ended 12/31/94, one of the worst bond markets in
decades turned the fund's fixed-income side into a temporary handicap.
On the equity side, the fund was overweighted in capital goods and
consumer cyclicals during the first quarter of the fiscal year. These stocks
were out of favor with the market last summer, hampering performance. But as the
threat of inflation diminished and interest rates stopped rising, our
investments in capital goods, technology and financial stocks began to pay off.
Compared to the first half of the fiscal year, bonds performed notably
better in the six months ended 6/30/95, making a positive contribution through
both interest income and price appreciation.
<PAGE>
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the INVESCO Industrial Income Fund to the value of a
$10,000 investment in the S&P 500 and Lehman Government/Corporate Bond
Indexes, assuming in each case reinvestment of all dividends and capital
gain distributions, for the ten year period ended 6/30/95.
The line graph represents the value of a $10,000 investment in INVESCO
Industrial Income Fund, plus reinvested dividends and capital gain
distributions, for the 10-year period ended 6/30/95.*
The chart and other total return figures cited reflect the fund's operating
expenses, but the indexes do not have expenses, which would have lowered their
performance.
Industrial Income Fund
Average Annual Total Return
as of 6/30/95
1 year 14.79%
5 years 12.65%
10 years 14.96%
Strategy Summary
About a year ago, we structured the equity part of Industrial Income's
portfolio to capitalize on four dominant economic themes: capital goods for
developing countries; United States companies with global earnings, primarily in
consumer staples; technology stocks, computers and semiconductors; and global
energy producers and refiners.
As the stock market began its powerful rally in December 1994, this
strategy positioned the fund for a strong upturn in the first six months of
1995. We expect these investment themes will continue to guide our stock
selections for the remainder of 1995.
Graph:
Fixed-Income Portfolio Quality
as of 6/30/95
This pie chart shows the allocation of fixed-income investments for each of
the following ratings categories: AAA/Government - 55.5%, AA - 1.1%, A -
6.5%, BBB - 6.7%, BB - 15.2%, B - 14.2%, C - 0.8%.
Fixed-Income. In the fixed-income segment, we profited by locating
securities that not only provided high dividend income, but also had upside
price potential. The major themes of this fund component are: cable television
and broadcasting consolidation and takeover situations; strong companies in a
market-driven, post-health care reform environment; and former
bankruptcy-threatened companies that have survived the "near-death experience"
and promise to pare down debt.
A good example of the latter situation is USG Corp. (building and
construction related), which has reduced its debt after bankruptcy and improved
its debt rating from B to BB since we purchased it. That companyAEs management
has made regaining an investment grade rating of BBB a priority.
<PAGE>
Graph:
Portfolio Diversification by Value
This bar graph reflects the allocation of the Industrial Income Fund's
portfolio by value of net assets in fixed-income, capital goods and
construction, consumer cyclical, consumer staples, energy, technology,
finance, other equity and net cash & short-term securities as of 6/94,
12/94 and 6/95
Equity Sector Analysis
Capital Goods. The United States has emerged as the clear leader among
industrialized countries in low-cost production, manufacturing efficiency and
quality. Newly upgraded factories produce goods that have become the products of
choice worldwide. This translates into growing demand for high-ticket items made
by large U.S. manufacturers, as developing nations build up their
infrastructures. In this vein, we found profitable opportunities in the stocks
of Caterpillar, Inc., (machinery); Deere & Co. (machinery), and Honeywell, Inc.
(electrical equipment).
Consumer Staples. During the last six months, we have increased our
weighting of consumer staples, consistent with the belief that emerging
countries represent growing demand for U.S.-made goods. Therefore, we are
favoring large, domestic companies that have a dominant presence
internationally, such as Heinz (H J) Co. (food products and beverages), American
Home Products (medical relateddrugs), and Merck & Co. (drugs).
Technology. The driving force behind the demand for U.S. goods worldwide is
superior technology. Top-performing technology stocks in the fund during fiscal
1995 include Intel Corp. (electronics) and computer systems giants
Hewlett-Packard Co.and IBM. We have taken profits on Motorola Inc. (electronics
and communications equipment). Energy. Growing global demand for energy
positively influenced the value of our holdings in large international
integrated oil producers, such as Amoco Corp., Exxon Corp. and Royal Dutch
Petroleum. As they are both producers
<PAGE>
and refiners, these firms are somewhat protected from a downturn in oil prices.
They also have above average dividend yields and higher earnings as a result of
corporate restructuring.
Consumer Cyclicals. As baby boomers turn into retirement-bound savers,
they are much more price conscious. That is fine for keeping inflation in check,
but it can mean lower earnings growth for consumer-oriented firms, such as auto
manufacturers and retailers. Accordingly, we have lowered our weighting in this
sector.
Other. We will be scaling down our position in McDonnell Douglas, the
aerospace and defense firm, after taking profits. We have also liquidated at a
profit holdings of Cincinnati Milacron (machine tools), Fleet Financial Group
(banking), Dial Corp. (cosmetics and toiletries), and JC Penney Co. (retail). We
are reducing our stake in El Paso Natural Gas, one of our top ten holdings in
December, but a disappointing performer in 1995.
Looking Ahead
The Federal Reserve's decision to cut interest rates in July is a signal
of its determination to prevent a recession. The move enhances our belief that
there will be continued growth for the next six months at least, and possibly
until the 1996 presidential election. As usual, our goal is to keep cash and
equivalents under 5% of the equity side of the portfolio. We continue to look
for stocks with positive earnings growth, keeping in mind that growth stocks are
not always found in the same sectors of the economy that have been popular in
the past.
