KNOWLEDGE o DISCIPLINE o SERVICE o CHOICE
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YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
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INVESCO SECTOR FUNDS, INC.
ENERGY
FINANCIAL SERVICES
GOLD
HEALTH SCIENCES
LEISURE
TECHNOLOGY
UTILITIES
ANNUAL
ANNUAL REPORT | October 31, 1999 [INVESCO ICON] INVESCO
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"...WE ARE QUITE OPTIMISTIC ABOUT OUR BASIC FOCUS ON WHAT PEOPLE LIKE TO DO WITH
THEIR TIME AND THEIR MONEY. AT ITS ROOT, THIS SEEMS TO US SIMPLY A STRATEGIC
"PLAY" ON THE GROWTH OF THE WORLD ECONOMY AND THE ENRICHMENT OF ITS CONSUMERS."
PAGE 8
The line graphs illustrate the value of a $10,000 investment, plus reinvested
dividends and capital gain distributions, for the 10-year or since inception
period ended 10/31/99. The charts and other total return figures cited reflect
the funds' operating expenses, but the indexes do not have expenses, which
would, of course, have lowered their performance. (Of course, past performance
is no guarantee of future results.)(1),(2)
TOTAL RETURN
PERIODS ENDED 10/31/99(1)
6 months 1 year 5 years* 10 years* Page #
ENERGY FUND 3.40% 21.19% 11.46% 5.10% 4
FINANCIAL SERVICES FUND -7.65% 13.52% 24.02% 21.64% 5
GOLD FUND -11.17% -3.68% -14.62% -6.91% 6
HEALTH SCIENCES FUND 1.08% 8.44% 23.81% 19.44% 7
LEISURE FUND 14.25% 65.13% 23.13% 19.98% 8
TECHNOLOGY FUND--CLASS I 41.85% 72.61%** N/A N/A 9
TECHNOLOGY FUND--CLASS II 41.50% 107.23% 33.00% 27.75% 9
UTILITIES FUND 3.52% 23.22% 18.26% 13.57% 10
* AVERAGE ANNUALIZED
** CUMULATIVE RETURN SINCE INCEPTION (12/98)
Graph: Energy Fund
10-Year Total Return vs. S&P 500 Index
This line graph compares the value of a $10,000 investment in INVESCO
Energy Fund 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 October 31, 1999.
Graph: Financial Services Fund
10-Year Total Return vs. S&P Financial Index
This line graph compares the value of a $10,000 investment in INVESCO
Financial Services Fund to the value of a $10,000 investment in the S&P
500 Financial Index, assuming in each case reinvestment of all
dividends and capital gain distributions, for the ten year period ended
October 31, 1999.
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Graph: Gold Fund
10-Year Total Return vs. S&P 500 Index
This line graph compares the value of a $10,000 investment in INVESCO
Gold Fund 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 October 31, 1999.
Graph: Health Sciences Fund
10-Year Total Return vs. S&P 500 Index
This line graph compares the value of a $10,000 investment in INVESCO
Health Sciences Fund 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 October
31, 1999.
Graph: Leisure Fund
10-Year Total Return vs. S&P 500 Index
This line graph compares the value of a $10,000 investment in INVESCO
Leisure Fund 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 October 31, 1999.
Graph: Technology Fund-Class II
10-Year Total Return vs. S&P 500 Index
This line graph compares the value of a $10,000 investment in INVESCO
Technology Class Fund-II 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 October 31,
1999.
Graph: Technology Fund-Class I
Total Return Since Inception 12/22/98 vs. S&P 500 Index
This line graph compares the value of a $10,000 investment in INVESCO
Technology Fund-Class I 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 (12/98)
through 10/31/99.
Graph: Utilities Fund
10-Year Total Return vs. S&P Utility Index
This line graph compares the value of a $10,000 investment in INVESCO
Utility Fund to the value of a $10,000 investment in the S&P Utility
Index, assuming in each case reinvestment of all dividends and capital
gain distributions, for the ten year period ended October 31, 1999.
"FUNDAMENTALS USUALLY WIN OUT, HOWEVER, AND THIS IS WHERE OUR INTENSIVE RESEARCH
CAPABILITY GIVES US AN EDGE-WE TRY TO KNOW WHAT WE OWN AND WHY WE OWN IT, SO
THAT WE TAKE ADVANTAGE OF THE VOLATILITY AND NOT BE SHAKEN OUT OF POSITIONS DUE
TO A LACK OF UNDERSTANDING."
