October 31, 1997
Annual Report
INVESCO STRATEGIC PORTFOLIOS
Energy
Environmental Services
Financial Services
Gold
Health Sciences
Leisure
Technology
Utilities
No-load portfoios investing in
targeted industry sectors.
INVESO FUNDS
<PAGE>
Market Overview November 1997
Despite some volatility, this has been a gratifying year for stock
investors. Broad market averages are approaching a third year of double-digit
returns, consumer confidence is running at historically high levels, the economy
has been expanding for 79 months, inflation measured at the consumer level is
non-existent, and interest rates remain low. Within this near-perfect economic
environment, corporate earnings have thrived, as downsizing and corporate
restructuring - along with improved worker productivity - helped make U.S.
companies the most efficient in the world. In fact, the S&P 500 Index operating
earnings have increased at a double-digit rate for an unprecedented fifth
consecutive year.(1)
With all the good news about the economy, financial markets have produced
euphoric results over the last 12 months. These strong returns, however, were
accompanied by increased volatility. In the early spring, fears of inflation and
an overheating economy caused the Federal Reserve Board to increase the
short-term interest rates by 25 basis points - producing a sharp pullback in the
equity markets. In August, renewed inflation fears as well as concerns about
corporate earnings again dampened investors' returns. In both cases, the markets
quickly recovered and continued their upward trend.
However, in the fall, U.S. equity markets experienced their first
correction-- a decline in value of more than 10% from their highs - in more than
seven years. On October 27, the Dow Jones Industrial Average plunged 554.26
points (the largest point decline in history, but twelfth in percentage terms)
as fears of slowing economies in the Asia/Pacific Rim region reignited worries
about corporate earnings and the value of the domestic markets.(1) However, the
market recovered almost half of its losses the following day. Investors need to
remember that, in times of volatility, emotions sway markets more than
fundamentals. Fears of a global recession and an international currency meltdown
were not supported by economic data, and the market has already recovered its
losses.
Furthermore, the U.S. economy is still the dominant economy in the world,
and remains fundamentally sound. Granted, a slowdown in Asia/Pacific Rim
countries may reduce corporate earnings for selected multinational companies,
but it will probably not derail the expansion here at home. Continued low
interest rates, non-existent inflation, and a better-balanced equity market with
strong returns being posted across the capitalization spectrum bodes well for
the domestic economy and equity markets. Consequently, the health of the economy
and financial markets appears strong, although volatility is likely to continue.
As we approach the new year, it is a good time to re-evaluate your financial
goals. From a historical perspective, domestic equity indexes have averaged 10%
to 12% per year. When investors plan their financial strategies, such average
results are appropriate benchmarks -- not the 20% to 30% recently earned in the
financial markets.
<PAGE>
Energy Portfolio
Energy Portfolio
Average Annualized Total Return
as of 10/31/97(2)
1 year 40.65%
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5 years 18.87%
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10 years 11.01%
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The fund's competitive performance has improved significantly since John
S. Segner - an industry veteran with over 15 years of experience in the
investment and energy industry - assumed responsibilities of portfolio manager.
John has reduced the number of stocks, while increasing market capitalization
and quality characteristics to create a better-balanced portfolio. Independent
mutual fund analyst Lipper Analytical Services ranked INVESCO Energy Portfolio
#2 out 44 natural resources funds for the one-year period ended 10/31/97. For
the five-year period, the fund was ranked #5 of 17 funds; for the 10-year
period, #7 of 12.(3)
For the one-year period ended 10/31/97, Energy Portfolio achieved a total
return of 40.65%, compared to 32.06% for the S&P 500. For the six-month period
ended 10/31/97, the fund had a total return of 39.77%, compared to 15.12% for
the S&P 500. (Of course, past performance is not a guarantee of future
results.)(1),(2)
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Energy Portfolio to the value of a $10,000 investment in
the S&P 500 Index, assuming in each case reinvestment of all dividends and
capital gain distributions, for the ten year period ended 10/31/97.
During the last year, the fundamentals for the energy industry have
improved. Worldwide oil demand is currently at 95% of production capacity and
increasing -- the highest level in 17 years. Replacement reserves for oil and
natural gas have been tapped during the last decade to meet temporary
supply-and-demand imbalances; these reserves are now close to being depleted.
Thus, any increase in demand should translate into an increase in prices and
profitability of selected energy companies. In addition, many firms, through
corporate restructuring and increased worker productivity, are much more
efficient than they were 10 years ago.
Within this environment, we continue to favor oil service companies, as
well as natural gas and oil production and exploration firms. Oil service
companies have enhanced the fund's returns as increased profit margins, better
use of technology, and strong international demand for oil improved
profitability. One of our favorites remains Baker Hughes, which appears cheaply
valued compared to its potential growth rate.
Natural gas and oil production and exploration companies have also
contributed to the fund's results. As mentioned above, supply and demand for oil
are nearly equal. Any increase in demand may force a greater emphasis on
exploration and production, as companies are no longer able to simply "turn on
the valve" and increase supply. This is also applicable to natural gas, and we
remain bullish on both industries.
<PAGE>
The energy sector has historically had a 10- to 15-year life cycle. After
years of underperforming the broad market, this sector appears to be entering a
new growth cycle. We believe that emerging and developing nations will increase
their use of oil and natural gas as they develop their infrastructures. This may
put pressure on oil and natural gas prices in the future. Of course, even though
fundamentals are improving, we may experience increased volatility in the near
future as concerns about the economies of the Asia/Pacific Rim region persist.
However, for the long-term investor, the fundamentals appear bright.
Vice President John S. Segner assumed the responsibilities of portfolio
manager in February, 1997. He received a BS from the University of Alabama and
an MBA from the University of Texas at Austin. Before joining INVESCO in 1997,
John served as Managing Director and Principal for The Mitchell Group, and was a
co-manager of an institutional energy portfolio worth over $250 million. Prior
to The Mitchell Group, he held responsibilities with Texaco Inc., Amerada Hess
Corporation, and First Tennessee National Corporation.
Environmental Services Portfolio
Environmental Services Portfolio
Average Annualized Total Return
as of 10/31/97(2)
1 year 19.13%
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5 years 10.41%
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Since inception 1/91 6.59%
-----------------------------------------
Lipper Analytical Services ranked INVESCO Environmental Sciences Portfolio
#1 of 3 environmental funds for the one-year period ended 10/31/97, based on
total return unadjusted for commissions. For the five-year period, the fund was
ranked #1 of 3 funds.(3)
For the one-year period ended 10/31/97, Environmental Services Portfolio
had a total return of 19.13%, compared to 32.06% for the S&P 500. For the
six-month period ended 10/31/97, the fund had a total return of 23.74%, compared
to 15.12% for the S&P 500. (Of course, past performance is not a guarantee of
future results.)(1),(2)
After years of underperforming the broad market, the outlook for
environmental stocks is improving. Industry consolidation and improved
efficiencies have led to more profitable companies. The fund maintains its focus
on the highest growth firms within the environmental services sector. We
continue to believe that the water and solid waste industries offer the best
growth prospects for the long-term investor.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Environmental Services Portfolio to the value of a
$10,000 investment in the S&P 500 Index, assuming in each case
reinvestment of all dividends and capital gain distributions, for the
period from inception (1/91) through 10/31/97.
<PAGE>
In the water industry, population shifts to warm, dry climates, and
deteriorating Municipal water systems, are leading to an increased demand for
clean water by consumers. This situation may translate into increased revenue
for companies that specialize in clean and purified water. Some of our favorite
companies in this industry are US Filter, Culligan Water, and Waterlink Inc.
The solid waste (or trash) industry is also fundamentally improving.
Favorable financial market conditions are hastening acquisitions. This had led
to an increase in earnings growth for the acquirer. USA Waste Services, and
Republic Industries are two such companies experiencing strong revenue growth,
are active in acquisitions, and have excellent management teams.
Looking forward, because the environmental services sector deals with a
necessity, it may experience less volatility compared to the broad market. While
price fluctuations may persist in the overall market for the near-term,
environmental stocks appear to have turned the corner and may be entering a
prolonged growth period.
Environmental Services Portfolio is managed by INVESCO Vice President
Gerard Hallaren. A Chartered Financial Analyst, Gerard earned a BA in economics
for the University of Massachusetts -- Amherst. He began his investment career
in 1983.
Financial Services Portfolio
Financial Services Portfolio
Average Annualized Total Return
as of 10/31/97(2)
1 year 39.80%
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5 years 24.88%
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10 years 24.41%
-----------------------------------------
Overall, and for the three-, five- and 10-year periods ended 10/31/97, the
fund received the prestigious five-star rating for risk-adjusted performance by
independent mutual fund analyst Morningstar.(4)
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Financial Services Portfolio to the value of a $10,000
investment in the S&P 500 Index, assuming in each case reinvestment of all
dividends and capital gain distributions, for the ten year period ended
10/31/97.
During the one-year period ended 10/31/97, Financial Services Portfolio
achieved a total return of 39.80%, compared to 32.06% for the S&P 500. For the
six-month period ended 10/31/97, the fund had a total return of 21.79%, compared
to 15.12% for the S&P 500. (Of course, past performance is not a guarantee of
future results.)(1),(2)
<PAGE>
Financial services industries produced strong returns again in 1997. In
our opinion, consolidation, improving profit margins, and strong demographic
trends make this one of the most exciting growth sectors. During the last year,
the fund's performance was enhanced by individual stock and industry selection.
In the spring, strong gains were produced by most insurance companies in the
portfolio, although after their phenomenal appreciation, we cautiously scaled
back our positions. However, we do remain selectively exposed to property and
casualty companies with attractive niche positions, such as Chubb Corp.
In the banking industry, the increased pace of consolidation and improved
efficiencies are translating into greater profitability. The fund maintains its
focus on conservative, fundamentally sound regional banks. We continue to
believe that improving profit margins and consolidation give this industry
strong prospects for earnings growth. One of our favorite regional banks with
exceptional upward potential is First Tennessee National.
On a stock-by-stock basis, strong returns were posted for the portfolio by
American International Group, BankAmerica Corp, and Imperial Bancorp. American
International Group is a worldwide diversified financial services company that
continues to increase its exposure in international markets. BankAmerica Corp is
a market-leading firm whose management is committed to improving shareholder
value. Imperial Bancorp is a regional bank located in California with improving
fundamentals and increasing market share.
Looking forward, the fund will maintain its balanced approach. By having a
broad-based exposure to market-leading companies with defensible positions, the
fund should be well-positioned to weather potentially volatile market
conditions. An added bonus is that many of these stocks are trading at
reasonable valuation levels and pay a high dividend yield when compared to
classic growth companies. Over the next few months, we may selectively increase
the fund's exposure to asset management firms, which should benefit from the
aging of America, as well as the global transition away from defined benefit to
defined contribution retirement plans.
Financial Services Portfolio is co-managed by INVESCO Senior Vice
President Daniel B. Leonard and Vice President Jeffrey G. Morris. Dan joined
INVESCO in 1975; his investment experience extends back to 1960. He attended the
New York University Graduate School of Business and holds a BA from Washington &
Lee University.
Jeff was named co-manager of the fund in March 1997. He joined INVESCO in
1991, served as a research analyst from 1994 to 1995, and became a vice
president in 1997. He earned a BS from Colorado State University and MS from
University of Colorado - Denver. He is a Chartered Financial Analyst.
Gold Portfolio
For the one-year period ended 10/31/97, Gold Portfolio had a total return
of -44.38%, compared to 32.06% for the S&P 500. (Of course, past performance is
not a guarantee of future results.)(1)(2)
The fund primarily invests in growth gold companies, typically junior- to
mid-size gold exploration concerns. Their value is highly dependent on the
perceived demand for and price of gold. In the last 12 months, gold bullion
declined from a peak price of $383.70 per troy ounce to $311.30 and reached a
12-year low earlier this fall. The price decrease can be attributed to a
continuing deflationary trend worldwide and heavy selling of their gold reserves
by foreign central banks - especially Australia's decision to sell 60% of its
gold reserves last summer.
<PAGE>
Gold Portfolio
Gold Portfolio
Average Annualized Total Return
as of 10/31/97(2)
1 year -44.38%
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5 years 2.26%
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10 years -2.10%
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A second problem that plagued growth gold companies during the 12 months
was the credibility issue associated with the Bre-X Minerals Ltd. scandal. That
company falsified claims that they had discovered one of the world's largest
gold deposits in Indonesia. The highly publicized hoax had a spill-over effect
and dampened investors' enthusiasm for all growth gold companies, with a
devastating effect on the stock prices of junior- to mid-size gold exploration
firms in 1997. The fund held a position in Bre-X, but closed its holdings
earlier this year for a substantial profit.
Looking forward, growth gold stocks may continue to experience volatility
in the short-term. However, market pessimism is at a peak and short-sale
positions are at historical highs -- typical signals that the bottom is near. We
believe that the long-term fundamentals of the sector remain positive. Worldwide
demand for gold, particularly in Asia, continues to grow, outstripping
production supply. When the oversupply of gold due to central bank selling
"washes out" of the system, we may see a price rebound. This would have positive
effects on growth gold companies, and might increase the pace of consolidation
within the industry. We remain strong believers in the long-term fundamentals of
the sector and in companies such as Euro-Nevada Mining (a mining royalty
company) and Getchell Gold (a domestic gold mining firm which owns intriguing
properties).
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Gold Portfolio to the value of a $10,000 investment in
the S&P 500 Index, assuming in each case reinvestment of all dividends and
capital gain distributions, for the ten year period ended 10/31/97.
Gold Portfolio is managed by Senior Vice President Daniel B. Leonard. He
joined INVESCO in 1975; his investment experience extends back to 1960. He
attended the New York University Graduate School of Business and holds a BA from
Washington & Lee University.
<PAGE>
Health Sciences Portfolio
Health Sciences Portfolio
Average Annualized Total Return
as of 10/31/97(2)
1 year 22.96%
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5 years 15.49%
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10 years 22.83%
-----------------------------------------
Lipper Analytical Services ranked INVESCO Health Sciences Portfolio #1 of
7 health-biotechnology funds for the 10-year period ended 10/31/97, based on
total return unadjusted for commissions. For the one-year period, the fund was
ranked #24 of 29 funds; for the five-year period, #11 of 13.(3)
For the one-year period ended 10/31/97, Health Sciences Portfolio had a
total return of 22.96%, compared to 32.06% for the S&P 500. For the six-month
period ended 10/31/97, the fund had a total return of 17.23%, compared to 15.12%
for the S&P 500. (Of course, past performance is not a guarantee of future
results.)(1),(2)
Earlier this year, investors placed a premium on large, liquid stocks with
predictable earnings, and large-capitalization pharmaceutical companies
benefited. Warner-Lambert Co. experienced significant appreciation as its two
new drugs (Lipitor and Rezulin) were well-received by the market. Large-cap drug
firms remain a vital part of our portfolio strategy, as we believe an improving
regulatory environment, combined with new products in the pipeline, may lead to
enhanced valuations.
Over the last six months, we have witnessed a better-balanced market. This
development has proven quite beneficial for the health sciences sector overall.
As mentioned in the semiannual report, we felt that many small- and mid-cap
stocks were undervalued compared to their growth rates earlier this year. With
the shift in market leadership, companies like Guidant Corp. (a developer and
manufacturer of cardiac equipment) produced strong returns for the fund.