Fund Managers
Industrial Income Fund is co-managed by two INVESCO Trust Company senior
vice presidents. Industry veteran Charles P. Mayer oversees the equity portion
of the holdings. He began his investment career in 1969, and previously managed
a sizable equity portfolio for Westinghouse Pension Investment Corporation. Mr.
Mayer earned his MBA from St. John's University and BA from St. Peter's College.
Donovan "Jerry" Paul manages the fund's fixed-income investments. He
earned his MBA from the University of Northern Iowa, as well as a BBA from the
University of Iowa. A Chartered Financial Analyst, Mr. Paul has more than 19
years of experience in the securities industry. He joined INVESCO in 1994;
previously, he was director of fixed-income research and a portfolio manager for
Stein, Roe & Farnham.
The managers are assisted by Albert M. Grossi, who joined INVESCO in 1995
from Westinghouse Pension Investments Corporation, where he was portfolio
manager/senior analyst. Mr. Grossi has an BA and MBA from Rutgers University.
Correction: In the Industrial Income Fund Semiannual Report dated
12/31/94, we incorrectly quoted certain duration figures. As of 6/30/94, the
duration of bond holdings, excluding cash and equivalents, was 4.1 years. As of
12/31/94, the duration was 3.1 years.
* Total return assumes reinvestment of dividends and capital gain distributions
for the periods indicated. Past performance is not a guarantee of future
results. Investment return and principal value will fluctuate so that, when
redeemed, an investor's shares may be worth more or less when purchased. The S&P
500 is an unmanaged index considered representative of common stock performance;
the Lehman Brothers Government/Corporate Bond Index is an unmanaged index
reflecting the broad bond market.
<PAGE>
INVESCO Industrial Income Fund, Inc.
Ten Largest Common Stock Holdings
June 30, 1995
Description Value
------------------------------------------------------------------------
International Business Machines $72,000,000
Bank of New York 64,600,000
AT&T Corp 63,750,000
Exxon Corp 56,500,000
Hilton Hotels 56,200,000
Seagram Co Ltd 48,475,000
Sears Roebuck & Co 47,900,000
El Paso Natural Gas 47,067,750
Kansas City Southern Industries 46,823,250
Amoco Corp 46,637,500
Composition of holdings is subject to change.
<PAGE>
INVESCO Industrial Income Fund, Inc.
Statement of Investment Securities
June 30, 1995
Shares or
Principal
Description Amount Value
-------------------------------------------------------------------------------
COMMON STOCKS 69.17%
AEROSPACE & DEFENSE 3.27%
Boeing Co 700,000 $ 43,837,500
General Motors Class H 600,000 23,700,000
Lockheed Martin 500,000 31,562,500
McDonnell Douglas 400,000 30,700,000
--------------
129,800,000
--------------
AUTOMOBILE RELATED 3.28%
Borg-Warner Automotive 365,600 10,419,600
Chrysler Corp 425,000 20,346,875
Cummins Engine 800,000 34,900,000
Eaton Corp 700,000 40,687,500
Ford Motor 800,000 23,800,000
--------------
130,153,975
--------------
BANKING 3.15%
Bank of New York 1,600,000 64,600,000
Chase Manhattan 800,000 37,600,000
Citicorp 400,000 23,150,000
--------------
125,350,000
--------------
BROADCASTING 0.56%
CBS Inc 331,345 22,200,115
--------------
BUILDING &
CONSTRUCTION RELATED 0.95%
Armstrong World Industries 233,400 11,699,175
Fluor Corp 300,000 15,600,000
Louisiana-Pacific Corp 400,000 10,500,000
--------------
37,799,175
--------------
CHEMICALS 0.75%
PPG Industries 300,000 12,900,000
Potash Corp Saskatchewan 300,000 16,762,500
--------------
29,662,500
--------------
CLEANING PRODUCTS 0.92%
Colgate-Palmolive Co 500,000 36,562,500
--------------
<PAGE>
COMPUTER SYSTEMS 3.58%
Apple Computer 550,000 25,540,625
Hewlett-Packard Co 600,000 44,700,000
International Business Machines 750,000 72,000,000
--------------
142,240,625
--------------
DIVERSIFIED COMPANIES 4.97%
AlliedSignal Inc 1,000,000 44,500,000
du Pont (E I) de Nemours 600,000 41,250,000
Kansas City Southern Industries 1,257,000 46,823,250
Minnesota Mining & Manufacturing 600,000 34,350,000
Tenneco Inc 500,000 23,000,000
Whitman Corp 400,000 7,750,000
--------------
197,673,250
--------------
ELECTRICAL EQUIPMENT 2.01%