PAGE 9
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ENERGY FUND
A REPORT FROM THE MANAGER
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Dear Shareholder:
In running Energy Fund, we keep one premise in mind: Eventually, the economic
fundamentals of energy supply and demand will determine the performance of the
sector. Happily, oil stocks began to reflect these fundamentals earlier this
year. More encouraging still, the fundamentals for the oil and gas industries
have continued to improve, suggesting that this recovery is poised to continue.
For the one-year period ended October 31, 1999, the value of your shares rose
21.19%. This performance lagged that of the S&P 500 Index, which rose 25.66%
over the same period. (Of course, past performance is no guarantee of future
results.)(1),(2)
Behind the wild swings in the price of oil and oil companies over this past year
was a set of inventory adjustments that, from a distance, were relatively minor
in scale. Due to the drop in Asian demand following the economic crisis of 1997,
world demand levels began to drop, creating excess supplies. These, in turn,
drove oil prices down toward the lows they experienced in the summer and fall of
1998.
As Asia began recovering and production began to diminish in response to the low
prices, however, the gap between production and demand began to narrow. This was
further accelerated in March 1999, when the Organization of Petroleum Exporting
Countries (OPEC) agreed on a new set of production limits.
Indeed, world oil production capacity (including all of OPEC) is roughly 80
million barrels per day, which is only 3 million barrels per day more than the
expected daily world demand in the year 2000--the smallest excess capacity since
the 1970s. We expect that, by the end of 1999, inventories of both crude oil and
refined products will be at their lowest levels in five years. This bodes well,
of course, for both the price of oil and the profits of oil companies.
The situation in the natural gas industry is even more encouraging for
investors. Electric power plants, homeowners, and other users have increasingly
turned toward natural gas as a cost-effective and environmentally friendly
source of energy. Yet natural gas production has lagged, a situation that has
generally escaped notice, due to a series of warm winters which lowered heating
demand.
While we are optimistic for many companies throughout the energy sector, we are
especially enthusiastic about those that have managed to grow and invest even in
the face of last year's problems. Our favorite investments, for example, include
Nabors Industries, the largest land driller in the world, and Apache, a large
production and exploration firm. Both of these companies have managed to record
accelerating earnings growth through well-considered acquisitions.
Although oil stocks have fought their way back from their depressed levels last
winter, we do not believe they yet reflect these promising fundamentals. Indeed,
any hint of an earnings disappointment has sent many investors running for the
exits--leaving choicer opportunities for those with the patience to let the
fundamentals operate.
/s/ John S. Segner
John S. Segner
Vice President
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FINANCIAL SERVICES FUND
A REPORT FROM THE MANAGER
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Dear Shareholder:
This has been a positive year for our fund, although we lagged the returns of
many closely watched market indexes. Financial services investors suffered
especially this past year from the threat of higher interest rates. While these
fears proved reasonable given the rise in rates this spring, many financial
companies have nonetheless continued to show healthy earnings growth. This
leaves the sector well-positioned, we believe, to continue the recovery it began
at the end of our current reporting period.
For the one-year period ended October 31, 1999, the value of your shares rose
13.52%. This performance lagged that of the S&P 500 Index, which rose 25.66%
over the same period. Our return also lagged the S&P Financial Index, which rose
21.42%. (Of course, past performance is no guarantee of future results.)(1),(2)
In many ways, this past year in the financial services sector resembled the
situation in 1994, also a period of rising interest rates. Then, as now,
investors turned their backs on financial services firms, discounting the solid
fundamentals that many continued to enjoy in the form of healthy earnings and
minimal credit losses. When interest rates reached an inflection point and began
heading lower in the summer of 1995, the prices of many financial services firms
snapped back.
There is, of course, no guarantee that history will repeat itself. Should rates
fall and valuations in the sector improve, however, our fund is well-positioned
to benefit. The fast-growing companies in which we invest generally carry higher
multiples than their peers. While this caused our fund some problems last year,
we are optimistic that, when investors return to this sector, they will head
first to these leading firms.