However, one area of disappointment over the last year has been the health care
delivery subsector; this group continues to experience deteriorating
fundamentals due to their limited ability to control costs.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Health Sciences Portfolio to the value of a $10,000
investment in the S&P 500 Index, assuming in each case reinvestment of all
dividends and capital gain distributions, for the ten year period ended
10/31/97.
Looking forward, we plan to keep the portfolio skewed towards large-cap
pharmaceuticals, while avoiding health care delivery companies until their
fundamentals improve. This sector may experience volatility over the near-term,
but we remain confident in the long-term potential.
Health Sciences Portfolio is managed by INVESCO Senior Vice President John
R. Schroer, a Chartered Financial Analyst. He started his investment career in
1989, after earning an MBA and BA from the University of Wisconsin.
<PAGE>
Leisure Portfolio
Lipper Analytical Services ranked INVESCO Leisure Portfolio #3 of 16
specialty/miscellaneous funds for the 10-year period ended 10/31/97, based on
total return unadjusted for commissions. For the one-year period, the fund was
ranked #17 of 35 funds; for the five-year period, #10 of 20.(3)
For the one-year period ended 10/31/97, Leisure Portfolio had a total
return of 22.32%, compared to 32.06% for the S&P 500. For the six-month period
ended 10/31/97, the fund had a total return of 20.09%, compared to 15.12% for
the S&P 500. (Of course, past performance is not a guarantee of future
results.)(1),(2)
Leisure Portfolio
Average Annualized Total Return
as of 10/31/97(2)
1 year 22.32%
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5 years 17.46%
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10 years 19.72%
-----------------------------------------
Leisure companies are highly dependent on discretionary spending by
consumers. When the economy is expanding, consumers typically spend more money
on recreation and entertainment. Early this year, deteriorating business
conditions and a slowdown in consumer purchases produced a negative environment
for these stocks, which underperformed the broad market. However, in the late
spring and summer, consumers increased their spending on leisure activities,
rejuvenating these stock prices.
Within this environment, we have stayed true to our investment discipline.
We continue to search worldwide for the best growth opportunities in this group
of industries. Through in-depth analysis, we try to identify companies with
market leadership and defensible positions that will perform well over the next
three to four years. For example, our research identified the advertising agency
industry as potentially undervalued with strong growth prospects. This industry
is an oligopoly, with only a few companies in the worldwide advertising
business. This unusual industry structure has allowed those limited market
participants to benefit from expanding global economies. In addition,
consolidation within the industry has led to more efficient companies and to
stronger-than-expected earnings growth for the industry. Our favorite company
remains the Omnicom Group. Omnicom is the second largest global advertising
organization, (in terms of worldwide gross revenue) and continues to expand its
market share.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Leisure Portfolio to the value of a $10,000 investment
in the S&P 500 Index, assuming in each case reinvestment of all dividends
and capital gain distributions, for the ten year period ended 10/31/97.
<PAGE>
Over the last 12 months, the fund's returns were also enhanced through
investments in Time Warner, Hilton Hotels, and Harmon International Industries -
market-leading companies with improving fundamentals. In fact, Hilton Hotels
stock experienced significant appreciation as increased room rates translated
into strong earnings growth.
Looking forward, we remain excited about the long-term fundamentals of the
leisure sector. Worldwide demand for leisure products continues to grow at a
faster rate than most economies. As demographics change and the world's
population matures, we will see an increase in spending on leisure activities.
In the coming months, short-term market volatility may continue as slowing
economies in the Asia/Pacific Rim region remain a concern for investors.
However, we feel that this crisis should be short-term in nature and have little
effect on the long-term fundamentals of this particular sector.
Leisure Portfolio is managed by Mark Greenberg. With over 16 years of
experience in the leisure sector, he is a Chartered Financial Analyst and
started his investment career in 1980. Mark earned his BSBA in Finance from
Marquette University. Prior to joining INVESCO he was with Scudder, Stevens &
Clark in New York.
Technology Portfolio
INVESCO Technology Portfolio was awarded the prestigious five-star rating
for risk-adjusted performance by Morningstar, for the 10-year period ended
10/31/97. The fund received a four-star rating for the five-year period, and
three stars for the three-year period.(4)
For the one-year period ended 10/31/97, Technology Portfolio achieved a
total return of 20.71%, compared to 32.06% for the S&P 500. For the six-month
period ended 10/31/97, the fund had a total return of 18.45%, compared to 15.12%
for the S&P 500. (Of course, past performance is not a guarantee of future
results.)(1),(2)
Increased volatility in technology stocks in 1997 made this sector
somewhat risky over the short-term. Within this volatile environment, we have
favored keeping a relatively high cash balance in the portfolio, which moderated
investment results. However, as the market experienced a correction in the fall,
we were able to selectively buy attractive securities with strong long-term
potential and reduce the fund's cash balance.
Technology Portfolio
Average Annualized Total Return
as of 10/31/97(2)
1 year 20.71%
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5 years 23.65%
-----------------------------------------
10 years 23.92%
-----------------------------------------
<PAGE>
The fund continues to invest in market-leading technology companies with
defensible positions. These firms typically have more predictable earnings and
are better able to weather volatility. Market-leading companies such as
International Business Machines (IBM) and Schlumberger Ltd produced strong
returns for the fund over the last 12 months and remain dominant holdings in the
portfolio. IBM is in a major product cycle which should translate into
accelerating earnings, and they are the best company to address "Year 2000"
computer problems. Schlumberger Ltd is an energy company with cutting-edge
technology called three dimensional seismic analysis, which helps identify
potential oil and natural gas deposits.
Looking forward, we believe that technology companies will be a major
engine of growth for the U.S. economy in coming years. However, the market may
experience increased volatility as investor expectations have become a tad
unrealistic. Nevertheless, this sector still appears to have excellent long-term
fundamentals for those able to weather short-term risk.
Technology Portfolio is co-managed by Senior Vice President Daniel B.
Leonard and Vice President Gerard Hallaren (pictured on pages 4 and 3,
respectively). Dan's experience in investment management extends back to 1960.
He joined INVESCO in 1975 and is now a senior vice president. He attended the
New York University Graduate School of Business and holds a BA from Washington &
Lee University. Gerard, who joined INVESCO in 1994, earned his BA from the
University of Massachusetts at Amherst and is a Chartered Financial Analyst. He
began his investment career in 1983.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Technology Portfolio to the value of a $10,000
investment in the S&P 500 Index, assuming in each case reinvestment of all
dividends and capital gain distributions, for the ten year period ended
10/31/97.
Utilities Portfolio
For the one-year period ended 10/31/97, Utilities Portfolio had a total
return of 14.37%, compared to 32.06% for the S&P 500. For the six-month period
ended 10/31/97, the fund had a total return of 15.39%, compared to 15.12% for
the S&P 500. (Of course, past performance is not a guarantee of future
results.)(1),(2)
The utilities sector experienced increased volatility over the last 12
months. Earlier this year, a jumpy bond market, milder-than-expected winter, and
a communications sell-off during the spring stock market decline all contributed
to temper the fund's returns. However, as summer arrived, fundamentals for the
sector improved and fund performance accelerated. Within this unpredictable
environment, we remain committed to investing in the best growth opportunities
in the utilities sector - primarily among electric utilities,
telecommunications, and natural gas and oil.
Over the last six months, strong results were produced by the energy
industry -- especially natural gas pipeline companies. The latter is benefiting
from being one of the first industries to go through deregulation. With
structural changes now behind it, market-leading, low-cost providers of natural
gas continue to improve their profitability. An added bonus is that improving
supply-and-demand fundamentals have translated into increased prices for natural
gas and oil companies. Presently, one of our favorite energy companies is
Coastal Corp. (which has produced significant returns for the fund over the last
year).
<PAGE>
Conversely, the electric utility industry is in a period of transition.
Deregulation has forced structural changes which should allow the best electric
companies to increase their revenue and earnings. The fund continues to focus on
low-cost providers like Duke Energy, a market leader the southeastern U.S. with
proven management.
In the telecommunications industry, RBOCs (Regional Bell Operating
Companies) remain among our favorites. These companies continue to deliver
strong earnings growth rates compared to electric utilities, while paying a
high-dividend yield. Firms like SBC Communications and BellSouth Corp. have
enhanced the fund's performance over the last year. Another strong performer for
the fund (but not a RBOC) was Century Telephone Enterprises. This company is a
broad-based rural service provider -- servicing 14 states -- which enjoys strong
earnings growth by focusing on its niche market.
Utilities Portfolio
Average Annualized Total Return
as of 10/31/97(2)
1 year 20.71%
-----------------------------------------
5 years 23.65%
-----------------------------------------
10 years 23.92%
-----------------------------------------
Looking forward, the utilities sector continues to go through positive
structural changes. When this evolution is finally complete, the sector should
be more profitable and efficient. Not only are the long-term growth prospects
good, the defensive characteristics of utility stocks are still present - which
may add a degree of stability for investors otherwise largely exposed to the
broad equity market.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Utilities Portfolio to the value of a $10,000 investment
in the S&P 500 Index, assuming in each case reinvestment of all dividends
and capital gain distributions, for the ten year period ended 10/31/97.
Effective July 1, 1997, Brian B. Hayward assumed responsibilities of
portfolio manager for INVESCO Utilities Portfolio. Previously, he was a senior
equity analyst for Mississippi Valley Advisors in St. Louis, Missouri and began
his investment career in 1985. Brian earned a BA in Mathematics and a MA in
Economics from the University of Missouri. He is a Chartered Financial Analyst.
(1)The S&P 500 is an unmanaged index considered representative of the
performance of the broad U.S. stock market, while the Dow Jones Industrial
Average reflects performance of large-capitalization stocks. (2)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 than when purchased. (3)Rankings provided by
Lipper Analytical Services, an independent fund analyst, are based upon total
return performance unadjusted for commissions. When available, rankings are
<PAGE>
cited for one-, five-, and 10-year periods. (4)Morningstar's proprietary
rankings reflect historical risk-adjusted performance and are subject to change
every month. Ratings are calculated for the fund's three-, five-, and 10-year
average annual returns (based on available track records) in excess of 90-day
Treasury bill returns. The top 10% of funds in an investment category receive 5
stars; the next 22.5%, 4 stars; and the next 35%, 3 stars. As of 10/31/97,
Financial Services Portfolio received 5 stars among 2,189 funds in the domestic
equity fund category for the three-year period, 5 stars among 1,210 funds for
the five-year period, and 5 stars among 642 funds 10-year period. As of
10/31/97, Technology Portfolio received 5 stars among 642 funds in the domestic
equity fund category for the 10-year period, 4 stars among 1,210 funds for the
five-year period, and 3 stars among 2,189 funds three-year period.
INVESCO Strategic Portfolios, Inc.
Five Largest Common Stock Holdings
October 31, 1997
Description Value
- --------------------------------------------------------------------------------
ENERGY Portfolio
Baker Hughes $16,078,125
Sonat Inc 14,300,344
Apache Corp 14,280,000
Gulf Canada Resources 13,965,313
Nabors Industries 13,262,812
ENVIRONMENTAL SERVICES Portfolio
Republic Industries $1,711,000
USA Waste Services 1,480,000
Laidlaw Inc 1,412,500
Waterlink Inc 1,365,000
Browning-Ferris Industries 1,300,000
FINANCIAL SERVICES Portfolio
American International Group $44,397,187
BankAmerica Corp 36,822,500
Union Planters 29,656,250
Federal National Mortgage Association 29,304,687
State Street 28,711,250
GOLD Portfolio
Franco-Nevada Mining Ltd $13,860,890
Euro-Nevada Mining 11,391,054
Lihir Gold Ltd Sponsored ADR 10,600,000
Getchell Gold 9,360,000
Freeport McMoRan Copper & Gold Class A 7,062,821
<PAGE>
HEALTH SCIENCES Portfolio
Warner-Lambert Co $93,759,175
Pfizer Inc 67,035,625
Bristol-Myers Squibb 59,670,000
SmithKline Beecham PLC Sponsored
ADR Representing Ord A Shrs 49,911,000
Guidant Corp 46,230,000
LEISURE Portfolio
Time Warner $9,230,000
Hilton Hotels 9,089,687
Tele-Communications Inc - Liberty Media Class A 8,485,547
Omnicom Group 7,768,750
Harman International Industries 6,478,380
TECHNOLOGY Portfolio
Schlumberger Ltd $43,750,000
International Business Machines 43,147,500
Diamond Offshore Drilling 31,125,000
Halliburton Co 29,812,500
Texas Instruments 28,805,625
UTILITIES Portfolio
Bell Atlantic $5,602,033
SBC Communications 4,612,813
Ameritech Corp 4,290,000
BellSouth Corp 3,827,581
NEXTEL Communications Class A 3,570,000
Composition of holdings is subject to change.
<PAGE>
INVESCO Strategic Portfolios, Inc.