General Electric 600,000 33,825,000
General Signal 400,000 15,900,000
Honeywell Inc 700,000 30,187,500
--------------
79,912,500
--------------
ELECTRONICS 1.66%
Harris (Del) Corp 543,800 28,073,675
Intel Corp 600,000 37,987,500
--------------
66,061,175
--------------
FINANCE RELATED 1.24%
Block (H & R) Inc 600,000 24,675,000
Household International 500,000 24,750,000
--------------
49,425,000
--------------
FOOD PRODUCTS & BEVERAGES 4.45%
CPC International 600,000 37,050,000
General Mills 500,000 25,687,500
Heinz (H J) Co 700,000 31,062,500
Kellogg Co 300,000 21,412,500
Quaker Oats 400,000 13,150,000
Seagram Co Ltd 1,400,000 48,475,000
--------------
176,837,500
--------------
HOTELS 1.41%
Hilton Hotels 800,000 56,200,000
--------------
INSURANCE 1.29%
Allmerica Property & Casualty 500,000 11,062,500
General Re 300,000 40,162,500
--------------
51,225,000
--------------
<PAGE>
MACHINERY 3.01%
Caterpillar Inc 300,000 19,275,000
Cooper Industries 300,000 11,850,000
Deere & Co 500,000 42,812,500
Ingersoll-Rand Co 650,000 24,862,500
TRINOVA Corp 600,000 21,000,000
--------------
119,800,000
--------------
MEDICAL PRODUCTS 0.46%
Baxter International 500,000 18,187,500
--------------
MEDICAL RELATED -- DRUGS 3.80%
American Home Products 400,000 30,950,000
Merck & Co 500,000 24,500,000
Novo-Nordisk A/S ADR 859,172 23,090,247
Upjohn Co 1,000,000 37,875,000
Warner-Lambert Co 400,000 34,550,000
--------------
150,965,247
--------------
MINING 1.27%
ASARCO Inc 800,000 24,400,000
Newmont Mining 624,050 26,132,094
--------------
50,532,094
--------------
OFFICE EQUIPMENT 1.03%
Xerox Corp 350,000 41,037,500
--------------
OIL & GAS RELATED 9.64%
Amoco Corp 700,000 46,637,500
Apache Corp 736,300 20,156,212
Atlantic Richfield 400,000 43,900,000
Chevron Corp 600,000 27,975,000
Dresser Industries 1,000,000 22,250,000
El Paso Natural Gas~ 1,651,500 47,067,750
Exxon Corp 800,000 56,500,000
Halliburton Co 400,000 14,300,000
Occidental Petroleum 500,000 11,437,500
Royal Dutch Petroleum
5 Gldr Shrs 250,000 30,468,750
Schlumberger Ltd 500,000 31,062,500
Sonat Inc 300,000 9,150,000
Unocal Corp 800,000 22,100,000
--------------
383,005,212
--------------
PHOTO EQUIPMENT 1.07%
Eastman Kodak 700,000 42,437,500
--------------
PRINTING & PUBLISHING 1.37%
Donnelley (R R) & Sons 600,000 21,600,000
Time Warner 800,000 32,900,000
--------------
54,500,000
--------------
<PAGE>
REAL ESTATE RELATED 2.23%
Health & Retirement Properties
Trust REIT 1,800,000 27,000,000
Health Care Property Investors REIT 550,000 17,600,000
Health Care REIT 300,000 6,187,500
Healthcare Realty Trust 400,000 8,100,000
Meditrust SBI REIT 500,000 17,062,500
Omega Healthcare Investors~ 500,000 12,687,500
--------------
88,637,500
--------------
RECREATION PRODUCTS
& SERVICES 0.70%
Disney (Walt) Co 500,000 27,812,500
--------------
RETAIL 3.03%
Limited Inc 1,000,000 22,000,000
May Department Stores 800,000 33,300,000
Melville Corp 500,000 17,125,000
Sears Roebuck & Co 800,000 47,900,000
--------------
120,325,000
--------------
SAVINGS & LOAN 0.30%
FirstFed Michigan 425,000 11,900,000
--------------
TELECOMMUNICATIONS 1.60%
AT&T Corp 1,200,000 63,750,000
--------------
TOBACCO 1.12%
Philip Morris 600,000 44,625,000
--------------
TRANSPORTATION 1.78%
Conrail Inc 400,000 22,250,000
Norfolk Southern 300,000 20,212,500
Overseas Shipholding 300,000 6,225,000
Union Pacific 400,000 22,150,000
--------------
70,837,500
--------------
UTILITIES 3.27%
Bell Atlantic 600,000 33,600,000
GTE Corp 500,000 17,062,500
KN Energy 536,900 13,623,838
NYNEX Corp 600,000 24,150,000
U S WEST 1,000,000 41,625,000
--------------
130,061,338
--------------
TOTAL COMMON STOCKS
(Cost $2,343,219,741 ) 2,749,517,206
--------------
<PAGE>
FIXED INCOME SECURITIES 25.87%
US Government Obligations 3.70%
US Treasury Notes
6.750%, 4/30/2000 $35,000,000 36,071,875
6.500%, 5/15/2005 $37,000,000 37,763,125
5.875%, 2/15/2004 $75,000,000 73,288,950
--------------
TOTAL US GOVERNMENT
OBLIGATIONS
(Cost $145,823,017) 147,123,950
--------------
US Government
Agency Obligations 10.44%
Federal Home Loan Bank
Step-Up Bonds
5.740%^^, 12/23/1998 $20,000,000 19,615,160
4.750%^^, 12/14/1998 $18,050,000 17,666,744