One difference between this period and 1994 is that technological change has
been flowing fast and furious in the sector as a result of the Internet. We are
monitoring the impact of the Internet closely, and to this point we have favored
established companies with multi-distribution channels that are moving online.
Wells Fargo, for example, has been a pioneer in online billing services and
Web-based electronic banking. While a degree of caution is necessary in
evaluating claims for the technology, it does seem that banks are uniquely
well-positioned to draw Web traffic to their sites, thus providing an additional
opportunity for profit as Web portals.
Finally, financial services deregulation further complicates the picture,
although in ways favorable for investors. Passage of legislation allowing
greater integration of insurance, banking, and brokerage eased nearer as the
year progressed and was signed at the beginning of November. The greater
competition that should result may well allow substantial gains for investors in
the best firms.
/s/ Jeffrey G. Morris
Jeffrey G. Morris
Vice President
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GOLD FUND
A REPORT FROM THE MANAGER
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Dear Shareholder:
This was another challenging fiscal year for gold investors, and our fund once
again recorded a loss. Yet the very last weeks of our recording period showed a
very different side of the gold markets. While recent history cautions against
being too quick to see a turning point for gold investors, we are hopeful that
in fact this may represent a fundamental change in the market's direction.
For the one-year period ended October 31, 1999, the value of your shares
declined 3.68%. This performance contrasts with the strong advance of the S&P
500 Index, which rose 25.66% over the same period. (Of course, past performance
is no guarantee of future results.)(1),(2)
Many investors would be quite surprised to know that demand for gold has for
many years been dramatically outstripping the marginal increases in mine
production; indeed, the gap has largely widened over the past decade even as
gold prices have fallen.
The shortfall has not been to the benefit of investors primarily for one reason,
however: the impact of central bank selling. Many nations have been net sellers
of gold as the U.S. dollar has increasingly taken over gold's role as the
world's reserve currency. In addition, gold investors have never been sure how
much gold would come tumbling out of national coffers as their doors
occasionally opened.
Thanks to a recent announcement by the European nations, however, investors now
have a much better idea of the scale and timing of these gold sales. This has
added a degree of certainty to the market, one which is likely to help it
operate more efficiently. Now investors can weigh production and sales against
demand, thereby allowing them to focus on the fundamentals of the market itself.
These fundamentals appear encouraging. No less an authority than Alan Greenspan
has argued that gold provides a helpful backing to a nation's money supply; it
seems unlikely that this source of demand will disappear as emerging markets
develop. Also, demand from Asia--a vital support for the market--is on the rise
as that region's economies continue to recover. Finally, the cost of mining new
gold helps establish a floor not too far below current prices.
We will continue to attempt to exploit these fundamentals through our focus on
large, low-cost gold producers. Newmont Mining, for example, is one of our
favorite holdings. Because it does not hedge against the price of gold--in other
words, use the options market to reduce its exposure to gold's price
swings--Newmont seems especially well-positioned to benefit if prices recover.
In sum, in a market characterized by ample valuations, gold stocks seem
remarkably "near to the bone." We are hopeful that our next report will bring
with it more encouraging news.
/s/ John S. Segner
John S. Segner
Vice President
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HEALTH SCIENCES FUND
A REPORT FROM THE MANAGER
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Dear Shareholder:
While it's true that beauty is in the eye of the beholder, it's probably also
true that beauty is a relative thing--at least in the stock market.
Unfortunately, health care stocks have not been very attractive in the latter
context this year. Nonetheless, we are confident that their remarkably
consistent earnings growth will make them stand out again should the rest of the
market return to more normal performance patterns in the years ahead.
For the one-year period ended October 31, 1999, the value of your shares rose
8.44%. This return substantially lagged that of the S&P 500 Index, which rose
25.66% over the same period. (Of course, past performance is not a guarantee of
future results.)(1),(2)
Over the past several years, pharmaceutical stocks have enjoyed a remarkable
record of double-digit earnings growth. As we have outlined in our past reports,
this has been due to the continuing growth in drug spending by consumers
worldwide, and has reflected profound demographic and technological trends. This
enviable record has drawn considerable attention from growth investors, and has
resulted in very solid gains for the stocks and for our fund over the years.
Given the "profits recession" that many non-health care stocks faced last year,
however, earnings growth outside the pharmaceutical sector has been very healthy
this year--diminishing the relative performance of the pharmaceutical sector. We
should emphasize, however, that profits growth has not been as impressive in the
health care sector precisely because drug companies continued to perform well in
the face of the slowdown last year--making their year-over-year comparisons more
challenging.