Statement of Investment Securities
October 31, 1997
<TABLE>
<CAPTION>
Shares,
Country Units or
Code if Principal
Description Non US Amount Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY Portfolio
COMMON STOCKS 95.93%
Oil & Gas 95.93%
DOMESTIC INTEGRATED 7.19%
Murphy Oil 186,500 $ 10,805,344
Phillips Petroleum 223,000 10,787,625
-------------
21,592,969
-------------
DRILLING & EQUIPMENT 38.82%
Baker Hughes 350,000 16,078,125
Camco International 153,000 11,054,250
Marine Drilling* 399,000 11,820,375
Maverick Tube* 235,000 8,283,750
NS Group* 450,000 12,037,500
Nabors Industries* 322,500 13,262,812
Noble Affiliates 120,000 4,927,500
Noble Drilling* 370,000 13,158,125
Offshore Logistics* 310,000 6,510,000
Patterson Energy* 180,000 10,080,000
Schlumberger Ltd 106,000 9,275,000
-------------
116,487,437
-------------
EXPLORATION & PRODUCTION 29.44%
Apache Corp 340,000 14,280,000
Bellwether Exploration* 325,000 4,062,500
Burlington Resources 154,025 7,537,598
Canadian Occidental Petroleum 324,900 8,325,563
Gulf Canada Resources Ltd* 1,667,500 13,965,313
Newfield Exploration* 271,000 7,350,875
Sonat Inc 311,300 14,300,344
United Meridian* 236,000 8,009,250
Vastar Resources 260,200 10,505,575
-------------
88,337,018
-------------
<PAGE>
INTERNATIONAL INTEGRATED 17.84%
Amoco Corp 105,500 9,673,031
Chevron Corp 137,000 11,362,438
Exxon Corp 181,500 11,150,906
Mobil Corp 137,000 9,975,312
Texaco Inc 200,000 11,387,500
-------------
53,549,187
-------------
REFINING & MARKETING 2.64%
Valero Energy 263,400 7,934,925
-------------
TOTAL COMMON STOCKS
(Cost $246,944,988) 287,901,536
-------------
PREFERRED STOCKS 4.07%
OIL & GAS -
EXPLORATION & PRODUCTION 4.07%
Enron Corp, 6.25%, Redeemable
Exchangeable Pfd
(Cost $12,230,916) 566,000 12,204,375
-------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $259,175,904)
(Cost for Income Tax Purposes
$259,633,730) $ 300,105,911
=============
ENVIRONMENTAL SERVICES Portfolio
COMMON STOCKS 100.00%
CHEMICALS 0.88%
OM Group 5,000 $ 188,750
-------------
ELECTRIC UTILITIES 3.09%
United Water Resources 40,000 662,500
-------------
FINANCIAL 1.21%
Cadiz Land* 40,000 260,000
-------------
IRON & STEEL 3.40%
Northwest Pipe* 30,000 727,500
-------------
MANUFACTURING 1.87%
Flanders Corp* 50,000 400,000
-------------
METALS MINING 1.12%
Recycling Industries* 40,000 240,000
-------------
<PAGE>
OIL & GAS RELATED 4.08%
Newpark Resources* 10,000 415,000
Sonat Inc 10,000 459,375
-------------
874,375
-------------
Pollution Control 82.13%
EQUIPMENT/SYSTEMS 9.78%
ITEQ Inc* 55,000 687,500
Thermatrix Inc* 80,000 205,000
US Filter* 30,000 1,203,750
-------------
2,096,250
-------------
RECYCLING 7.99%
Browning-Ferris Industries 40,000 1,300,000
IMCO Recycling 10,000 181,875
TETRA Technologies* 10,000 230,625
-------------
1,712,500
-------------
SERVICES 64.36%
Allied Waste Industries* 52,500 1,069,688
American Disposal Services* 25,000 881,250
Culligan Water Technologies* 10,000 426,250
Emcon* 20,000 117,500
EnviroSource Inc* 30,000 82,500
Laidlaw Environmental Services* 200,000 1,012,500
Laidlaw Inc 100,000 1,412,500
OHM Corp* 35,000 301,875
Republic Industries* 58,000 1,711,000
Safety-Kleen Corp 35,000 774,375
US Liquids* 75,000 1,200,000
USA Waste Services* 40,000 1,480,000
Waste Industries* 10,000 211,250
Waste Management 20,000 467,500
Waste Management International
PLC ADR* 75,000 515,625
Waterlink Inc* 80,000 1,365,000
Wheelabrator Technologies 50,000 759,375
-------------
13,788,188
-------------
TOTAL POLLUTION CONTROL 17,596,938
-------------
SERVICES 2.22%
American Water Works 21,000 475,125
-------------
TOTAL COMMON STOCKS
(Cost $19,148,774) 21,425,188
-------------
<PAGE>
PREFERRED STOCKS 0.00%
POLLUTION CONTROL -
RECYCLING 0.00%
Cyclean Inc, Series D, Pfd*^
(Cost $499,998) 146,691 1
-------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $19,648,772)
(Cost for Income Tax Purposes
$19,671,145) $ 21,425,189
=============
FINANCIAL SERVICES Portfolio
COMMON STOCKS 91.95%
BANKS 38.46%
BB&T Corp 500,000 27,218,750
Bank of New York 600,000 28,237,500
BankAmerica Corp 515,000 36,822,500
Bankers Trust New York 90,000 10,620,000
Chase Manhattan 142,000 16,383,250
Citicorp 184,000 23,011,500
City National 270,000 8,116,875
Compass Bancshares 750,000 28,265,625
First Chicago NBD 150,000 10,912,500
First Tennessee National 300,000 17,287,500
Fleet Financial Group 58,200 3,742,988
Imperial Bancorp* 393,450 17,164,256
National Commerce Bancorp 90,000 2,666,250
Norwest Corp 460,000 14,748,750
Providian Financial 400,000 14,800,000
Republic New York 250,000 26,453,125
Royal Bank of Canada 235,000 12,616,563
SouthTrust Corp 300,000 14,400,000
State Street 515,000 28,711,250
Toronto-Dominion Bank 340,000 12,410,000
Union Planters 500,000 29,656,250
Wachovia Corp 292,000 21,991,250
Wells Fargo & Co 40,000 11,655,000
-------------
417,891,682
-------------
CONSUMER FINANCE 1.51%
American Express 211,000 16,458,000
-------------
<PAGE>
FINANCIAL 7.29%
Federal Home Loan Mortgage 620,000 23,482,500
Federal National Mortgage
Association 605,000 29,304,687
Franklin Resources 94,000 8,448,250
Investors Group 100,000 2,998,580
Northern Trust 257,000 15,034,500
-------------
79,268,517
-------------
INSURANCE 31.57%
AEGON NV Ord American
Registered Shrs 303,766 24,149,397
American General 450,000 22,950,000
American International Group 435,000 44,397,187
Chubb Corp 300,000 19,875,000
Everest Reinsurance Holdings 630,000 23,703,750
Frontier Insurance Group 332,000 11,184,250
Hartford Life Class A 247,700 9,149,419
ING Groep NV 130,183 5,450,965
ING Groep NV Sponsored ADR 97,200 4,045,950
Jefferson-Pilot Corp 180,000 13,916,250
Lincoln National 365,000 25,093,750
ReliaStar Financial 420,800 15,727,400
St Paul Cos 150,700 12,046,581
SunAmerica Inc 621,000 22,317,188
Torchmark Corp 460,000 18,342,500
Transamerica Corp 165,000 16,654,687
Travelers Group 300,000 21,000,000
UNUM Corp 440,000 21,450,000
Western National 400,000 11,525,000
-------------
342,979,274
-------------
INSURANCE BROKERS 2.03%
Regions Financial 600,000 22,050,000
-------------
INVESTMENT BANK/BROKER FIRM 2.71%
Lehman Brothers Holdings 220,000 10,353,750
Morgan Stanley Dean Witter
Discover & Co 260,000 12,740,000
Price (T Rowe) Associates 96,000 6,360,000
-------------
29,453,750
-------------
RAILROADS 0.98%
Kansas City Southern Industries 350,000 10,675,000
-------------
<PAGE>
SAVINGS & LOAN 7.40%
Ahmanson (H F) & Co 380,000 22,420,000
Charter One Financial 261,450 15,196,781
Golden West Financial 132,700 11,511,725
Reliance Bancorp 120,000 3,870,000
Washington Mutual 400,000 27,375,000
-------------
80,373,506
-------------
TOTAL COMMON STOCKS
(Cost $812,401,829) 999,149,729
-------------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 8.05%
AUTOMOBILES 2.62%
Ford Motor Credit
5.580%, 11/5/1997 $ 28,463,000 28,463,000
-------------
CONSUMER FINANCE 2.81%
Household Finance
5.540%, 11/4/1997 $ 30,496,000 30,496,000
-------------
FINANCIAL 2.62%
Associates Corp of North America
5.640%, 11/3/1997 $ 28,460,000 28,460,000
-------------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $87,419,000) 87,419,000
-------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $899,820,829)
(Cost for Income Tax Purposes
$900,015,134) $1,086,568,729
==============
GOLD Portfolio
COMMON STOCKS 96.08%
CONSUMER - JEWELRY,
NOVELTIES & GIFTS 2.44%
DeBeers Consolidated Mines
Deferred ADR SF 150,000 $ 3,600,000
-------------
<PAGE>
GOLD & PRECIOUS
METALS MINING 90.73%
Aber Resources Ltd* CA 300,000 3,525,000
American Mineral Fields* CA 139,600 579,602
Arizona Star Resource* CA 919,600 2,121,149
Bema Gold* CA 780,000 2,486,250
Canyon Resources* 500,000 843,750
Crown Resources*~ 960,000 5,160,000
Dayton Mining* CA 228,300 570,750
Eldorado Gold Ltd* CA 800,000 1,533,002
Emperor Mines Ltd* AS 3,000,000 1,480,229
Euro-Nevada Mining CA 750,000 11,391,054
Francisco Gold*~ CA 186,900 2,221,841
Franco-Nevada Mining Ltd CA 600,000 13,860,890
Freeport McMoRan Copper &
Gold Class A 306,247 7,062,821
Geomaque Explorations Ltd* CA 971,200 1,895,528
Getchell Gold* 260,000 9,360,000
Gitennes Exploration* CA 700,000 2,136,266
Glenmore Highlands* CA 500,000 1,188,786
Goldbelt Resources*~ CA 2,000,000 198,722
Golden Knight Resources* CA 706,000 1,676,750
Golden Star Resources* 900,000 4,050,000
Greenstone Resources Ltd* CA 300,000 2,400,000
Guyanor Ressources SA
Class B*~ FR 1,000,000 1,774,308
Homestake Mining 400,000 4,950,000
IAMGOLD* CA 112,400 358,978
Indochina Goldfields Ltd*^^ CA 1,100,000 4,293,824
International Capri Resources*~ CA 462,500 75,497
International Taurus Resources* CA 500,000 56,778
KWG Resources* CA 332,800 717,617
Lihir Gold Ltd Sponsored ADR* AS 400,000 10,600,000
Manhattan Minerals* CA 400,000 1,504,613
Meridian Gold* CA 1,000,000 4,062,500
Metallica Resources* CA 500,000 968,750
Minefinders Corp Ltd* CA 100,000 212,917
Monarch Resources* CA 235,000 100,071
Nevsun Resources Ltd* CA 700,000 2,434,350
Newmont Gold 100,000 3,612,500
Original Sixteen to One Mine* CA 91,100 250,525
Orvana Minerals* CA 500,000 1,082,328
Pacific Amber Resources Ltd*~ CA 300,000 153,300
Pacific Rim Mining*~ CA 924,900 951,813
Pangea Goldfields* CA 300,000 532,292
Peruvian Gold Ltd* CA 200,000 114,975
Queenstake Resources Ltd* CA 500,000 386,799
Repadre Capital* CA 200,000 993,612
Rex Diamond Mining* CA 240,000 345,777
Rio Narcea Gold Mines Ltd* CA 527,800 1,592,015
<PAGE>
Scorpion Minerals* CA 519,333 387,012
SEMAFO Inc* CA 100,000 202,271
Solitario Resources* CA 204,000 542,938
SouthernEra Resources Ltd* CA 500,000 5,234,207
Sutton Resources Ltd* CA 507,900 3,745,763
TVX Gold* CA 1,000,000 4,250,000
Trillion Resources Ltd* CA 509,900 1,302,796
-------------
133,533,516
-------------
IRON & STEEL 0.32%
Rea Gold* CA 1,495,700 467,406
-------------
METALS MINING 2.59%
Cameco Corp CA 101,700 3,807,394
-------------
TOTAL COMMON STOCKS
(Cost $203,214,786) 141,408,316
-------------
FIXED INCOME SECURITIES 3.92%
GOLD & PRECIOUS
METALS MINING 3.92%
Ashanti Capital Ltd
Exchangeable Gtd Notes
5.500%, 3/15/2003
(Cost $7,000,000) CJ $ 7,000,000 5,775,000
--------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $210,214,786)
(Cost for Income Tax Purposes
$215,262,506) $ 147,183,316
=============
HEALTH SCIENCES Portfolio
COMMON STOCKS
& WARRANTS 91.52%
BIOTECHNOLOGY 6.62%
Creative BioMolecules* 565,000 $ 5,208,622
Ecogen Technologies I*^~ 100 1
Emisphere Technologies*~ 593,600 11,501,000
Genentech Inc* 250,000 14,515,625
IDEC Pharmaceuticals* 170,700 6,507,938
INCYTE Pharmaceuticals* 139,300 11,213,650
MedClone Trust*@^~ 144,405 0
PathoGenesis Corp* 185,600 6,681,600
Sepracor Inc* 100,000 3,587,500
Titan Pharmaceuticals*^ 488,215 2,308,342
Unisyn Technologies*^~ 31,132 10,896
Xenometrix Inc*^ 145,641 196,615
-------------
61,731,789
-------------
<PAGE>
DRUG DELIVERY 0.27%
CIMA Labs* 416,666 2,473,954
-------------
DRUGS 57.23%
Abbott Laboratories 310,000 19,006,875
Akzo Nobel NV++ 120,000 21,153,192
American Home Products 212,500 15,751,562
Bristol-Myers Squibb 680,000 59,670,000
Forest Laboratories* 225,000 10,406,250
ICN Pharmaceuticals 405,000 19,490,625
Johnson & Johnson 170,000 9,753,750
Lilly (Eli) & Co 600,000 40,125,000
Merck & Co 351,100 31,335,675
Novartis AG Registered Shrs++ 15,700 24,656,324
Pfizer Inc 947,500 67,035,625
Schering AG++ 362,300 35,173,326
Schering-Plough Corp 600,000 33,637,500
SmithKline Beecham PLC
Sponsored ADR Representing
Ord A Shrs 1,048,000 49,911,000
Sparta Pharmaceuticals*^~ 500,000 281,250
Warner Chilcott Laboratories
Sponsored ADR Representing
Ord Shrs* 168,200 2,375,825
Warner-Lambert Co 654,800 93,759,175
-------------
533,522,954
-------------
HEALTH CARE - SERVICES 1.48%
Bergen Brunswig Class A 345,000 13,821,562
-------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 1.04%
MedImmune Inc* 243,800 9,721,525
-------------
HEALTH MAINTENANCE
ORGANIZATION 4.13%
Coventry Corp* 711,100 9,910,956
PacifiCare Health Systems
Class B* 230,400 14,918,400
United Healthcare 295,000 13,662,188
-------------
38,491,544
-------------
INFORMATION MANAGEMENT 3.86%
Cerner Corp* 139,000 3,370,750
HBO & Co 636,080 27,669,480
Transition Systems* 245,000 4,961,250
-------------
36,001,480
-------------
<PAGE>
MEDICAL EQUIPMENT
& DEVICES 12.42%
Cambridge Heart*^~ 457,812 3,708,277
Clarus Medical Systems
Warrants (Exp 2000)*@^~ 2,224 0
Diametrics Medical* 83,333 541,665
Electroscope Inc*^~ 399,000 678,300
Guidant Corp 804,000 46,230,000
IDEXX Laboratories* 292,100 4,637,088
Medtronic Inc 350,000 15,225,000
Perkin-Elmer Corp 186,000 11,625,000
ResMed Inc*~ 445,000 12,460,000
Sofamor/Danek Group* 300,000 20,662,500
-------------
115,767,830
-------------
PHARMACY MANAGEMENT 1.73%
McKesson Corp 150,000 16,096,875
-------------
PHYSICIAN PRACTICE
MANAGEMENT 2.30%
Advanced Health*^~ 458,538 7,273,559
Concentra Managed Care* 152,020 4,959,653
MedPartners Inc* 360,000 9,157,500
-------------
21,390,712
-------------
PRIMARY CARE 0.28%
Quorum Health Group* 109,200 2,648,100
-------------
SERVICES 0.16%
Vision Twenty-One* 128,000 1,472,000
-------------
TOTAL COMMON STOCKS & WARRANTS
(Cost $619,375,047) 853,140,325
-------------
PREFERRED STOCKS 0.98%
BIOTECHNOLOGY 0.25%
Ingenex Inc, Series B, Pfd*^ 103,055 600,000
MedClone Trust, Series G
Conv Pfd*^~ 581,396 75,581
Osiris Therapeutics, Series C
Conv Pfd*^ 382,353 1,300,000
Unisyn Technologies
Series A, Conv Pfd*^~ 359,501 125,825
Series B, Pfd*^~ 250,500 87,675
Series C, Pfd*^~ 349,376 122,282
-------------
2,311,363
-------------
<PAGE>
INFORMATION MANAGEMENT 0.55%
Multum Information Services
Series C, Pfd*^~ 571,429 1,468,573
Series E, Pfd*^~ 142,941 486,000
Physicians Online, Series A, Pfd*^~ 361,350 3,219,629
-------------
5,174,202
-------------
MEDICAL EQUIPMENT
& DEVICES 0.18%
Clarus Medical Systems
Series I, Pfd*^~ 106,664 533,320
Series II, Pfd*^~ 22,239 111,196
Janus Biomedical, Series A
Conv Pfd*^~ 400,000 1,000,000
OrbTek Inc, Series A, Conv Pfd*^ 476,190 1
-------------
1,644,517
-------------
TOTAL PREFERRED STOCKS
(Cost $10,507,518) 9,130,082
-------------
OTHER SECURITIES 0.83%
BIOTECHNOLOGY 0.83%
Axogen Ltd, Units*~ (Each unit
consists of one cmn shr of
Axogen and one wrnt to
purchase ELAN representing
one ADR)
(Cost $3,555,000) 197,500 7,702,500
-------------
SHORT-TERM INVESTMENTS -
COMMERICAL PAPER 6.67%
CONSUMER FINANCE 3.77%
Household Finance
5.680%, 11/3/1997 $ 35,130,000 35,130,000
-------------
FINANCIAL 2.90%