4.750%^^, 3/1/1999 $12,000,000 11,877,216
Federal Home Loan Mortgage, Deb
6.450%, 10/20/1999 $3,000,000 3,004,050
Federal Home Loan Mortgage
Gold Pool
8.000%, 12/1/2024 $19,841,820 20,213,437
7.500%, 9/1/2024 $9,930,728 9,960,510
7.000%, 5/1/2024 $4,852,920 4,772,357
7.000%, 6/1/2024 $14,411,831 14,172,581
7.000%, 7/1/2024 $9,479,073 9,321,711
6.500%, 12/31/1999 $50,000,000 49,300,950
6.500%, 7/1/2008 $37,741,771 37,214,104
6.500%, 8/1/2008 $8,394,364 8,277,003
Federal Home Loan Mortgage
Step-Up Deb
5.630%^^, 1/5/1999 $9,600,000 9,401,952
4.800%^^, 7/7/1998 $5,000,000 4,938,900
Federal National Mortgage
Association, Gtd Mortgage
Pass-Through Certificates
7.500%, 6/1/2024 $15,054,381 15,100,131
6.500%, 7/1/2008 $42,406,640 41,754,383
6.000%, 10/1/2009 $24,063,190 23,272,209
Government National Mortgage
Association I, Modified
Pass-Through Certificates
7.500%, 10/15/2023 $19,513,532 19,626,886
7.500%, 5/15/2024 $10,714,452 10,767,370
7.500%, 6/15/2024 $4,241,530 4,262,478
7.500%, 7/15/2024 $5,148,706 5,174,136
7.250%, 7/15/2030 $13,260,000 13,103,784
Student Loan Marketing
Association, Notes
Floating, 5.720%, 2/8/1999 $37,250,000 36,990,218
Floating, 5.720%, 1/13/1999 $12,750,000 12,665,735
Step-Up, 6.812%^^, 1/27/1998 $12,500,000 12,515,213
--------------
TOTAL US GOVERNMENT
AGENCY OBLIGATIONS
(Cost $412,466,266) 414,969,218
--------------
<PAGE>
Corporate Bonds 11.45%
AUTOMOBILE RELATED 0.33%
Auburn Hills Trust, Deb
Gtd Exchangeable Certificates
12.000%, 5/1/2020 $8,725,000 12,920,329
--------------
BANKING 0.16%
Sovereign Bancorp
Medium-Term Sub Notes
8.000%, 3/15/2003 $6,500,000 6,356,929
--------------
BROADCASTING 0.85%
Allbritton Communications
Sr Sub Deb, 11.500%, 8/15/2004 $11,600,000 12,180,000
Benedek Broadcasting, Sr Notes^
11.875%, 3/1/2005 $5,000,000 5,181,250
Granite Broadcasting
Sr Sub Deb, 12.750%, 9/1/2002 $3,000,000 3,292,500
Sr Sub Notes, Series A^
10.375%, 5/15/2005 $4,000,000 4,000,000
SCI Television, Sr Secured Notes
11.000%, 6/30/2005 $8,750,000 9,078,125
--------------
33,731,875
--------------
BUILDING &
CONSTRUCTION RELATED 1.09%
Schuller International Group
Sr Notes, 10.875%, 12/15/2004 $2,730,000 2,975,700
USG Corp
Deb, 8.750%, 3/1/2017 $13,740,000 13,190,400
Deb, 7.875%, 1/1/2004 $17,788,000 16,898,600
Sr Notes, Series B
9.250%, 9/15/2001 $10,000,000 10,325,000
--------------
43,389,700
--------------
CABLE TELEVISION 1.47%
Cablevision Industries
Sr Deb, Series B, 9.250%, 4/1/2008 $6,760,000 7,005,050
Century Communications, Sr Notes
9.500%, 3/1/2005 $8,500,000 8,457,500
Jones Intercable, Sr Sub Deb
11.500%, 7/15/2004 $7,000,000 7,700,000
10.500%, 3/1/2008 $4,203,000 4,455,180
Marcus Cable Operating LP/Marcus
Cable Capital II, Sr Sub
Gtd, Discount Step-Up Notes
Zero Coupon^^, 8/1/2004 $16,500,000 10,353,750
Rogers Cablesystems, Sr Secured
2nd Priority Notes^
10.000%, 3/15/2005 $9,200,000 9,476,000
Summit Communications Group
Sr Sub Deb, 10.500%, 4/15/2005 $4,400,000 4,818,000
Viacom Inc, Sub Deb
8.000%, 7/7/2006 $6,500,000 6,305,000
--------------
58,570,480
--------------
<PAGE>
CHEMICALS 0.36%
Borden Chemicals & Plastics
Operating LP/ BCP Finance
Notes, 9.875%, 5/1/2005 $5,500,000 5,596,250
SIFTO Canada, Gtd Sr Secured Notes
8.500%, 7/15/2000 $9,000,000 8,520,147
--------------
14,116,397
--------------
CONTAINERS 0.46%
Anchor Glass Container, Sr Sub Deb
9.875%, 12/15/2008 $4,000,000 3,660,000
Owens-Illinois, Sr Sub Notes
10.500%, 6/15/2002 $5,750,000 5,980,000
Silgan Holdings, Sr Discount Step-Up
Deb, Zero Coupon^^, 12/15/2002 $6,000,000 5,430,000
Stone Container, Sr Notes
9.875%, 2/1/2001 $3,225,000 3,208,875
--------------
18,278,875
--------------
FINANCE RELATED 1.14%
Associates Corp of North America
Sr Deb, 8.550%, 7/15/2009 $10,000,000 11,264,720
Chrysler Financial, Notes
6.625%, 8/15/2000 $5,000,000 4,986,615
6.500%, 6/15/1998 $8,375,000 8,377,077
Ford Motor Credit
Medium-Term Notes, Floating
6.520%, 11/9/1998 $3,600,000 3,573,000
6.437%, 2/1/1999 $10,500,000 10,462,714
Westinghouse Credit, Notes
8.875%, 6/14/2014 $5,850,000 6,470,685
--------------
45,134,811
--------------
HEALTH CARE FACILITIES 0.05%
Hillhaven Corp, Sr Sub Notes