Of course, not all the sector's problems have come from this comparison
phenomenon. The prominent drug maker Pfizer set off the slide in pharmaceutical
stocks by warning in April that its second-quarter earnings would come in below
expectations. Also, increased attention to Medicare reform has made some
investors worry about the possibility of price controls and other factors.
Finally, demand for medical devices such as coronary stents and pacemakers has
leveled off, cooling what was a very hot industry last year.
Ironically, while a disappointing one for investors, this may be remembered as a
breakthrough year for medical technology. New drugs from industry leaders such
as Lilly, Pfizer, and Merck have enjoyed very successful launches, and promising
drugs in the regulatory pipeline suggest more good news is on the way.
Biotechnology has been a bright spot in the sector. Product sales have increased
at a healthy clip, and mergers and acquisitions within the industry have drawn
attention. Additionally, biotechnology companies have appeared as less
vulnerable to any changes in Medicare regulation or coverage.
As always, we would urge you to consider the long-term trends in the economy
when considering your investment strategy. This past year, the world's
population has gotten a little bit older and a little bit richer. Every
indication is that consumption of advanced pharmaceuticals as well as medical
devices and services will continue to increase. Given the significant barriers
to entry in the sector, this seems to us to offer great prospects for the
best-positioned firms. Our plan is to continue to be there when the market
recognizes these opportunities.
/s/ John R. Schroer
John R. Schroer
Senior Vice President
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LEISURE FUND
A REPORT FROM THE MANAGER
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Dear Shareholder:
We are pleased to report on a very successful year for our fund. Most rewarding
has been the extent to which many different stocks have performed well. In a
market characterized by a small number of hot stocks dramatically outperforming
the rest of the market, we have nevertheless managed to enjoy a broad advance
among our portfolio holdings.
For the one-year period ended October 31, 1999, the value of your shares rose
65.13%. This performance easily surpassed that of the S&P 500 Index, which rose
25.66% over the same period. (Of course, past performance is no guarantee of
future results.)(1),(2)
These positive returns have flowed from our strategy of conducting fundamental
research on the roughly 200 companies that make up the leisure sector, then
narrowing them down to a fairly concentrated portfolio of 30 to 40 stocks. This
fundamental approach has kept us from some of the more prominent names within
the sector that have recently experienced problems, such as certain toy
companies and resort operators, for example.
While individual companies will always be at risk, the leisure sector as a whole
seems to us likely to continue to prosper, growing at a pace faster than the
U.S. economy as a whole. Our task will be to find the areas where consumers are
directing their leisure dollars.
Cable television has been of continuing interest to us. A large part of this
focus has involved programming, which we believe brings significant competitive
advantages to the companies that do it well. Even as the television audience
becomes more fragmented, carefully targeted cable networks are solidifying their
holds on consumer viewing habits. We are also enthusiastic about satellite
television providers, in particular Echostar Communications, which has been one
of our top-performing stocks.
While the bulk of our holdings are based in the United States, the portfolio is
also positioned to benefit from the recovery in the world economy. A couple of
our largest advertising holdings, Omnicom and WPP, both derive the bulk of their
earnings from operations overseas. Our largest holding, the cable programming
company AT&T Liberty Media, is also well-positioned in Europe and elsewhere
overseas.
It bears repeating that we are unlikely to consistently duplicate this year's
performance, which saw us more than double the returns of the S&P 500 Index.
Still, we are quite optimistic about our basic focus on what people like to do
with their time and their money. At its root, this seems to us simply a
strategic "play" on the growth of the world economy and the enrichment of its
consumers.(1),(2)
/s/ Mark Greenberg
Mark Greenberg
Vice President
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TECHNOLOGY FUND
A REPORT FROM THE MANAGER
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Dear Shareholder:
Technology led stocks out of their 1998 bear market doldrums, a leadership
position that has been nearly continuous over the past 13 months. As we faced
the millennium, with its well-publicized Y2K problem, few would have imagined
that the technology sector would enjoy one of its best stretches of performance
ever over the following year, or that many leading technology firms would
continue to grow at astonishing rates.