Associates Corp of North
America 5.640%, 11/3/1997 $ 27,100,000 27,100,000
-------------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $62,230,000) 62,230,000
-------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $695,667,565)
(Cost for Income Tax Purposes
$696,613,707) $ 932,202,907
=============
<PAGE>
LEISURE Portfolio
COMMON STOCKS 88.50%
BEVERAGES 0.80%
Seagram Co Ltd CA 50,000 1,684,375
-------------
BROADCASTING 5.16%
Central European Media
Enterprises Ltd Class A* BD 82,800 2,421,900
Chancellor Media* 72,500 3,978,437
Lin Television* 45,000 2,365,313
Television Broadcasts Ltd ADR HK 414,000 1,151,541
ValueVision International
Class A* 230,000 977,500
-------------
10,894,691
-------------
CABLE 13.57%
Cablevision Systems Class A* 5,000 349,375
Comcast Cable Partners Ltd
Class A* UK 110,000 1,251,250
Comcast Corp Special Class A 201,078 5,529,645
Rogers Communications Class B
Representing Non-Voting Shrs* CA 80,000 545,067
TCI Satellite Entertainment
Class A* 15,000 108,750
Tele-Communications Inc-
International Class A* 285,700 4,606,913
Liberty Media Class A* 243,750 8,485,547
Series A* 154,086 3,534,348
United Video Satellite Group
Class A* 155,000 4,204,375
-------------
28,615,270
-------------
COMPUTER RELATED 2.02%
Bell & Howell* 154,500 4,258,406
CONSUMER - JEWELRY,
NOVELTIES & GIFTS 3.03%
De Beers Consolidated Mines
Deferred ADR SF 230,000 5,520,000
TAG Heuer International SA
Sponsored ADR* SZ 75,000 862,500
-------------
6,382,500
-------------
ELECTRICAL EQUIPMENT 0.50%
Westinghouse Electric 40,000 1,057,500
-------------
<PAGE>
ENTERTAINMENT 8.18%
Disney (Walt) Co 37,233 3,062,414
Granada Group PLC UK 115,229 1,588,432
Metromedia International Group* 100,000 1,150,000
Time Warner 160,000 9,230,000
Viacom Inc
Class A* 45,040 1,345,570
Class B* 28,802 871,261
-------------
17,247,677
-------------
FOODS 3.05%
Heineken NV NL 39,600 6,443,902
-------------
GAMING 1.54%
Grand Casinos* 55,000 739,063
MGM Grand* 45,000 1,974,375
Mirage Resorts* 21,000 525,000
-------------
3,238,438
-------------
HOUSEHOLD FURNITURE
& APPLIANCES 3.07%
Harman International Industries 119,970 6,478,380
-------------
LEISURE TIME 10.28%
Amalgamated Holdings Ltd AS 438,908 1,825,304
Bally Total Fitness Holdings* 113,400 2,012,850
Carnival Corp Class A 84,200 4,083,700
Cedar Fair LP 72,000 3,523,500
K2 Inc 200,000 5,062,500
Premier Parks* 7,500 300,000
Royal Caribbean Cruises Ltd 44,000 2,043,250
Steiner Leisure Ltd* 89,100 2,405,700
Vail Resorts* 15,000 417,188
-------------
21,673,992
-------------
LODGING - HOTELS 5.28%
Extended Stay America* 74,400 976,500
Hilton Hotels 295,000 9,089,687
Interstate Hotels* 13,300 408,975
Suburban Lodges of America* 27,000 668,250
-------------
11,143,412
-------------
PUBLISHING 13.64%
Belo (A H) Corp Class A 110,000 5,197,500
Central Newspapers Class A 10,000 656,875
Harcourt General 84,000 4,205,250
McClatchy Newspapers Class A 122,500 4,019,531
McGraw-Hill Cos 70,000 4,576,250
<PAGE>
News Corp Ltd ADR AS 60,000 1,143,750
Pearson PLC UK 50,000 654,033
Petersen Cos Class A* 40,000 790,000
Scholastic Corp* 20,000 810,000
Scripps (E W) Co Class A 70,000 2,935,625
Times Mirror Series A 70,000 3,788,750
-------------
28,777,564
-------------
REAL ESTATE
INVESTMENT TRUST 1.13%
Golf Trust of America 25,000 651,562
Mills Corp 69,000 1,725,000
-------------
2,376,562
-------------
RESTAURANTS 0.37%
IHOP Corp* 23,000 776,250
-------------
RETAIL 2.16%
Wal-Mart Stores 130,000 4,566,250
-------------
SERVICES 9.59%
CUC International* 83,667 2,468,176
Cordiant PLC UK 1,475,000 3,091,984
Omnicom Group 110,000 7,768,750
Sotheby's Holdings Class A 70,000 1,312,500
WPP Group PLC UK 1,225,000 5,598,062
-------------
20,239,472
-------------
TELECOMMUNICATIONS -
LONG DISTANCE 2.19%
PT Pasifik Satelit Nusantara
ADR* ID 40,000 710,000
US WEST Media Group* 155,000 3,913,750
-------------
4,623,750
-------------
TOYS 2.94%
Hasbro Inc 20,000 580,000
Mattel Inc 100,196 3,895,112
Nintendo Co Ltd JA 20,000 1,729,520
-------------
6,204,632
-------------
TOTAL COMMON STOCKS
(Cost $139,717,995) 186,683,023
-------------
PREFERRED STOCKS 3.09%
ENTERTAINMENT 0.22%
Village Roadshow Ltd, Pfd AS 250,000 466,977
-------------
<PAGE>
LEISURE TIME 1.26%
Royal Caribbean Cruises Ltd
Series A, 7.25%, Conv Pfd 35,000 2,660,000
-------------
PUBLISHING 1.61%
News Corp Ltd Sponsored ADR
Representing Ltd Voting Pfd AS 190,978 3,389,860
-------------
TOTAL PREFERRED STOCKS
(Cost $4,919,946) 6,516,837
-------------
FIXED INCOME SECURITIES 1.17%
CABLE 1.17%
United International Holdings
Sr Secured Discount Notes
Zero Coupon, 11/15/1999
(Cost $2,322,849) $ 3,000,000 2,460,000
-------------
OTHER SECURITIES 1.26%
CABLE 1.26%
United International Holdings
Units* (Each unit consists of
one $1,000 face amount Sr
Secured Discount Note, Zero
Coupon, 11/15/1999 and 1 wrnt
to purchase 4.535 shrs of cmn stock)
(Cost $2,523,461) 3,225 2,668,687
-------------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 5.98%
FINANCIAL 2.99%
American General
5.700%, 11/3/1997 $ 6,302,000 6,302,000
-------------
INSURANCE 2.99%
CIGNA Corp
5.680%, 11/3/1997 $ 6,302,000 6,302,000
-------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $12,604,000) 12,604,000
--------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $162,088,251)
(Cost for Income Tax Purposes
$162,919,847) $210,932,547
=============
<PAGE>
TECHNOLOGY Portfolio
COMMON STOCKS 91.90%
BIOTECHNOLOGY 4.67%
BioChem Pharma* 200,000 5,012,500
Centocor Inc* 400,000 17,600,000
Genzyme Corp 200,000 5,475,000
Immunex Corp* 100,000 6,400,000
INCYTE Pharmaceuticals* 112,500 9,056,250
Millennium Pharmaceuticals* 200,000 3,987,500
Titan Pharmaceuticals*^ 244,108 1,154,173
-------------
48,685,423
-------------
BROADCASTING 0.25%
APT Satellite Holdings Ltd
Sponsored ADR* 170,000 2,656,250
-------------
CABLE 0.00%
Future Communications*~ 160,000 1
-------------
COMMUNICATIONS - EQUIPMENT
& MANUFACTURING 10.45%
AVX Corp 75,000 2,118,750
CIENA Corp* 40,000 2,200,000
Comverse Technology* 75,000 3,093,750
Ericsson (L M) Telephone ADR
Representing Class B Shrs 450,000 19,912,500
JDS Fitel* 200,000 11,462,026
Motorola Inc 230,000 14,202,500
Nokia Corp Sponsored ADR
Representing A Shrs 100,000 8,825,000
PairGain Technologies* 200,000 5,650,000
Pittway Corp Class A 296,700 18,488,119
QUALCOMM Inc* 200,000 11,275,000
Scientific-Atlanta Inc 600,000 11,137,500
Voice Control Systems* 150,000 506,250
-------------
108,871,395
-------------
COMPUTER SOFTWARE
& SERVICE 13.71%
Adobe Systems 200,000 9,550,000
America Online* 20,000 1,540,000
Broderbund Software* 400,000 11,600,000
CBT Group PLC Sponsored
ADR* 200,000 15,350,000
Cadence Design Systems* 200,000 10,650,000
Ceridian Corp* 202,000 7,890,625
Computer Associates
International 270,000 20,131,875
Compuware Corp* 200,000 13,225,000
Edwards (J D) & Co* 171,000 5,814,000
Electronic Arts* 40,000 1,355,000
<PAGE>
Forecross Corp* 200,000 2,760,000
Keane Inc* 200,000 5,925,000
Learning Co* 352,300 6,649,662
Mercury Interactive* 165,000 3,712,500
Microsoft Corp* 10,000 1,300,000
Oracle Corp* 200,000 7,156,260
Parametric Technology* 200,000 8,825,000
PLATINUM technology* 125,000 3,031,250
Siebel Systems* 666 26,890
Sybase Inc* 100,000 1,631,250
VIASOFT Inc* 35,000 1,435,000
Wonderware Corp* 100,000 1,806,250
Xionics Document Technologies* 94,100 1,435,025
-------------
142,800,587
-------------
COMPUTER SYSTEMS 1.40%
GEAC Computer Ltd* 400,000 11,951,735
Sequent Computer Systems* 125,000 2,617,187
-------------
14,568,922
-------------
COMPUTERS - HARDWARE 11.27%
Compaq Computer* 300,000 19,125,000
Data General* 150,000 2,887,500
HMT Technology* 365,000 6,159,375
Hewlett-Packard Co 450,000 27,759,375
International Business Machines 440,000 43,147,500
Lexmark International Group
Class A* 600,000 18,337,500
-------------
117,416,250
-------------
COMPUTERS - NETWORKING 2.28%
Bay Networks* 633,400 20,031,275
Cisco Systems* 35,000 2,871,095
Novell Inc* 100,000 843,750
-------------
23,746,120
-------------
COMPUTERS - PERIPHERALS 0.12%
Exabyte Corp* 115,000 1,214,688
-------------
DISTRIBUTION 0.29%
Ingram Micro Class A* 100,000 2,981,250
-------------
<PAGE>
ELECTRICAL EQUIPMENT 1.73%
Alpine Group* 110,582 1,624,173
KEMET Corp* 75,000 1,631,250
Kent Electronics* 300,000 10,481,250
Micrel Inc* 110,000 3,946,250
Sanmina Corp* 5,000 373,750
-------------
18,056,673
-------------
ELECTRONICS - COMPONENT
DISTRIBUTION 0.33%
Superior Telecom* 100,000 3,425,000
-------------
ELECTRONICS - INSTRUMENTS 1.51%
SanDisk Corp* 375,600 8,967,450
Sawtek Inc* 200,000 6,800,000
-------------
15,767,450
-------------
ELECTRONICS -
SEMICONDUCTOR 11.42%
Adaptec Inc* 100,000 4,843,750
Analog Devices* 540,000 16,503,750
Cypress Semiconductor* 200,000 2,250,000
Intel Corp 170,000 13,090,000
MRV Communications* 391,000 11,436,750
National Semiconductor* 625,000 22,500,000
QLogic Corp* 64,000 2,080,000
Taiwan Semiconductor
Manufacturing Sponsored ADR* 753,500 14,928,719
Texas Instruments 270,000 28,805,625
Xilinx Inc* 75,000 2,559,375
-------------
118,997,969
-------------
GAMING 0.18%
Midway Games* 89,375 1,871,289
-------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 1.37%
Corixa Corp* 105,000 1,325,625
Medicis Pharmaceutical Class A* 270,000 12,993,750
-------------
14,319,375
-------------
HEALTH CARE RELATED 0.84%
HBO & Co 200,000 8,700,000
-------------
LEISURE TIME 2.69%
International Game Technology 1,000,000 25,562,500
WMS Industries* 100,000 2,431,250
-------------
27,993,750
-------------
<PAGE>
OFFICE EQUIPMENT
& SUPPLIES 1.75%
Xerox Corp 230,000 18,241,875
-------------
OIL & GAS RELATED 14.77%
Diamond Offshore Drilling 500,000 31,125,000
Dresser Industries 200,000 8,425,000
Halliburton Co 500,000 29,812,500
Schlumberger Ltd 500,000 43,750,000
Smith International* 300,000 22,875,000
Williams Cos 350,000 17,828,125
-------------
153,815,625
-------------
RETAIL 2.38%
Creative Technology Ltd* 300,000 7,631,250
Tandy Corp 500,000 17,187,500
-------------
24,818,750
-------------
SERVICES 2.07%
COREStaff Inc* 100,000 2,475,000
Equifax Inc 500,000 15,531,250
Information Resources* 100,000 1,650,000
LGS Group 185,050 1,858,380
-------------
21,514,630
-------------
TELECOMMUNICATIONS -
CELLULAR & WIRELESS 1.06%
GST Telecommunications* 250,000 3,500,000
Iridium World Communications
Ltd* 130,000 4,883,125
NEXTEL Communications
Class A* 100,000 2,625,000
-------------
11,008,125
-------------
TELECOMMUNICATIONS -
LONG DISTANCE 3.82%
Clearnet Communications
Non-Voting Class A* 100,000 1,587,500
fONOROLA Inc* 300,000 8,271,822
Premiere Technologies* 400,000 13,600,000
Teledata Communications Ltd* 200,000 6,200,000
WorldCom Inc* 300,000 10,087,500
-------------
39,746,822
-------------
<PAGE>
TELEPHONE 1.54%
BCE Inc 100,000 2,793,750
Newbridge Networks* 250,000 13,250,000
-------------
16,043,750
-------------
TOTAL COMMON STOCKS
(Cost $863,070,855) 957,261,969
-------------
PREFERRED STOCKS 0.03%
BIOTECHNOLOGY 0.03%
Ingenex Inc, Series B, Pfd*^
(Cost $300,000) 51,527 300,000
-------------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 8.07%
CONSUMER FINANCE 8.07%
American Express Credit
5.530%, 11/3/1997 $ 41,223,000 41,223,000
Household Finance
5.550%, 11/5/1997 $ 42,851,000 42,851,000
-------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $84,074,000) 84,074,000
-------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $947,444,855)
(Cost for Income Tax Purposes
$949,179,403) $1,041,635,969
==============
UTILITIES Portfolio
COMMON STOCKS 95.47%
OIL & GAS RELATED 5.15%
Enron Corp 42,000 1,596,000
Sonat Inc 73,000 3,353,438
Williams Cos 34,000 1,731,875
-------------
6,681,313
-------------
TELECOMMUNICATIONS 23.34%
AT&T Corp 37,900 1,854,731
Brooks Fiber Properties* 52,700 2,944,612
France Telecom SA Sponsored
ADR Representing Ord Shrs* 81,500 3,086,813
ICG Communications* 94,000 2,162,000
LCI International* 84,900 2,196,787
McLeodUSA Inc Class A* 55,000 2,041,875
<PAGE>
NEXTEL Communications
Class A* 136,000 3,570,000
Portugal Telecom SA Sponsored
ADR Representing Ord Shrs 33,800 1,394,250
Sprint Corp 68,000 3,536,000
US WEST Communications
Group 88,300 3,515,444
Viatel Inc* 141,700 938,763
WorldCom Inc* 89,800 3,019,525
-------------
30,260,800
-------------
Utilities 66.98%
ELECTRIC 37.35%
Allegheny Energy 50,000 1,412,500
American Electric Power 37,000 1,748,250
CMS Energy 46,700 1,704,550
CalEnergy Co* 48,000 1,644,000
Carolina Power & Light 41,300 1,476,475
CINergy Corp 44,100 1,455,300
DTE Energy 52,500 1,614,375
Dominion Resources 38,200 1,420,562
Duke Energy 62,009 2,991,934
Edison International 70,000 1,793,750
Entergy Corp 57,100 1,395,381
FPL Group 33,000 1,705,687
GPU Inc 43,000 1,556,062
Houston Industries 65,700 1,428,975
IES Industries 100,000 3,225,000
Idaho Power 70,000 2,231,250
New Century Energies 77,700 3,243,975
NIPSCO Industries 21,000 922,687
Northern States Power 32,100 1,617,038
PG&E Corp 68,300 1,745,919
PP&L Resources 131,500 2,843,688
PacifiCorp 74,100 1,607,044
PECO Energy 69,000 1,565,438
Pinnacle West Capital 48,500 1,688,406
SCANA Corp 56,400 1,424,100
Southern Co 70,300 1,612,506
Texas Utilities 37,900 1,359,663
-------------
48,434,515
-------------
NATURAL GAS 8.63%
Coastal Corp 47,000 2,825,875
Columbia Gas System 26,000 1,878,500
NGC Corp 76,625 1,455,875
New Jersey Resources 35,000 1,133,125
ONEOK Inc 51,000 1,749,938
TransCanada PipeLines Ltd 115,000 2,149,063
-------------
11,192,376
-------------
<PAGE>
TELEPHONE 21.00%
ALLTEL Corp 46,300 1,637,862
Ameritech Corp 66,000 4,290,000
Bell Atlantic 70,135 5,602,033
BellSouth Corp 80,900 3,827,581
Century Telephone Enterprises 46,700 1,981,831
Cincinnati Bell 67,000 1,809,000
GTE Corp 81,800 3,471,387
SBC Communications 72,500 4,612,813
-------------
27,232,507
-------------
TOTAL UTILITIES 86,859,398
-------------
TOTAL COMMON STOCKS
(Cost $105,622,015) 123,801,511
-------------
PREFERRED STOCKS 0.97%
UTILITIES - ELECTRIC 0.97%
Cia Paranaense de Energia
Sponsored ADR Representing
1,000 Pfd B Shrs
(Cost $1,916,388) 105,000 1,253,438
-------------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 3.56%
FINANCIAL 3.56%
Associates Corp of North America
5.643%, 11/3/1997
(Cost $4,620,000) $ 4,620,000 4,620,000
-------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $112,158,403)
(Cost for Income Tax Purposes
$112,159,080) $ 129,674,949
=============
</TABLE>
* Security is non-income producing.