10.125% 9/1/2001 $2,000,000 2,065,000
--------------
HOTELS 0.12%
Host Marriott Travel Plaza
Sr Secured Notes^
9.500%, 5/15/2005 $5,000,000 4,793,750
--------------
INSURANCE 0.14%
Torchmark Corp, Deb
8.250%, 8/15/2009 $5,000,000 5,455,085
--------------
OIL & GAS RELATED 0.31%
Louis Dreyfus Natural Gas
Sr Sub Notes, 9.250%, 6/15/2004 $5,000,000 5,200,000
NorAm Energy, Deb
10.000%, 11/15/2019 $6,000,000 6,925,062
--------------
12,125,062
--------------
<PAGE>
PAPER & PAPER PRODUCTS 0.17%
Gaylord Container, Sr Sub
Discount Step-Up Deb
Zero Coupon^^, 5/15/2005 $3,950,000 3,851,250
Quno Corp, Sr Notes
9.125%, 5/15/2005 $3,000,000 2,985,000
--------------
6,836,250
--------------
PRINTING & PUBLISHING 0.57%
News America Holdings, Deb
8.500%, 2/23/2025 $5,725,000 6,284,229
Valassis Communications
Sr Notes, 9.550%, 12/1/2003 $10,000,000 11,214,430
Sr Sub Notes, 9.375%, 3/15/1999 $5,000,000 5,313,035
--------------
22,811,694
--------------
RECREATION PRODUCTS
& SERVICES 0.87%
GNS Finance, Sr Sub Notes, Series B
9.250%, 3/15/2003 $5,400,000 5,724,000
MGM Grand Hotel Finance
1st Mortgage Notes
12.000%, 5/1/2002 $8,025,000 8,917,781
Royal Caribbean Cruises Ltd
Sr Sub Notes, 11.375%, 5/15/2002 $6,475,000 7,122,500
Six Flags Theme Parks^, Sr Sub
Discount Step-Up Notes
Zero Coupon^^, 6/15/2005 $6,500,000 4,680,000
United Artists Theatre Circuit
Sr Secured Notes, Series B
11.500%, 5/1/2002 $7,625,000 8,082,500
--------------
34,526,781
--------------
RETAIL 0.21%
Penn Traffic, Sr Sub Notes
9.625%, 4/15/2005 $3,400,000 3,204,500
Southland Corp, 2nd Priority
Sr Sub Deb, Series A
4.500%, 6/15/2004 $7,205,000 5,025,487
--------------
8,229,987
--------------
SAVINGS & LOAN 0.35%
Western Financial Savings Bank
Sub Capital Deb
8.500%, 7/1/2003 $14,000,000 14,000,000
--------------
STEEL 0.18%
AK Steel, Sr Notes
10.750%, 4/1/2004 $7,000,000 7,332,500
--------------
TELECOMMUNICATIONS 0.53%
Allnet Communication Services
Sr Sub Notes, 9.000%, 5/15/2003 $6,008,000 6,353,460
<PAGE>
Centennial Cellular, Sr Notes
8.875%, 11/1/2001 $10,480,000 9,877,400
Comcast Cellular
Sr Participation Notes, Series B
Zero Coupon, 3/5/2000 $2,000,000 1,407,500
Commnet Cellular, Conv Sub Deb
6.750%, 7/15/2009 $3,500,000 3,618,125
--------------
21,256,485
--------------
TOBACCO 0.25%
Philip Morris, Notes
9.800%, 12/15/1998 $4,575,000 4,654,976
RJR Nabisco, Notes
8.750%, 8/15/2005 $5,000,000 5,118,300
--------------
9,773,276
--------------
TRANSPORTATION 0.46%
Delta Air Lines
Equipment Trust Certificates
Series 1992E, 9.300%, 1/2/2010 $4,175,000 4,650,921
Series 1992F, 9.300%, 1/2/2011 $9,085,000 10,332,289
Pass-Through Certificates
Series 1992A2
9.200%, 9/23/2014 $3,000,000 3,150,198
--------------
18,133,408
--------------
UTILITIES 1.38%
Commonwealth Edison
1st Mortgage
Series 16, 6.375%, 10/1/1998 $15,450,000 15,156,759
Series 37, 8.250%, 12/1/2007 $11,220,000 11,584,717
Series 61, 9.125%, 1/15/2014 $2,000,000 2,102,438
First PV Funding, Lease Oblig
Series 1986B, 8.950%, 1/15/1997 $7,511,000 7,616,558
Southern California Edison
1st Mortgage, 8.875%, 6/1/2024 $9,000,000 9,516,618
Southwestern Bell Telephone, Deb
7.750%, 9/1/2009 $8,833,000 9,047,333
--------------
55,024,423
--------------
TOTAL CORPORATE BONDS
(Cost $441,599,495) 454,863,097
--------------
Asset-Backed Securities 0.09%
RECREATION PRODUCTS
& SERVICES 0.09%
Griffin Gaming & Entertainment, Secured
Non Recourse Pass-Through Notes
Zero Coupon, 6/30/2000
(Cost $3,559,884) $4,268,000 3,618,500
--------------
Foreign Government Obligations 0.19%
Newfoundland Province, Deb
9.000%, 6/1/2019
(Cost $7,104,500) $6,500,000 7,663,624
--------------
TOTAL FIXED INCOME SECURITIES
(Cost $1,010,553,162) 1,028,238,389
<PAGE>
--------------
OTHER SECURITIES 0.13%
CABLE TELEVISION 0.13%
Australis Media Ltd, Units
(Each unit consists of one million
Sr Sub Discount Step-Up Notes, Zero
Coupon^^, 5/15/2003 and one wrnt to
buy 57.7721 shrs of cmn stock)
(Cost $5,174,451) 10,000,000 5,200,000
--------------
SHORT-TERM INVESTMENTS 4.83%
US Government
Agency Obligations 0.63%
Federal Home Loan Bank, Floating
5.265%, 3/21/1996
(Cost $25,000,000) $25,000,000 25,000,000
Commerical Paper 4.20%