For the one-year period ended October 31, 1999, the value of Class II shares
rose 107.23%. This return more than quadrupled that of the S&P 500 Index, which
rose 25.66%. Class I shares have risen 72.61% since their introduction in
December 1998. (Of course, past performance is no guarantee of future results.)
We would caution shareholders to avoid expecting such results to continue--the
returns in this period have been truly extraordinary.(1),(2)
As we informed you in our semiannual report last spring, I took over direction
of the fund at the end of 1998. Our strategy has been to own the leaders within
the various sub-sectors of technology. These are companies which we believe have
long-term defensible positions and sustainable growth prospects. We have also
broadened the fund's approach, including in the portfolio secondary and tertiary
companies to take advantage of broad secular or cyclical trends. For example, we
overweighted the semi-conductor industry for much of the year, and more recently
we have expanded our exposure to software. We concentrate the portfolio less
than many of our competitors, using the industry weightings to gain performance
advantage. This also enables us to help control risk.
Demand for technology products along the "food chain" has been extremely strong.
Companies selling semi-conductors, software, networking equipment, personal
computers, telecommunications equipment, outsourcing services, consulting and
other technology products have seen demand remain strong. More importantly, the
drivers of this demand--businesses moving into e-commerce, the "mainstreaming"
of the Internet, the proliferation of wireless communications, and the
deregulation of the worldwide telecommunications industry--are expected to
persist for a number of years.
Notwithstanding our long-term bullishness, we hasten to point out that there is
a tremendous amount of speculation occurring within the technology sector.
Valuations have in many cases become so high as to be nearly irrelevant in
making investment decisions. The new issue market has been extremely "hot," with
numerous stocks rocketing to staggering levels.
We expect many of these companies to fail or to consolidate into others. This
shakeout period will be harsh and could create tremendous volatility in
technology stocks. As always, we are working to discriminate between those
companies which we believe have viable business plans, strong management teams,
and a solid competitive position, and those that lack the elements critical to
success.
These are exciting times to be an investor in technology, but we should remind
shareholders that stocks do go down as well, and tech stocks, which are among
the most volatile in the market, can go down a lot, even when nothing is wrong.
Fundamentals usually win out, however, and this is where our intensive research
capability gives us an edge--we try to know what we own and why we own it, in
order to take advantage of volatility and not be shaken out of positions due to
a lack of understanding.
/s/ William R. Keithler
William R. Keithler
Senior Vice President
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UTILITIES FUND
A REPORT FROM THE MANAGER
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Dear Shareholder:
This has been a rewarding fiscal year for our fund, one that has seen us enjoy
solid returns while steadily adjusting the portfolio to best seek our twin goals
of solid performance and less risk.
For the one-year period ended October 31, 1999, the value of your shares rose
23.22%. This return lagged that of the S&P 500 Index, which rose 25.66%, but it
handily exceeded the return of the S&P Utility Index, which rose 2.09%. (Of
course, past performance is no guarantee of future results.)(1),(2)
As the utilities sector and stock markets in general have changed over the past
several years, so has the role of funds such as ours, in our opinion. As many of
you know, deregulation and technical change have threatened many older
utilities, which once were reliable sources of dividends for investors seeking
current income. As usual, however, the tearing down of one set of investment
opportunities has created room for another, as more aggressive firms have
benefited from these deregulated markets.
Our aim in the fund, of course, has been to highlight the latter category of
utilities firms, which seem to us to offer better long-term opportunities for
investors. At the same time, however, we have taken seriously our mandate to
focus on what we believe truly defines a utilities firm--its performance of a
necessary, reliable service. The attraction of such firms for investors is
clear: They offer reliable earnings that are less at risk from any economic
downturn.
Because of our emphasis on consistency, we have also sought out those areas of
the utilities sector where the deregulation process is clearest to investors. A
utility company enjoying a rate structure or monopoly that may soon disappear
clearly loses its attraction as a safe investment.
For this reason we have targeted telecommunications firms rather than electrical
utilities. Telephone companies, regulated nationally according to well-defined
guidelines, have seemed to us to be much more stable investments than electric
companies subject to the widely varying agendas of individual state regulatory
agencies. Some of our largest and most rewarding positions, for example, have
been in the stocks of the regional Bell operating companies. While still
regulated, these firms are subject to few surprises from Washington, and they
have used their growing freedom to compete to invest in technology and wider
markets.