@ Security has no market value at October 31, 1997.
~ Security is an affiliated company (See Notes).
^^ Securities are registered persuant to Rule 144A and may be deemed to be
restricted for resale to institutional investors.
++ Security has been designated as collateral for forward foreign currency
contracts.
^ The following are restricted securities at October 31, 1997:
<PAGE>
<TABLE>
<CAPTION>
Value as
Acquisition Acquisition % of
Description Date(s) Cost Net Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Environmental Services
Cyclean Inc, Series D Pfd 2/23/94 $499,998 0.00%
========
Health Sciences Portfolio
Advanced Health 8/31/93-
3/16/94 $ 2,023,120 0.77%
Cambridge Heart 9/29/93 915,624 0.39
Clarus Medical Systems
Series I, Pfd 12/23/92 2,000,000 0.06
Series II, Pfd 5/3/95 111,196 0.01
Warrants 5/3/95 0 0.00
Ecogen Technologies I 11/18/92-
1/28/94 1,140,000 0.00%
Electroscope Inc 4/27/93-
5/3/96 1,039,500 0.07
Ingenex Inc, Series B
Pfd 9/27/94 600,000 0.06
Janus Biomedical
Series A, Conv Pfd 3/2/94 1,000,000 0.11
MedClone Trust 9/30/97 101,310 0.00
MedClone Trust
Series G, Conv Pfd 10/21/93 1,000,001 0.01
Multum Information
Services
Series C, Pfd 12/28/93 1,000,001 0.16
Series E, Pfd 6/17/97 486,000 0.05
OrbTek Inc, Series A
Conv Pfd 5/13/94 999,999 0.00
Osiris Therapeutics
Series C, Conv Pfd 5/26/94 1,300,000 0.14
Physicians Online
Series A, Pfd 8/31/93 963,600 0.34
Sparta
Pharmaceuticals 11/12/93 1,000,000 0.03
Titan Pharmaceuticals 7/19/93 2,000,035 0.24
Unisyn Technologies 2/28/94 1,500,000 0.00
Unisyn Technologies
Series A, Conv Pfd 12/27/94 359,501 0.01
Series B, Pfd 2/5/96 250,500 0.01
Series C, Pfd 4/25/97 436,720 0.01
Xenometrix Inc 1/7/94 1,400,000 0.02
--------
2.49%
--------
<PAGE>
Technology Portfolio
Ingenex Inc
Series B, Pfd 9/27/94 $ 300,000 0.03%
Titan Pharmaceuticals 7/19/93 1,000,035 0.11
--------
0.14%
--------
</TABLE>
<PAGE>
Forward Foreign Currency Contracts
Open at October 31, 1997:
<TABLE>
<CAPTION>
Currency Currency Unrealized
Units Value Gain
Currency/Value Date Sold (US$) (Loss)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Health Sciences Portfolio
German Mark
2/9/1998 32,000,000 $ 18,447,442 $ (106,509)
Netherlands Guilder
11/20/1997 33,000,000 14,312,311 (1,339,368)
Swiss Franc
2/9/1998 23,000,000 16,129,009 (236,439)
-----------------------------
$ 48,888,762 $(1,682,316)
=============================
</TABLE>
Summary of Investments by Country
<TABLE>
<CAPTION>
% of
Country Investment
Country Code Securities Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gold Portfolio
Australia AS 8.21% $ 12,080,229
Canada CA 60.41 88,914,708
Cayman Islands CJ 3.92 5,775,000
France FR 1.20 1,774,308
South Africa SF 2.45 3,600,000
United States US 23.81 35,039,071
--------------------------
100.00% $147,183,316
==========================
Leisure Portfolio
Australia AS 3.24% $ 6,825,891
Bermuda BD 1.15 2,421,900
Canada CA 1.05 2,229,442
Hong Kong HK 0.54 1,151,541
Indonesia ID 0.34 710,000
Japan JA 0.82 1,729,520
Netherlands NL 3.05 6,443,902
South Africa SF 2.62 5,520,000
Switzerland SZ 0.41 862,500
United Kingdom UK 5.78 12,183,761
United States US 81.00 170,854,090
--------------------------
100.00% $210,932,547
==========================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Strategic Portfolios, Inc.
Statement of Assets and Liabilities
October 31, 1997
<TABLE>
<CAPTION>
Environmental Financial
Energy Services Services Gold
Portfolio Portfolio Portfolio Portfolio
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investment Securities:
At Cost $ 259,175,904 $ 19,648,772 $ 899,820,829 $ 210,214,786
===================================================================
At Value $ 300,105,911 $ 21,425,189 $1,086,568,729 $ 147,183,316
Cash 610,443 359,142 0 5,320,218
Receivables:
Investment Securities Sold 29,451,689 1,689,367 31,267,972 5,570,565
Fund Shares Sold 6,980,717 20,625 8,480,809 3,392,302
Dividends and Interest 206,415 6,174 1,529,512 210,712
Prepaid Expenses and Other Assets 86,325 10,716 96,985 51,926
-------------------------------------------------------------------
TOTAL ASSETS 337,441,500 23,511,213 1,127,944,007 161,729,039
-------------------------------------------------------------------
LIABILITIES
Payables:
Custodian 0 0 430,976 0
Distributions to Shareholders 64,179 452 551,847 0
Investment Securities Purchased 0 236,850 11,725,710 0
Fund Shares Repurchased 2,703,646 117,443 1,980,772 10,614,339
Borrowings on Line of Credit 15,022,431 0 0 0
Accrued Expenses and Other Payables 0 5,473 0 29,457
-------------------------------------------------------------------
TOTAL LIABILITIES 17,790,256 360,218 14,689,305 10,643,796
-------------------------------------------------------------------
Net Assets at Value $ 319,651,244 $ 23,150,995 $1,113,254,702 $151,085,243
===================================================================
NET ASSETS
Paid-in Capital* 238,972,335 15,864,388 778,691,988 284,346,076
Accumulated Undistributed
(Distributions in Excess of)
Net Investment Income 150,934 (1,567) (3,840) (2,122,169)
Accumulated Undistributed Net Realized
Gain (Loss) on Investment Securities
and Foreign Currency Transactions 39,597,968 5,511,757 147,818,654 (68,099,824)
Net Appreciation (Depreciation) of
Investment Securities and Foreign
Currency Transactions 40,930,007 1,776,417 186,747,900 (63,038,840)
-------------------------------------------------------------------
Net Assets at Value $ 319,651,244 $ 23,150,995 $1,113,254,702 $151,085,243
===================================================================
<PAGE>
Shares Outstanding 16,496,002 2,023,020 38,202,876 47,104,459
Net Asset Value, Offering and
Redemption Price per Share $ 19.38 $ 11.44 $ 29.14 $ 3.21
===================================================================
</TABLE>
* The Fund has one billion authorized shares of common stock, par value of $0.01
per share. Of such shares, 100 million have been allocated to each individual
Portfolio.
See Notes to Financial Statements
<PAGE>
INVESCO Strategic Portfolios, Inc.
Statement of Assets and Liabilities (Continued)
October 31, 1997
<TABLE>
<CAPTION>
Health
Sciences Leisure Technology Utilities
Portfolio Portfolio Portfolio Portfolio
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investment Securities:
At Cost $ 695,667,565 $ 162,088,251 $ 47,444,855 $ 112,158,403
===================================================================
At Value $ 932,202,907 $ 210,932,547 $1,041,635,969 $ 129,674,949
Cash 0 484,163 0 0
Receivables:
Investment Securities Sold 15,860,807 1,081,019 4,756,483 1,215,752
Fund Shares Sold 5,045,780 5,644,483 8,280,404 1,505,718
Dividends and Interest 848,847 193,588 170,802 475,081
Prepaid Expenses and Other Assets 94,396 37,244 94,292 28,942
-------------------------------------------------------------------
TOTAL ASSETS 954,052,737 218,373,044 1,054,937,950 132,900,442
-------------------------------------------------------------------
LIABILITIES
Payables:
Custodian 4,428,474 0 2,657,174 126,534
Distributions to Shareholders 45,872 4,416 229,968 49,103
Investment Securities Purchased 1,096,540 1,204,222 9,407,769 0
Fund Shares Repurchased 2,264,341 530,551 2,665,305 294,255
Depreciation on Forward Foreign
Currency Contracts 1,682,316 0 0 0
Accrued Expenses and Other Payables 37,332 18,091 9,330 7,401
-------------------------------------------------------------------
TOTAL LIABILITIES 9,554,875 1,757,280 14,969,546 477,293
===================================================================
Net Assets at Value 944,497,862 216,615,764 1,039,968,404 132,423,149
===================================================================
NET ASSETS
Paid-in Capital* 560,220,220 145,805,533 755,196,589 110,974,847
Accumulated Undistributed
(Distributions in Excess of)
Net Investment Income 2,019,043 (12,651) 2,000 (1,533)
Accumulated Undistributed Net Realized
Gain on Investment Securities and
Foreign Currency Transactions 147,401,272 21,978,222 190,578,701 3,933,289
Net Appreciation of Investment Securities
and Foreign Currency Transactions 234,857,327 48,844,660 94,191,114 17,516,546
-------------------------------------------------------------------
Net Assets at Value 944,497,862 216,615,764 1,039,968,404 132,423,149
===================================================================
<PAGE>
Shares Outstanding 16,425,894 7,961,765 28,912,682 10,664,816
Net Asset Value, Offering and
Redemption Price per Share 57.50 27.21 35.97 12.42
==================================================================
</TABLE>
* The Fund has one billion authorized shares of common stock, par value of $0.01
per share. Of such shares, 100 million have been allocated to each individual
Portfolio.
See Notes to Financial Statements
<PAGE>
INVESCO Strategic Portfolios, Inc.
Statement of Operations
Year Ended October 31, 1997
<TABLE>
<CAPTION>
Environmental Financial
Energy Services Services Gold
Portfolio Portfolio Portfolio Portfolio
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 2,793,477 $ 206,046 $ 15,533,731 $ 1,430,318
Interest 948,907 121,998 2,846,515 922,242
Foreign Taxes Withheld (66,684) (3,832) (160,350) (68,080)
------------------------------------------------------------------
TOTAL INCOME 3,675,700 324,212 18,219,896 2,284,480
------------------------------------------------------------------
EXPENSES
Investment Advisory Fees 1,788,892 188,133 5,705,247 1,703,349
Transfer Agent Fees 710,090 208,784 1,995,619 982,788
Administrative Fees 45,876 13,763 137,504 44,069
Custodian Fees and Expenses 53,160 10,645 135,518 125,141
Directors' Fees and Expenses 19,465 9,585 49,139 21,406
Professional Fees and Expenses 20,164 12,732 42,020 21,997
Registration Fees and Expenses 121,809 37,098 137,694 127,725
Reports to Shareholders 118,511 60,884 225,986 204,960
Other Expenses 10,198 2,270 29,611 112,910
------------------------------------------------------------------
TOTAL EXPENSES 2,888,165 543,894 8,458,338 3,344,345
Fees and Expenses Absorbed by
Investment Adviser 0 (111,723) 0 0
Fees and Expenses Paid Indirectly (147,144) (8,370) (420,579) (135,644)
------------------------------------------------------------------
NET EXPENSES 2,741,021 423,801 8,037,759 3,208,701
------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 934,679 (99,589) 10,182,137 (924,221)
------------------------------------------------------------------
<PAGE>
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on Investment
Securities and Foreign Currency
Transactions 40,217,487 5,641,836 147,813,499 (30,717,664)
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 23,498,589 (1,079,626) 97,578,701 (94,168,901)
------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENT
SECURITIES 63,716,076 4,562,210 245,392,200 (124,886,565)
------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
from Operations 64,650,755 4,462,621 255,574,337 (125,810,786)
==================================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Strategic Portfolios, Inc.