FINANCE RELATED 3.07%
American Express Credit
5.850%, 7/3/1995 $18,512,000 18,512,000
Ford Motor Credit
6.000%, 7/7/1995 $20,912,000 20,912,000
General Motors Acceptance
6.020%, 7/12/1995 $24,706,000 24,660,555
Sears Roebuck Acceptance
5.920%, 7/5/1995 $25,000,000 25,000,000
5.850%, 7/5/1995 $33,081,000 33,081,000
--------------
122,165,555
--------------
INVESTMENT BROKERS 0.63%
Merrill Lynch & Co
6.000%, 7/6/1995 $25,000,000 24,979,166
--------------
OIL & GAS RELATED 0.50%
Texaco Inc
5.960%, 7/10/1995 $20,000,000 20,000,000
--------------
TOTAL COMMERCIAL PAPER
(Cost $167,144,721) 167,144,721
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $192,144,721) 192,144,721
--------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $3,551,092,075)
(Cost for Income Tax Purposes
$3,552,365,147) $3,975,100,316
==============
<PAGE>
~ Security is an affliated company (See Note 5).
^^ 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.
^ The following are restricted securities at June 30, 1995:
Value as
Acquisition Acquisition % of
Security Name Date Cost Net Assets
-------------------------------------------------------------------------------
Benedek Broadcasting, Sr Notes 4/21/95 -
11.875%, 3/1/2005 6/22/95 $5,106,250 0.13%
Granite Broadcasting
Sr Sub Notes, Series A
10.375%, 5/15/2005 5/17/95 4,025,000 0.10%
Host Marriott Travel Plaza
Sr Secured Notes
9.500%, 5/15/2005 5/18/95 4,817,968 0.12%
Rogers Cablesystems
Sr Secured 2nd Priority Notes
10.000%, 3/15/2005 3/10/95 9,154,000 0.23%
Six Flags Theme Parks, Sr Sub
Discount Step-Up Notes
Zero Coupon, 6/15/2005 6/16/95 4,574,175 0.12%
-------
0.70%
=======
See Notes to Financial Statements
<PAGE>
INVESCO Industrial Income Fund, Inc.
Statement of Assets and Liabilities
June 30, 1995
ASSETS
Investment Securities at Value
(Cost $3,551,092,075) $ 3,975,100,316
Cash 1,058,163
Receivables:
Investment Securities Sold 33,468,379
Fund Shares Sold 3,185,538
Dividends and Interest 23,920,722
Prepaid Expenses and Other Assets 275,617
-----------------
TOTAL ASSETS 4,037,008,735
-----------------
LIABILITIES
Payables:
Distributions to Shareholders 2,305,807
Investment Securities Purchased 15,369,290
Fund Shares Repurchased 7,871,345
Accrued Distribution Expenses 1,578,039
Accrued Expenses and Other Payables 275,345
-----------------
TOTAL LIABILITIES 27,399,826
-----------------
Net Assets at Value $ 4,009,608,909
=================
NET ASSETS
Paid-in Capital* $ 3,567,406,370
Accumulated Undistributed Net Investment Income 1,916,689
Accumulated Undistributed Net Realized Gain
on Investment Securities 16,277,609
Net Appreciation of Investment Securities 424,008,241
-----------------
Net Assets at Value $ 4,009,608,909
=================
Net Asset Value, Offering and Redemption
Price per Share $11.92
======
* The Fund has one billion authorized shares of common stock, par value
of $1.00 per share, of which 336,433,951 were outstanding at June 30, 1995.
See Notes to Financial Statements
<PAGE>
INVESCO Industrial Income Fund, Inc.
Statement of Operations
Year Ended June 30, 1995
INVESTMENT INCOME
INCOME
Dividends $ 79,661,232
Interest 98,013,303
Foreign Taxes Withheld (730,240)
-----------------
TOTAL INCOME 176,944,295
-----------------
EXPENSES
Investment Advisory Fees 19,946,443
Distribution Expenses 9,710,722
Transfer Agent Fees 5,386,968
Administrative Fees 592,643
Custodian Fees and Expenses 236,526
Directors' Fees and Expenses 258,055
Professional Fees and Expenses 156,590
Registration Fees and Expenses 331,732
Reports to Shareholders 871,882
Other Expenses 110,115
-----------------
TOTAL EXPENSES 37,601,676
Fees and Expenses Absorbed
by Investment Adviser (946,406)
-----------------
NET EXPENSES 36,655,270
-----------------
NET INVESTMENT INCOME 140,289,025
-----------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain on Investment Securities 52,677,597
Change in Net Appreciation
of Investment Securities 336,508,408
-----------------
NET GAIN ON INVESTMENT SECURITIES 389,186,005
-----------------
Net Increase in Net Assets from Operations $ 529,475,030
=================
See Notes to Financial Statements
<PAGE>
INVESCO Industrial Income Fund, Inc.
Statement of Changes in Net Assets
Year Ended June 30
1995 1994
OPERATIONS
Net Investment Income $140,289,025 $118,580,406
Net Realized Gain on
Investment Securities 52,677,597 223,288,334
Change in Net Appreciation
(Depreciation) of Investment Securities 336,508,408 (239,673,996)
-------------- --------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 529,475,030 102,194,744
-------------- --------------
DISTRIBUTIONS TO
SHAREHOLDERS
Net Investment Income (140,427,579) (118,580,406)
In Excess of Net
Investment Income 0 (35,552,507)
Net Realized Gain on
Investment Securities (180,471,498) (39,465,441)
-------------- --------------
TOTAL DISTRIBUTIONS (320,899,077) (193,598,354)
-------------- --------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 767,808,162 1,480,266,941
Reinvestment of Distributions 301,417,968 178,200,257
-------------- --------------
1,069,226,130 1,658,467,198
Amounts Paid for Repurchases
of Shares (1,181,514,849) (1,066,268,671)
-------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM FUND
SHARE TRANSACTIONS (112,288,719) 592,198,527
-------------- --------------
Total Increase in Net Assets 96,287,234 500,794,917
NET ASSETS
Beginning of Period 3,913,321,675 3,412,526,758
-------------- --------------
End of Period (Including
Accumulated Undistributed Net
Investment Income of
$1,916,689 and $2,055,243,
respectively) $4,009,608,909 $3,913,321,675
============== ==============
--------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 67,824,580 124,877,111
Shares Issued from Reinvestment
of Distributions 27,888,096 15,171,237
-------------- --------------
95,712,676 140,048,348
Shares Repurchased (105,096,248) (90,302,861)
-------------- --------------
Net Increase (Decrease) in Fund Shares (9,383,572) 49,745,487
============== ==============
See Notes to Financial Statements
<PAGE>
INVESCO Industrial Income Fund, Inc.
Notes to Financial Statements
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO
Industrial Income Fund, Inc. (the "Fund"), a Maryland Corporation, is registered
under the Investment Company Act of 1940 (the "Act") as a diversified, open-end
management investment company. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements.
A. SECURITY VALUATION -- 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.
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 dealers making a market for such securities.
Foreign securities are valued at the closing price on the principal
stock exchange on which they are traded. In the event the closing prices
are not available for foreign securities, prices will be obtained from the
principal stock exchange at or prior to the close of the New York Stock
Exchange.
If market quotations 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. 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.
Restricted securities held by the Fund 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 the Fund to sell a security at
a fair price and may substantially delay the sale of the security which
the Fund seeks to sell. In addition, these securities may exhibit greater
price volatility than securities for which secondary markets exist.
The Fund may have elements of risk due to concentrated investments
in foreign issuers located in a specific country. Such concentrations may
subject the Fund to additional risks resulting from future political or
economic conditions and possible imposition of adverse foreign
governmental laws or currency exchange restrictions.
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.
<PAGE>
C. FEDERAL AND STATE TAXES -- The Fund has complied and continues to comply
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 net realized capital
gains, if any, to relieve it from all federal and state income taxes and
federal excise taxes.
Dividends paid by the Fund from net investment income and
distributions of net realized short-term capital gains are, for federal
income tax purposes, taxable as ordinary income to shareholders. Of the
ordinary income distributions declared for the year ended June 30, 1995,
49.10% qualified for the dividends received deduction available to the
Fund's corporate shareholders.
Investment income received from foreign sources may be subject to
foreign withholding taxes. Dividend and interest income is shown gross of
foreign withholding taxes in the accompanying financial statements.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions
to shareholders are recorded by the Fund on the ex dividend/distribution
date. 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
carryforwards and deferral of wash sales. During the year ended June 30,
1995, the Fund reclassified $19,671 from accumulated undistributed net
realized gain to accumulated undistributed net investment income. Paid-in
capital, net investment income and net assets were not affected.
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 0.60% on the first $350 million of average net assets; reduced to 0.55%
on the next $350 million of average net assets; and 0.50% of average net assets
in excess of $700 million. Effective October 15, 1992, IFG voluntarily agreed to
waive a portion of its fee which exceeds 0.45% of average net assets in excess
of $2 billion. In addition, effective October 21, 1993, IFG voluntarily agreed
to waive a portion of its fee which exceeds 0.40% of average net assets in
excess of $4 billion. In accordance with a Sub-Advisory Agreement between IFG
and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of the
Fund are made by ITC. Fees for such sub-advisory services are paid by IFG.
In accordance with an Administrative Agreement, the 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 $14.00 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.
<PAGE>
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 year ended
June 30, 1995, the Fund paid the Distributor $11,766,872 for reimbursement of
expenses incurred. NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For
the year ended June 30, 1995, the aggregate cost of purchases and proceeds from
sales of investment securities (excluding all U.S. Government securities and
short-term securities) were $1,743,845,716 and $2,256,555,297, respectively.