Statement of Operations (Continued)
Year Ended October 31, 1997
<TABLE>
<CAPTION>
Health
Sciences Leisure Technology Utilities
Portfolio Portfolio Portfolio Portfolio
------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 8,653,611 $ 1,963,685 $ 3,350,442 $ 5,155,802
Interest 2,532,661 1,105,003 9,951,373 388,558
Foreign Taxes Withheld (324,885) (46,462) (127,782) (17,010)
------------------------------------------------------------------
TOTAL INCOME 10,861,387 3,022,226 13,174,033 5,527,350
------------------------------------------------------------------
EXPENSES
Investment Advisory Fees 6,276,181 1,598,185 6,217,324 1,063,655
Transfer Agent Fees 2,910,149 1,048,771 2,686,039 530,316
Administrative Fees 152,539 41,964 150,934 31,273
Custodian Fees and Expenses 244,524 64,047 156,441 28,901
Directors' Fees and Expenses 63,667 21,182 57,742 15,746
Professional Fees and Expenses 53,707 22,240 46,372 18,130
Registration Fees and Expenses 106,545 53,062 174,368 50,952
Reports to Shareholders 392,475 137,982 322,101 57,022
Other Expenses 48,285 7,485 40,354 7,370
------------------------------------------------------------------
TOTAL EXPENSES 10,248,072 2,994,918 9,851,675 1,803,365
Fees and Expenses Absorbed by
Investment Adviser 0 0 0 (67,385)
Fees and Expenses Paid Indirectly (435,392) (80,529) (537,113) (94,466)
------------------------------------------------------------------
NET EXPENSES 9,812,680 2,914,389 9,314,562 1,641,514
------------------------------------------------------------------
NET INVESTMENT INCOME 1,048,707 107,837 3,859,471 3,885,836
------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 150,514,154 21,991,252 191,768,642 3,976,158
Change in Net Appreciation of
Investment Securities and Foreign
Currency Transactions 41,293,920 18,919,855 (21,199,698) 10,184,614
------------------------------------------------------------------
NET GAIN ON INVESTMENT SECURITIES 191,808,074 40,911,107 170,568,944 14,160,772
------------------------------------------------------------------
Net Increase in Net Assets from
Operations 192,856,781 41,018,944 174,428,415 18,046,608
==================================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Strategic Portfolios, Inc.
Statement of Changes in Net Assets
Year Ended October 31
<TABLE>
<CAPTION>
Energy Environmental Services Financial Services
Portfolio Portfolio Portfolio
---------------------------- ------------------------------ ------------------------------
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ 934,679 $ 580,681 $ (99,589) $ 150,546 $ 10,182,137 $ 11,291,536
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 40,217,487 20,895,131 5,641,836 4,012,079 147,813,499 49,662,621
Change in Net Appreciation
(Depreciation) of Investment
Securities and Foreign Currency
Transactions 23,498,589 17,796,621 (1,079,626) 2,319,724 97,578,701 59,699,110
---------------------------- ------------------------------ ------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS 64,650,755 39,272,433 4,462,621 6,482,349 255,574,337 120,653,267
---------------------------- ------------------------------ ------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (766,993) (580,681) 0 (149,211) (10,174,253) (11,291,536)
In Excess of Net Investment
Income 0 (3,529) (12,314) 0 0 (1,199,518)
Net Realized Gain on Investment
Securities and Foreign
Currency Transactions (16,796,928) 0 (1,266,766) 0 (48,464,760) (24,567,717)
---------------------------- ------------------------------ ------------------------------
TOTAL DISTRIBUTIONS (17,563,921) (584,210) (1,279,080) (149,211) (58,639,013) (37,058,771)
---------------------------- ------------------------------ ------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 1,133,329,398 658,993,329 80,565,921 122,232,471 1,852,179,285 717,132,503
Reinvestment of Distributions 16,740,539 557,255 1,239,463 161,433 54,645,985 35,465,349
---------------------------- ------------------------------ ------------------------------
1,150,069,937 659,550,584 81,805,384 122,393,904 1,906,825,270 752,597,852
Amounts Paid for Repurchases
of Shares (1,113,674,939) (510,352,997) (88,631,624) (124,689,299) (1,533,193,829) (703,552,727)
---------------------------- ------------------------------ ------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM FUND SHARE
TRANSACTIONS 36,394,998 149,197,587 (6,826,240) (2,295,395) 373,631,441 49,045,125
---------------------------- ------------------------------ ------------------------------
Total Increase (Decrease)
in Net Assets 83,481,832 187,885,810 (3,642,699) 4,037,743 570,566,765 132,639,621
NET ASSETS
Beginning of Period 236,169,412 48,283,602 26,793,694 22,755,951 542,687,937 410,048,316
---------------------------- ------------------------------ ------------------------------
End of Period $ 319,651,244 $ 236,169,412 $ 23,150,995 $ 26,793,694 $ 1,113,254,702 $ 542,687,937
============================ ============================== ==============================
<PAGE>
Accumulated Undistributed
(Distributions In Excess of)
Net Investment Income
Included in Net Assets at
End of Period $ 150,934 $ 1,036 $ (1,567) $ 11,295 $ (3,840) $ 2,782
-----------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 69,488,349 52,683,481 7,527,335 12,863,444 72,520,136 34,784,265
Shares Issued from Reinvestment
of Distributions 1,194,637 37,088 127,595 16,188 2,428,228 1,767,754
---------------------------- ---------------------------- -------------------------------
70,682,986 52,720,569 7,654,930 12,879,632 74,948,364 36,552,019
Shares Repurchased (69,903,722) (41,791,100) (8,275,001) (13,037,396) (60,404,260) (34,528,936)
---------------------------- ---------------------------- -------------------------------
Net Increase (Decrease) in
Fund Shares 779,264 10,929,469 (620,071) (157,764) 14,544,104 2,023,083
============================ ============================ ===============================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Strategic Portfolios, Inc.
Statement of Changes in Net Assets (Continued)
Year Ended October 31
<TABLE>
<CAPTION>
Gold Health Sciences Leisure
Portfolio Portfolio Portfolio
------------------------------ ---------------------------- ----------------------------
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ (924,221) $ (228,896) $ 1,048,707 $ 1,222,415 $ 107,837 $ 480,349
Net Realized Gain (Loss) on
Investment Securities and
Foreign Currency Transactions (30,717,664) 41,924,779 150,514,154 137,904,104 21,991,252 6,689,537
Change in Net Appreciation
(Depreciation) of Investment
Securities and Foreign
Currency Transactions (94,168,901) 47,263,589 41,293,920 23,591,252 18,919,855 19,505,255
------------------------------ ---------------------------- ----------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM OPERATIONS (125,810,786) 88,959,472 192,856,781 162,717,771 41,018,944 26,675,141
------------------------------ ---------------------------- ----------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 0 (982,628) (1,216,776) (106,433) (480,349)
In Excess of Net Investment
Income (64,909,867) 0 0 0 (8,905) (4,051)
Net Realized Gain on
Investment Securities and
Foreign Currency Transactions 0 0 (138,286,646) (73,235,099) (6,650,312) (6,689,537)
In Excess of Net Realized Gain on
Investment Securities and
Foreign Currency Transactions 0 0 0 0 0 (27,147,496)
------------------------------ ---------------------------- ---------------------------
TOTAL DISTRIBUTIONS (64,909,867) 0 (139,269,274) (74,451,875) (6,765,650) (34,321,433)
------------------------------ ---------------------------- ---------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales
of Shares 1,024,175,443 1,233,702,381 846,691,468 1,100,025,309 188,164,769 229,000,338
Reinvestment of
Distributions 61,300,192 0 134,000,802 71,749,211 6,513,122 33,235,182
------------------------------ ---------------------------- ---------------------------
1,085,475,635 1,233,702,381 980,692,270 1,171,774,520 194,677,891 262,235,520
Amounts Paid for
Repurchases of Shares (1,021,562,103) (1,196,548,485)(1,023,610,028)(1,187,138,111) (264,612,549) (267,472,664)
------------------------------ ---------------------------- ---------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM FUND SHARE
TRANSACTIONS 63,913,532 37,153,896 (42,917,758) (15,363,591) (69,934,658) (5,237,144)
------------------------------ ---------------------------- ---------------------------
<PAGE>
Total Increase (Decrease) in
Net Assets (126,807,121) 126,113,368 10,669,749 72,902,305 (35,681,364) (12,883,436)
NET ASSETS
Beginning of Period 277,892,364 151,778,996 933,828,113 860,925,808 252,297,128 265,180,564
------------------------------ ---------------------------- ---------------------------
End of Period $ 151,085,243 $ 277,892,364 $ 944,497,862 $ 933,828,113 4216,615,764 $ 252,297,128
============================== ============================ ===========================
Accumulated Undistributed
(Distributions In Excess of)
Net Investment Income
Included in Net Assets at
End of Period $ (2,122,169) $ 34,512,656 $ 2,019,043 $ (6,213) $ (12,651) $ (1,403)
------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 210,893,300 159,903,190 15,734,775 20,091,872 7,514,363 9,926,200
Shares Issued from Reinvestment
of Distributions 11,026,021 0 2,804,756 1,369,450 290,394 1,556,657
------------------------------ ---------------------------- ---------------------------
221,919,321 159,903,190 18,539,531 21,461,322 7,804,757 11,482,857
Shares Repurchased (209,545,027) (154,311,942) (19,017,914) (21,613,551) (10,864,156) (11,613,010)
------------------------------ ---------------------------- ---------------------------
Net Increase (Decrease) in
Fund Shares 12,374,294 5,591,248 (478,383) (152,229) (3,059,399) (130,153)
============================== ============================ ===========================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Strategic Portfolios, Inc.
Statement of Changes in Net Assets (Continued)
Year Ended October 31
<TABLE>
<CAPTION>
Technology Utilities
Portfolio Portfolio
------------------------------ ---------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 3,859,471 $ 1,631,849 $ 3,885,836 $ 4,512,982
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 191,768,642 105,200,971 3,976,158 14,115,442
Change in Net Appreciation (Depreciation) of Investment
Securities and Foreign Currency Transactions (21,199,698) 13,795,426 10,184,614 2,563,450
------------------------------ ---------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 174,428,415 120,628,246 18,046,608 21,191,874
------------------------------ ---------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (3,844,605) (1,631,849) (3,883,534) (4,512,982)
In Excess of Net Investment Income 0 (3,266) 0 (13,166)
Net Realized Gain on Investment Securities and
Foreign Currency Transactions (105,677,534) (96,107,659) (10,429,174) 0
------------------------------ ---------------------------
TOTAL DISTRIBUTIONS (109,522,139) (97,742,774) (14,312,708) (4,526,148)
------------------------------ ---------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 1,630,735,648 1,273,121,550 213,563,256 275,156,466
Reinvestment of Distributions 104,735,865 94,751,957 13,624,733 4,318,319
------------------------------ ---------------------------
1,735,471,513 1,367,873,507 227,187,989 279,474,785
Amounts Paid for Repurchases of Shares (1,550,020,036)(1,164,257,096) (251,580,295) (277,526,457)
------------------------------ ---------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 185,451,477 203,616,411 (24,392,306) 1,948,328
------------------------------ ---------------------------
Total Increase (Decrease) in Net Assets 250,357,753 226,501,883 (20,658,406) 18,614,054
NET ASSETS
Beginning of Period 789,610,651 563,108,768 153,081,555 134,467,501
------------------------------ ---------------------------
End of Period 1,039,968,404 789,610,651 132,423,149 153,081,555
============================== ===========================
Accumulated Undistributed (Distributions in Excess of)
Net Investment Income Included in Net Assets at
End of Period 2,000 (9,962) (1,533) 117,252
----------------------------------------------------------------------------------------------------
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 48,520,411 39,668,920 18,030,968 23,673,545
Shares Issued from Reinvestment of Distributions 3,352,065 3,238,131 1,209,641 371,817
------------------------------ ---------------------------
51,872,476 42,907,051 19,240,609 24,045,362
Shares Repurchased (46,024,492) (36,244,761) (21,291,670) (24,000,218)
------------------------------ ---------------------------
Net Increase (Decrease) in Fund Shares 5,847,984 6,662,290 (2,051,061) 45,144
============================== ===========================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Strategic Portfolios, Inc.
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO
Strategic Portfolios, Inc. (the "Fund") is incorporated in Maryland and
presently consists of eight separate Portfolios: Energy Portfolio, Environmental
Services Portfolio, Financial Services Portfolio, Gold Portfolio, Health
Sciences Portfolio, Leisure Portfolio, Technology Portfolio and Utilities
Portfolio. The investment objectives are to seek capital appreciation through
investments in specific business sectors. Additionally, Utilities Portfolio
seeks capital appreciation and income through investments in public utilities.
The Fund 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. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION - Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales
price in the market where such securities are primarily traded. If last
sales 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 one or more 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 that 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. Foreign currency exchange rates are determined daily 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 at the time of purchase, or
market value if maturity is greater than 60 days.
Assets and liabilities initially expressed in terms of foreign
curriences are translated into U.S. dollars at the prevailing market rates
as quoted by one or more banks or dealers on the date of valuation. The cost
of securities is translated into U.S. dollars at the rates of exchange
prevailing when such securities are acquired. Income and expenses are
translated into U.S. dollars at the rates of exchange prevailing when
accrued.
<PAGE>
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. Certain dividends from foreign securities will be
recorded as soon as the Fund is informed of the dividend if such information
is obtained subsequent to the ex dividend date. Interest income, which may
be comprised of stated coupon rate, market discount, original issue discount
and amortized premium, is recorded on the accrual basis. Discounts and
premiums 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.
Effective November 1, 1996, the Fund began accruing income using the
effective interest method which includes amortizing premiums on purchases of
portfolio securities as adjustments to income. This method of recording
income more closely reflects the economics of holding and disposing of debt
instruments. Prior to November 1, 1996, the Fund accrued coupon interest
income, market discount and original issue discount and accounted for
purchased premiums as capital gains or losses when realized upon disposition
of the associated security. The cumulative effect of applying this
accounting change was to decrease accumulated undistributed (distributions
in excess of) net investment income and increase net unrealized appreciation
of investment securities by $7,535 for Utilities Portfolio, and
insignificant for the remaining seven Portfolios. Such accounting change had
no effect on net asset value per share.
The Fund may have elements of risk due to concentrated investments in
specific industries or foreign issuers located in a specific country. Such
concentrations may subject the Fund to additional risks resulting from
future political or economic conditions and/or possible impositions of
adverse foreign governmental laws or currency exchange restrictions. Net
realized and unrealized gain or loss from investment securities includes
fluctuations from currency exchange rates and fluctuations in market value.
The Fund's use of forward foreign currency contracts may subject it to
certain risks as a result of unanticipated movements in foreign exchange
rates. The Fund does not hold forward foreign currency contracts for trading
purposes. The Fund may hold foreign currency in anticipation of settling
foreign security transactions and not for investment purposes.
The net position of such forward contracts is presented in the
Statement of Assets and Liabilities and may have additional elements of risk
which may not necessarily be reflected.
The Environmental Services Portfolio may have elements of risk due to
concentrated investments in the environmental services industry. Investments
in environmental services companies may be affected by regulations imposed
by various federal and state authorities, including the Environmental
Protection Agency and its affiliates. In addition, some of these companies
may have certain liability risks as a result of the products or services
they provide.
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 each Portfolio to sell a security at a fair price and may
substantially delay the sale of the security which each Portfolio seeks to
sell. In addition, these securities may exhibit greater price volatility
than securities for which secondary markets exist.
<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. At October 31, 1997, Gold Portfolio had $1,051,643
and $65,690,036 in net capital loss carryovers which expire in the years
2003 and 2005, respectively.
To the extent future capital gains are offset by capital loss
carryovers, such gains will not be distributed to shareholders.
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 October 31, 1997, amounts
qualifying for the dividends received deduction available to the Fund's
corporate shareholders were as follows:
Qualifying
Portfolio Percentage
----------------------------------------------------------------------------
Energy Portfolio 4.55%
Environmental Services Portfolio 100.00%
Financial Services Portfolio 27.43%
Gold Portfolio 1.68%
Health Sciences Portfolio 6.48%
Leisure Portfolio 100.00%
Technology Portfolio 3.95%
Utilities Portfolio 31.88%
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 amortized premiums, foreign currency transactions, nontaxable
dividends, net operating losses and expired capital loss carryforwards.
For the year ended October 31, 1997, the effects of such differences
were as follows:
<PAGE>
Accumulated Accumulated
Undistributed Undistributed
Net Net Realized
Investment Gain on Invest- Paid-in
Portfolio Income ment Securities Capital
- --------------------------------------------------------------------------------
Energy Portfolio $ (17,788) $ (1,218) $ 19,006
Enviornmental Services Portfolio 99,041 (99,159) 118
Financial Services Portfolio (14,506) 13,841 665
Gold Portfolio 29,199,263 (29,104,362) (94,901)
Health Sciences Portfolio 1,959,177 (1,958,686) (491)
Leisure Portfolio (3,747) 2,971 776
Technology Portfolio (2,904) 3,071 (167)
Utilities Portfolio (113,552) 113,552 0
Net investment income, net realized gains and net assets were not affected.
E. FORWARD FOREIGN CURRENCY CONTRACTS - The Fund enters into forward foreign
currency contracts in connection with planned purchases or sales of
securities as a hedge against fluctuations in foreign exchange rates pending
the settlement of transactions in foreign securities. A forward foreign
currency contract is an agreement between contracting parties to exchange an
amount of currency at some future time at an agreed upon rate. These
contracts are marked-to-market daily and the related appreciation or
depreciation of the contracts is presented in the Statement of Assets and
Liabilities.
At October 31, 1997, Health Sciences Portfolio had outstanding forward
foreign currency contracts. Unrealized gain or loss on forward foreign
currency contracts is calculated daily as the difference between the
contract exchange rate and the closing forward rate applied to the face
amount of the contract.
Forward foreign currency contracts held by the Fund are fully
collaterlized by other securities which are notated in the Statement of
Investment Securities and such collateral is in the posessession of the
Fund's custodian. The collateral is evaluated daily to ensure its market
value exceeds the current market value of the forward foreign currency
contract.
F. EXPENSES - Each of the Portfolios bears expenses incurred specifically on
its behalf and, in addition, each Portfolio bears a portion of general
expenses, based on the relative net assets of each Portfolio.
Under an agreement between each Portfolio and the Fund's Custodian,
agreed upon Custodian Fees and Expenses are reduced by credits granted by
the Custodian from any temporarily uninvested cash. Similarly, Transfer
Agent Fees are reduced by credits earned by each Portfolio from security
brokerage transactions under certain broker/service arrangements with third
parties. Such credits are included in Fees and Expenses Paid Indirectly in
the Statement of Operations.
For the year ended October 31, 1997, Fees and Expenses Paid Indirectly
consisted of the following:
<PAGE>
Custodian Fees Transfer
Portfolio and Expenses Agent Fees
- --------------------------------------------------------------------------------
Energy Portfolio $ 17,330 $ 129,814
Environmental Services Portfolio 1,394 6,976
Financial Services Portfolio 50,023 370,556
Gold Portfolio 25,895 109,749
Health Sciences Portfolio 98,710 336,682
Leisure Portfolio 25,504 55,025
Technology Portfolio 79,416 457,697
Utilities Portfolio 10,199 84,267
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 for each Portfolio is
based on the annual rate of 0.75% on the first $350 million of average net
assets; reduced to 0.65% on the next $350 million of average net assets; and
0.55% on average net assets in excess of $700 million. IFG voluntarily agreed to
waive a portion of its fee which exceeds 0.45% on average net assets in excess
of $2 billion, 0.40% on average net assets in excess of $4 billion, and 0.35% on
average net assets in excess of $10 billion.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of each
Portfolio are made by ITC. Fees for such sub-advisory services are paid by IFG.
In accordance with an Administrative Agreement, each Portfolio 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, where applicable, per participant in an omnibus
account, per year. 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 (the "Plan") became
effective November 1, 1997, for Energy, Financial Services, Gold, Health
Sciences, Leisure, Technology and Utilities Portfolios, and December 1, 1997 for
Environmental Services Portfolio. The Plan provides for compensation of
marketing and advertising expenditures to INVESCO Distributors, Inc. to a
maximum of 0.25% of new assets.
IFG has voluntarily agreed, in some instances, to absorb certain fees and
expenses incurred by Environmental Services and Utilities Portfolios.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended
October 31, 1997, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were as follows:
<PAGE>
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
Energy Portfolio $ 570,627,306 $ 555,607,817
Environmental Services Portfolio 42,127,963 51,327,623
Financial Services Portfolio 989,117,913 750,069,599
Gold Portfolio 328,645,295 335,105,357
Health Sciences Portfolio 1,252,866,232 1,439,010,465
Leisure Portfolio 51,326,618 132,561,646
Technology Portfolio 1,928,583,193 1,773,133,149
Utilities Portfolio 73,504,571 98,482,037
There were no purchases or sales of U.S. Government securities.
NOTE 4 - APPRECIATION AND DEPRECIATION. At October 31, 1997, 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 Portfolio were
as follows:
Net
Gross Gross Appreciation
Portfolio Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------
Energy Portfolio $ 44,561,099 $ 4,088,918 $ 40,472,181
Environmental Services Portfolio 3,369,584 1,615,540 1,754,044
Financial Services Portfolio 203,005,786 13,476,863 189,528,923
Gold Portfolio 11,286,794 79,365,984 (68,079,190)
Health Sciences Portfolio 258,189,604 22,600,404 235,589,200
Leisure Portfolio 54,420,111 6,407,411 48,012,700
Technology Portfolio 148,343,287 55,886,721 92,456,566
Utilities Portfolio 20,844,663 3,328,794 17,515,869
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 deferred compensation 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 40% of the retainer fee at the time of
retirement.
Pension expenses for the year ended October 31, 1997, included in Directors'
Fees and Expenses in the Statement of Operations, and unfunded accrued pension
costs and pension liability included in Prepaid Expenses and Accrued Expenses,
respectively, in the Statement of Assets and Liabilities were as follows:
Unfunded
Pension Accrued Pension
Portfolio Expenses Pension Costs Liability
- --------------------------------------------------------------------------------
Energy Portfolio $ 2,116 $ 4,444 $ 8,790
Environmental Services Portfolio 525 1,439 3,009
Financial Services Portfolio 6,622 13,555 30,891
Gold Portfolio 4,055 14,960 29,435
Health Sciences Portfolio 14,423 26,376 61,348
Leisure Portfolio 3,980 11,687 25,513
Technology Portfolio 11,170 17,357 41,429
Utilities Portfolio 1,974 5,781 12,527
<PAGE>
An affiliated company represents ownership by the Portfolio 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 October 31, 1997, in which
the issuer was an affiliate of the Portfolio, is as follows:
<TABLE>
<CAPTION>
Realized
Purchases Sales Gain (Loss)
------------------------------------------- on Invesment Value at
Affiliate Shares Cost Shares Cost Securities 10/31/97
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial Services Portfolio
Conseco Inc 50,000 $2,821,750 1,200,000 $ 18,696,019 $ 26,470,277 $ 0
Homeside Inc 427,500 6,500,614 427,500 6,500,614 4,097,563 0
Gold Portfolio
Crown Resources - - - - - $5,160,000
Franasco Gold 75,000 1,085,724 188,100 565,128 2,136,259 2,221,841
Goldbelt Resources - - - - - 198,722
Guyanor Resources SA
Class A 311,000 1,112,353 - - - 1,774,308
International Capri
Resources - - 137,500 276,456 (250,885) 75,497
Pacific Amber
Resources Ltd 300,000 1,079,707 - - - 153,300
Pacific Rim Mining 924,900 3,371,132 - - - 951,813
Sonoma Resources - - 62,800 87,782 (67,177) 0
Steppe Gold
International - - 900,000 1,664,280 (1,358,070) 0
Health Sciences Portfolio
Advanced Health - - 228,550 25,573 4,724,339 7,273,559
Axogen Ltd, Units 345,000 6,210,000 147,500 2,655,000 813,010 7,702,500
Cambridge Heart - - 142,188 284,376 802,174 3,708,277
Clarus Medical Systems
Series I, Pfd - - - - - 533,320
Series II, Pfd - - - - - 111,196
Warrants - - - - - 0
Ecogen Technologies I - - - - - 1
Electroscope Inc - - - - - 678,300
Emisphere Technologies 243,600 5,396,997 150,000 2,550,010 494,569 11,501,000
Janus Biomedical
Series A, Conv Pfd - - - - - 1,000,000
MedClone Inc 144,405 101,310 - - - 0
MedClone Inc
Promissory Notes
10.000% - - 73,680 73,680 - 0
Promissory Notes
7.000% - - 27,630 27,630 - 0
Series G, Conv Pfd - - - - - 75,581
Multum Information
Services
Series C, Pfd - - - - - 1,468,573
Series E, Pfd 142,941 486,000 - - - 486,000
<PAGE>
Physicians Online
Series A, Pfd - - - - - $ 3,219,629
ResMed Inc - - - - - 12,460,000S
parta Pharmaceuticals - - - - - 281,250
Unisyn Technologies - - - - - 10,896
Unisyn Technologies
Series A, Conv Pfd - - - - - 125,825
Series B, Pfd - - - - - 87,675
Series C, Pfd 349,376 $ 436,720 - - - 122,282
Technology Portfolio
Cellular Technical
Services 200,000 2,150,000 1,000,000 12,556,870 (6,565,317) 0
Future Communications - - - - - 1
</TABLE>
No dividend income was received from any affiliated companies.
NOTE 6 - LINE OF CREDIT. The Fund has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 10% of the Net Assets at Value of each respective
Portfolio. Each Portfolio agrees to pay annual fees and interest on the unpaid
principal balance based on prevailing market rates as defined in the agreement.
At October 31, 1997, Energy Portfolio had an outstanding line of credit at an
interest rate of 8.50%. The amount of the borrowing and the related interest is
presented in the Statement of Assets and Liabilities. On November 3, 1997,
Energy Portfolio paid the line of credit in full, including interest. There were
no such borrowings in any other Portfolio.
Other Information
UNAUDITED
On October 28, 1997, a special meeting of the shareholders of Energy,
Financial Services, Gold, Health Sciences, Leisure, Technology and Utilites
Portfolios was held at which the approval to change the investment policy of
each Portfolio to allow each Portfolio to utilize futures contracts, options on
futures, puts and calls to the extent permitted by applicable law (Proposal 1),
the approval to change the investment policy of each Portfolio to permit more
than five percent of each Portfolio's assets to be invested in a single issuer,
provided that such purchases do not exceed twenty-five percent of each
Portfolio's assets (Proposal 2) and the approval of a Plan and Agreement of
Distribution for each Portfolio (Proposal 3) were ratified. The following is a
report on the votes cast:
<PAGE>
<TABLE>
<CAPTION>
Proposal For Against Abstain Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Energy Portfolio
Proposal 1 6,423,502 1,855,328 362,890 8,641,720
Proposal 2 6,602,066 1,681,447 358,207 8,641,720
Proposal 3 6,642,918 1,437,789 561,013 8,641,720
Financial Services Portfolio
Proposal 1 12,927,773 4,986,456 1,121,350 19,035,579
Proposal 2 13,820,110 4,116,948 1,098,521 19,035,579
Proposal 3 12,968,294 4,361,944 1,705,341 19,035,579
Gold Portfolio
Proposal 1 18,905,559 4,421,739 1,387,381 24,714,679
Proposal 2 19,175,647 4,221,779 1,317,253 24,714,679
Proposal 3 17,912,067 4,736,743 2,065,869 24,714,679
Health Sciences Portfolio
Proposal 1 5,978,435 2,180,218 540,261 8,698,914
Proposal 2 6,463,315 1,714,580 521,019 8,698,914
Proposal 3 5,938,091 1,998,921 761,902 8,698,914
Leisure Portfolio
Proposal 1 2,724,535 977,420 336,181 4,038,136
Proposal 2 2,915,763 804,380 317,993 4,038,136
Proposal 3 2,772,142 837,017 428,977 4,038,136
Technology Portfolio
Proposal 1 10,661,753 3,386,943 976,400 15,025,096
Proposal 2 11,246,166 2,836,798 942,132 15,025,096
Proposal 3 10,244,910 3,394,146 1,386,040 15,025,096
Utilities Portfolio
Proposal 1 3,842,638 1,341,836 333,141 5,517,615
Proposal 2 4,176,972 991,822 348,821 5,517,615
Proposal 3 3,875,840 1,152,547 489,228 5,517,615
</TABLE>
On November 25, 1997, a special meeting of the shareholders of Enviornmental
Services Portfolio was held at which the approval to change the investment
policy of the Portfolio to allow the Portfolio to utilize futures contracts,
options on futures, puts and calls to the extent permitted by applicable law
(Proposal 1), the approval to change the investment policy of the Portfolio to
permit more than five percent of the Portfolio's assets to be invested in a
single issuer, provided that such purchases do not exceed twenty-five percent of
the Portfolio's assets (Proposal 2) and the approval of a Plan and Agreement of
Distribution for the Portfolio (Proposal 3) were ratified. The following is a
report on the votes cast:
<TABLE>
<CAPTION>
Proposal For Against Abstain Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Environmental Services Portfolio
Proposal 1 1,599,524 271,299 106,628 1,977,451
Proposal 2 1,626,365 241,857 109,229 1,977,451
Proposal 3 1,321,525 479,574 176,352 1,977,451
</TABLE>
<PAGE>
INVESCO Strategic Portfolios, Inc.