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities were $267,160,761 and $121,106,891, respectively. NOTE 4 --
APPRECIATION AND DEPRECIATION. At June 30, 1995, the gross appreciation of
securities in which there was an excess of value over tax cost amounted to
$466,307,527, and the gross depreciation of securities in which there was an
excess of tax cost over value amounted to $43,572,358 resulting in net
appreciation of $422,735,169. NOTE 5 -- TRANSACTIONS WITH AFFILIATES AND
AFFILIATED COMPANIES. Certain of the Fund's officers and directors are also
officers and directors of IFG or 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 year ended June 30, 1995,
included in Directors' Fees and Expenses in the Statement of Operations were
$79,659. Unfunded accrued pension costs of $140,604, and pension liability of
$220,263 are included in prepaid expenses and accrued expenses, respectively, in
the Statement of Assets and Liabilities.
An affiliated company represents ownership by the Fund of at least 5% of
the voting securities of the issuer during the period, as defined in the Act. A
summary of the transactions during the year ended June 30, 1995, in which the
issuer was an affiliate of the Fund, is as follows:
<TABLE>
<CAPTION>
Purchases Sales Realized
-------------------------------------------- Dividend Loss on Value at
Affiliate Shares Cost Shares Cost Income Investments 6/30/95
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
El Paso Natural Gas - - 65,900 $1,980,482 $2,568,115 $ (65,490) $47,067,750
Omega Healthcare
Investors - - - - 1,128,000 - 12,687,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Industrial Income Fund, Inc.
Financial Highlights
(For a Fund Share Outstanding throughout Each Period)
Year Ended June 30
---------- ---------- ---------- ---------- ----------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -- Beginning of Period $11.32 $11.53 $10.67 $9.74 $9.39
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.42 0.36 0.31 0.28 0.36
Net Gains on Securities
(Both Realized and Unrealized) 1.14 0.02 1.33 1.38 0.81
---------- ---------- ---------- ---------- ----------
Total from Investment Operations 1.56 0.38 1.64 1.66 1.17
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.42 0.36 0.32 0.29 0.34
In Excess of Net Investment Income 0.00 0.11 0.00 0.00 0.00
Distributions from Capital Gains 0.54 0.12 0.46 0.44 0.48
---------- ---------- ---------- ---------- ----------
Total Distributions 0.96 0.59 0.78 0.73 0.82
---------- ---------- ---------- ---------- ----------
Net Asset Value -- End of Period $11.92 $11.32 $11.53 $10.67 $9.74
========== ========== ========== ========== ==========
TOTAL RETURN 14.79% 3.24% 15.66% 17.04% 13.06%
RATIOS
Net Assets -- End of Period
($000 Omitted) $4,009,609 $3,913,322 $3,412,527 $2,092,955 $881,226
Ratio of Expenses to Average
Net Assets# 0.94% 0.92% 0.96% 0.98% 0.94%
Ratio of Net Investment Income
to Average Net Assets# 3.61% 3.11% 2.94% 2.75% 3.92%
Portfolio Turnover Rate 54% 56% 121% 119% 104%
<FN>
# Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended June 30, 1995, 1994 and 1993. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 0.97%,
0.95% and 0.98%, respectively, and ratio of net investment income to average
net assets would have been 3.58%, 3.08%, and 2.92%, respectively.
</FN>
</TABLE>
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
INVESCO Industrial Income Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO Industrial Income Fund,
Inc. (the "Fund") at June 30, 1995, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 1995 by correspondence with the custodian and the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
August 4, 1995
<PAGE>
FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
--------------------------------------------------------------------------------
International
Latin American Growth 34 IVSLX LatinAmGr
European Small Company 37 * *
European 56 FEURX Europ
Pacific Basin 54 FPBSX PcBas
International Growth 49 FSIGX IntlGr
--------------------------------------------------------------------------------
Sector
Energy 50 FSTEX Enrgy
Environmental Services 59 FSEVX Envirn
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Technology 55 FTCHX Tech
Worldwide Capital Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
--------------------------------------------------------------------------------
Growth, Value
Emerging Growth 60 FIEGX Emgrth
Value Equity 46 FSEQX ValEq
Small Company 74 IDSCX DivSmCo
Dynamics 20 FIDYX Dynm
Growth 10 FLRFX Grwth
--------------------------------------------------------------------------------
Equity-Income
Industrial Income 15 FIIIX IndInc
Utilities 58 FSTUX Util
--------------------------------------------------------------------------------
Balanced/Multiple-Asset
Multi-Asset Allocation 70 IMAAX MulAstAl
Balanced 71 IMABX Bal
Total Return 48 FSFLX TotRtn
--------------------------------------------------------------------------------
Bond
High Yield 31 FHYPX HiYld
Select Income 30 FBDSX SelInc
U.S. Government Securities 32 FBDGX USGvt
Intermediate Government Bond 47 FIGBX IntGov
Short-Term Bond 33 INIBX ShTrBd
--------------------------------------------------------------------------------
Tax-Exempt
Tax-Free Long-Term Bond 35 FTIFX TxFre
Tax-Free Intermediate Bond 36 * *
--------------------------------------------------------------------------------
Money Market
Tax-Free Money Fund 40 FFRXX N/A
Cash Reserves 25 FDSXX N/A
U.S. Government Money Fund 44 FUGXX N/A
* This fund does not meet size requirements to be assigned a ticker symbol in
newspaper listings.
For more information about any of the INVESCO Funds, including management fees
and expenses, please call us at 1-800-525-8085 for a prospectus. Read it
carefully before you invest or send money.
<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(R), your 24-hour Personal
Account Line, call: 1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied by an effective prospectus.