Financial Highlights
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
------------------------------------------------------
1997 1996 1995 1994 1993
Energy Portfolio
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $15.03 $10.09 $10.77 $11.53 $ 9.14
------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.06 0.04 0.09 0.06 0.13
Net Gains or (Losses)
on Securities (Both Realized
and Unrealized) 5.56 4.94 (0.68) (0.76) 2.36
------------------------------------------------------
Total from Investment Operations 5.62 4.98 (0.59) (0.70) 2.49
------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income+ 0.05 0.04 0.09 0.06 0.10
Distributions from
Capital Gains 1.22 0.00 0.00 0.00 0.00
------------------------------------------------------
Total Distributions 1.27 0.04 0.09 0.06 0.10
------------------------------------------------------
Net Asset Value -
End of Period $19.38 $15.03 $10.09 $10.77 $11.53
======================================================
TOTAL RETURN 40.65% 49.33% (5.45%) (6.04%) 27.18%
RATIOS
Net Assets - End of Period
($000 Omitted) $319,651 $236,169 $48,284 $73,767 $50,272
Ratio of Expenses to
Average Net Assets 1.21%@ 1.30%@ 1.53%@ 1.35% 1.18%
Ratio of Net Investment Income
to Average Net Assets 0.39% 0.54% 0.72% 0.65% 0.86%
Portfolio Turnover Rate 249% 392% 300% 123% 190%
Average Commission Rate Paid^^ $0.0796 $0.0794 - - -
</TABLE>
+ Distributions in excess of net investment income for the year ended October
31, 1996, aggregated less than $0.01 on a per share basis.
@ Ratio is based on Total Expenses of the Portfolio, which is before any
expense offset arrangements.
<PAGE>
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Strategic Portfolios, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
------------------------------------------------------
1997 1996 1995 1994< 1993<
Environmental Services Portfolio
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $10.14 $ 8.12 $ 6.50 $ 6.80 $ 7.54
------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) (0.04) 0.06 0.08 0.06 (0.02)
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 1.89 2.02 1.62 (0.30) (0.72)
------------------------------------------------------
Total from Investment
Operations 1.85 2.08 1.70 (0.24) (0.74)
------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.06 0.08 0.06 0.00
In Excess of Net Investment
Income 0.01 0.00 0.00 0.00 0.00
Distributions from Capital
Gains 0.54 0.00 0.00 0.00 0.00
------------------------------------------------------
Total Distributions 0.55 0.06 0.08 0.06 0.00
------------------------------------------------------
Net Asset Value -
End of Period $11.44 $10.14 $ 8.12 $ 6.50 $ 6.80
======================================================
TOTAL RETURN 19.13% 25.58% 26.09% (3.51%) (9.85%)
RATIOS
Net Assets - End of Period
($000 Omitted) $23,151 $26,794 $22,756 $29,276 $40,589
Ratio of Expenses to Average
Net Assets# 1.72%@ 1.61%@ 1.57%@ 1.29% 1.62%
Ratio of Net Investment Income
(Loss) to Average Net Assets# (0.40%) 0.47% 0.65% 0.61% (0.40%)
Portfolio Turnover Rate 187% 142% 195% 211% 155%
Average Commission Rate Paid^^ $0.0996 $0.1639 - - -
</TABLE>
<PAGE>
< The per share information was computed based on weighted average shares.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
years ended October 31, 1997, 1996, 1995 and 1994. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 2.16%, 1.85%, 1.93%, and 1.43%, respectively, and ratio of net
investment income to average net assets would have been (0.84%), 0.23%, 0.29%
and 0.47%, respectively.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Strategic Portfolios, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
------------------------------------------------------
1997 1996 1995 1994 1993
Financial Services Portfolio
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $22.94 $18.95 $15.31 $20.28 $15.28
------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.28 0.50 0.29 0.29 0.24
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 8.14 5.18 3.64 (0.66) 5.00
------------------------------------------------------
Total from Investment
Operations 8.42 5.68 3.93 (0.37) 5.24
------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.28 0.50 0.29 0.29 0.24
In Excess of Net Investment
Income 0.00 0.05 0.00 0.00 0.00
Distributions from Capital
Gains 1.94 1.14 0.00 4.31 0.00
------------------------------------------------------
Total Distributions 2.22 1.69 0.29 4.60 0.24
------------------------------------------------------
Net Asset Value -
End of Period $29.14 $22.94 $18.95 $15.31 $20.28
======================================================
TOTAL RETURN 39.80% 31.48% 25.80% (2.24%) 34.33%
RATIOS
Net Assets - End of Period
($000 Omitted) $1,113,255 $542,688 $410,048 $266,170 $384,131
Ratio of Expenses to
Average Net Assets 0.99%@ 1.11%@ 1.26%@ 1.18% 1.03%
Ratio of Net Investment
Income to Average Net
Assets 1.19% 2.48% 2.10% 1.66% 1.16%
Portfolio Turnover Rate 96% 141% 171% 88% 236%
Average Commission Rate Paid^^ $0.0887 $0.0835 - - -
</TABLE>
<PAGE>
@ Ratio is based on Total Expenses of the Portfolio, which is before any
expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Strategic Portfolios, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
------------------------------------------------------
1997^ 1996 1995 1994 1993<
Gold Portfolio
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 8.00 $ 5.21 $ 5.68 $ 6.23 $ 3.99
------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) (0.02) (0.01) 0.01 (0.02) (0.01)
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) (2.62) 2.80 (0.47) (0.53) 2.25
------------------------------------------------------
Total from Investment
Operations (2.64) 2.79 (0.46) (0.55) 2.24
------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.00 0.00 0.01 0.00 0.00
In Excess of Net Investment
Income 2.15 0.00 0.00 0.00 0.00
------------------------------------------------------
Total Distributions 2.15 0.00 0.01 0.00 0.00
------------------------------------------------------
Net Asset Value -
End of Period $ 3.21 $ 8.00 $ 5.21 $ 5.68 $ 6.23
======================================================
TOTAL RETURN (44.38%) 53.55% (8.12%) (8.83%) 56.27%
RATIOS
Net Assets - End of Period
($000 Omitted) $151,085 $277,892 $151,779 $271,163 $292,940
Ratio of Expenses to
Average Net Assets 1.47%@ 1.22%@ 1.32%@ 1.07% 1.03%
Ratio of Net Investment
Income (Loss) to Average
Net Assets (0.41%) (0.08%) 0.13% (0.32%) (0.21%)
Portfolio Turnover Rate 148% 155% 72% 97% 142%
Average Commission Rate Paid^^ $0.0359 $0.0415 - - -
</TABLE>
<PAGE>
^ The per share information was computed based on average shares.
< The per share information was computed based on weighted average shares.
@ Ratio is based on Total Expenses of the Portfolio, which is before any
expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Strategic Portfolios, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
------------------------------------------------------
1997 1996 1995 1994 1993
Health Sciences Portfolio
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $55.24 $50.47 $35.09 $33.49 $35.65
------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) 0.06 0.07 (0.03) (0.24) (0.13)
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 10.85 8.78 15.41 1.84 (2.02)
------------------------------------------------------
Total from Investment
Operations 10.91 8.85 15.38 1.60 (2.15)
------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.06 0.07 0.00 0.00 0.01
Distributions from
Capital Gains+ 8.59 4.01 0.00 0.00 0.00
------------------------------------------------------
Total Distributions 8.65 4.08 0.00 0.00 0.01
------------------------------------------------------
Net Asset Value -
End of Period $57.50 $55.24 $50.47 $35.09 $33.49
======================================================
TOTAL RETURN 22.96% 17.99% 43.83% 4.78% (6.01%)
RATIOS
Net Assets - End of Period
($000 Omitted) $944,498 $933,828 $860,926 $473,926 $560,294
Ratio of Expenses to Average
Net Assets 1.08%@ 0.98%@ 1.15%@ 1.19% 1.16%
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.11% 0.11% (0.08%) (0.57%) (0.34%)
Portfolio Turnover Rate 143% 90% 107% 80% 87%
Average Commission Rate Paid^^ $0.0600 $0.1204 - - -
</TABLE>
<PAGE>
+ For the year ended October 31, 1993, the Portfolio declared a Capital Gains
distribution which aggregated less than $0.01 on a per share basis.
@ Ratio is based on Total Expenses of the Portfolio, which is before any
expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Strategic Portfolios, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
------------------------------------------------------
1997 1996 1995 1994 1993<
Leisure Portfolio
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $22.89 $23.78 $22.63 $25.47 $16.29
------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) 0.02 0.04 0.08 (0.01) (0.02)
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 4.96 2.25 2.06 (0.94) 9.20
------------------------------------------------------
Total from Investment
Operations 4.98 2.29 2.14 (0.95) 9.18
------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income+ 0.02 0.04 0.08 0.00 0.00
Distributions from Capital Gains 0.64 2.25 0.91 1.89 0.00
In Excess of Capital Gains 0.00 0.89 0.00 0.00 0.00
------------------------------------------------------
Total Distributions 0.66 3.18 0.99 1.89 0.00
------------------------------------------------------
Net Asset Value -
End of Period $27.21 $22.89 $23.78 $22.63 $25.47
======================================================
TOTAL RETURN 22.32% 10.66% 9.98% (3.92%) 56.36%
RATIOS
Net Assets - End of Period
($000 Omitted) $216,616 $252,297 $265,181 $282,649 $351,685
Ratio of Expenses to Average
Net Assets 1.41%@ 1.30%@ 1.29%@ 1.17% 1.14%
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.05% 0.18% 0.31% 0.00% (0.11%)
Portfolio Turnover Rate 25% 56% 119% 116% 116%
Average Commission Rate Paid^^ $0.0672 $0.1503 - - -
</TABLE>
< The per share information was computed based on weighted average shares.
+ Distributions in excess of net investment income for the years ended October
31, 1997, 1996 and 1995, aggregated less than $0.01 on a per share basis.
@ Ratio is based on Total Expenses of the Portfolio, which is before any
expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Strategic Portfolios, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
------------------------------------------------------
1997 1996 1995 1994 1993
Technology Portfolio
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $34.23 $34.33 $24.94 $26.99 $20.20
------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) 0.13 0.07 (0.02) (0.02) (0.15)
Net Gains on Securities
(Both Realized and
Unrealized) 6.23 5.76 10.20 1.19 6.94
------------------------------------------------------
Total from Investment Operations 6.36 5.83 10.18 1.17 6.79
------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.13 0.07 0.00 0.00 0.00
Distributions from Capital
Gains 4.49 5.86 0.79 3.22 0.00
------------------------------------------------------
Total Distributions 4.62 5.93 0.79 3.22 0.00
------------------------------------------------------
Net Asset Value -
End of Period $35.97 $34.23 $34.33 $24.94 $26.99
======================================================
TOTAL RETURN 20.71% 19.98% 42.19% 5.04% 33.63%
RATIOS
Net Assets - End of Period
($000 Omitted) $1,039,968 $789,611 $563,109 $327,260 $248,803
Ratio of Expenses to
Average Net Assets 1.05%@ 1.08%@ 1.12%@ 1.17% 1.13%
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.41% 0.24% (0.06%) (0.55%) (0.69%)
Portfolio Turnover Rate 237% 168% 191% 145% 184%
Average Commission Rate Paid^^ $0.0633 $0.1557 - - -
</TABLE>
<PAGE>
+ Distributions in excess of net investment income for the year ended October
31, 1996, aggregated less than $0.01 on a per share basis.
@ Ratio is based on Total Expenses of the Portfolio, which is before any
expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Strategic Portfolios, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
------------------------------------------------------
1997 1996 1995 1994 1993
Utilities Portfolio
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.04 $10.61 $ 9.76 $12.80 $10.10
------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.32 0.37 0.44 0.33 0.29
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 1.25 1.43 0.84 (1.12) 2.71
------------------------------------------------------
Total from Investment
Operations 1.57 1.80 1.28 (0.79) 3.00
------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.32 0.37 0.43 0.25 0.30
Distributions from Capital
Gains 0.87 0.00 0.00 2.00 0.00
------------------------------------------------------
Total Distributions 1.19 0.37 0.43 2.25 0.30
------------------------------------------------------
Net Asset Value -
End of Period $12.42 $12.04 $10.61 $9.76 $12.80
======================================================
TOTAL RETURN 14.37% 17.18% 13.48% (7.22%) 29.88%
RATIOS
Net Assets - End of Period
($000 Omitted) $132,423 $153,082 $134,468 $139,579 $181,738
Ratio of Expenses to Average
Net Assets# 1.22%@ 1.17%@ 1.18%@ 1.13% 1.06%
Ratio of Net Investment Income
to Average Net Assets# 2.74% 3.28% 4.47% 3.33% 2.66%
Portfolio Turnover Rate 55% 141% 185% 180% 202%
Average Commission Rate Paid^^ $0.0866 $0.0895 - - -
</TABLE>
<PAGE>
+ Distributions in excess of net investment income for the year ended October
31, 1996, aggregated less than $0.01 on a per share basis.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
years ended October 31, 1997, 1996, 1995 and 1994. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 1.27%, 1.25%, 1.30% and 1.14%, respectively, and ratio of net investment
income to average net assets would have been 2.69%, 3.20%, 4.34% and 3.32%,
respectively.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
INVESCO Strategic Portfolios, 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 each of the portfolios constituting
INVESCO Strategic Portfolios, Inc. (the "Fund") at October 31, 1997, the results
of each of their operations for the year then ended, the changes in each of
their 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 October 31, 1997 by
correspondence with the custodian and the application of alternative auditing
procedures where securities purchased had not been received, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Denver, Colorado
December 8, 1997
<PAGE>
FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- --------------------------------------------------------------------------------
International
International Growth 49 FSIGX IntlGr
Asian Growth 41 IVAGX AsianGr
European 56 FEURX Europ
European Small Company 37 IVECX EuroSmCo
Latin American Growth 34 IVSLX LatinAmGr
Pacific Basin 54 FPBSX PcBas
- --------------------------------------------------------------------------------
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
Realty 42 IVSRX Realty
Technology 55 FTCHX Tech
Utilities 58 FSTUX Util
Worldwide Capital Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
- --------------------------------------------------------------------------------
Capital Appreciation
Growth 10 FLRFX Grwth
Dynamics 20 FIDYX Dynm
Small Company Value 74 IDSCX DivSmCo
Small Company Growth 60 FIEGX Emgrth
- --------------------------------------------------------------------------------
Growth & Income
Industrial Income 15 FIIIX IndInc
Value Equity 46 FSEQX ValEq
Multi-Asset Allocation 70 IMAAX MulAstAl
Balanced 71 IMABX Bal
Total Return 48 FSFLX TotRtn
- --------------------------------------------------------------------------------
Bond
Short-Term Bond 33 INIBX ShTrBd
Intermediate Government Bond 47 FIGBX IntGov
U.S. Government Securities 32 FBDGX USGvt
Select Income 30 FBDSX SelInc
High Yield 31 FHYPX HiYld
- --------------------------------------------------------------------------------
Tax-Exempt
Tax-Free Intermediate Bond 36 IVTIX *
Tax-Free Long-Term Bond 35 FTIFX TxFre
- --------------------------------------------------------------------------------
Money Market
U.S. Government Money Fund 44 FUGXX InvGvtMF
Cash Reserves 25 FDSXX InvCshR
Tax-Free Money Fund 40 FFRXX InvTaxFree
* 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
INVESCO Distributors, Inc.(SM)
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
In Denver, visit one of our
convenient Investor Centers:
Cherry Creek,
155-B Fillmore Street
Denver Tech Center,
7800 East Union Avenue,
Lobby Level
This information must be
preceded or accompanied
by a current prospectus.
Printed on recycled paper.