Within the gas and electric utility industries, our focus has been on the
relatively small number of companies that are finding a way to grow through the
use of new technologies. One company attracting our attention has been Calpine,
an operator of leading-edge gas-fired and geothermal power plants. Because its
plants are so efficient, Calpine seems to us well-positioned to profit from
deregulation.
Going forward, we will continue to adjust the portfolio according to this
service-based model. Although rising interest rates and any number of market
scenarios could bring trouble, we remain optimistic that our balanced approach
will continue to serve us well.
/s/ Brian B. Hayward
Brian B. Hayward
Vice President
<PAGE>
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FUND MANAGERS
ENERGY
The fund is managed by Vice President John S. Segner. 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.
FINANCIAL SERVICES
The fund is managed by Vice President Jeffrey G. Morris. He received a BS from
Colorado State University and an MS from the University of Colorado-Denver. He
is a Chartered Financial Analyst.
GOLD
The fund is managed by Vice President John S. Segner. 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.
HEALTH SCIENCES
The fund is managed by Senior Vice President John R. Schroer, a Chartered
Financial Analyst. John started his investment career in 1989, after earning an
MBA and BA from the University of Wisconsin.
LEISURE
The fund is managed by Vice President Mark Greenberg. Mark started his
investment career in 1980 and has over 16 years of experience in the leisure
sector.
He has a BSBA from Marquette University and is a Chartered Financial Analyst.
TECHNOLOGY
The fund is managed by Senior Vice President William R. Keithler, who returned
to INVESCO in 1998 after serving as vice president and portfolio manager with
Berger Associates. Bill has an MS from the University of Wisconsin-Madison and a
BS from Webster College. He is a Chartered Financial Analyst.
UTILITIES
The fund is managed by Vice President Brian B. Hayward. Previously, he was a
senior equity analyst for Mississippi Valley Advisors. Brian has a BA in
Mathematics and an MA in economics from the University of Missouri. He is a
Chartered Financial Analyst.
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SINCE THE FUNDS ARE ACTIVELY MANAGED, HOLDINGS WILL CHANGE OVER TIME.
(1) 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.
(2) THE S&P 500 IS AN UNMANAGED INDEX OF COMMON STOCKS CONSIDERED REPRESENTATIVE
OF THE BROAD U.S. STOCK MARKET. THE S&P UTILITY AND S&P FINANCIAL INDEXES ARE
CONSIDERED REPRESENTATIVE OF THOSE SECTORS.
<PAGE>
MARKET HEADLINES
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NOVEMBER 1998 TO OCTOBER 1999
The markets recorded another healthy advance for the 12 months ended October 31,
1999. For investors resetting their clocks on Halloween, however, the good news
may have seemed like so much ancient history. The markets rose quickly through
the end of 1998 and into the beginning of 1999, but then appeared to stall in
the spring. While precise explanations for the slowdown varied, nearly all could
agree on one culprit: rising interest rates.
With the American economic expansion entering its ninth year and world growth
recovering, the possibility of increasing inflationary pressures worried many
investors. The one observer who mattered most, of course, was Federal Reserve
Board Chairman Alan Greenspan. Several moderately troubling inflation signals
were enough for Greenspan and his fellow Governors to raise short-term rates on
two occasions, and market interest rates headed higher accordingly.
By the fall, tighter credit had taken its toll on interest-rate sensitive
sectors such as homebuilding and financial services. The public received the
message as well: Consumer confidence, while still high, began to drift lower as
the public considered higher mortgage rates and a flatter stock market.
Meanwhile, the bond markets languished due to the higher rates and poor
technical conditions.
With the world economy coming back to life and domestic consumer confidence
remaining relatively strong, however, rising rates barely slowed down most major
companies. Indeed, profit growth at many firms skyrocketed back from 1998's
slowdown. This posed a strong contrast to the classic late stages of most
expansions, when profit growth should theoretically slow; if anything, leading
companies seemed to be picking up speed.
Torn between good profit news on the one hand and rising interest rates on the
other, investors waffled and the domestic equity markets moved sideways--stuck
in a "horizontal trading range," in Wall Street's parlance. Interestingly, many
market watchers became more optimistic about performance in 2000, based in part
on their hope that the Y2K issue would no longer hang over the markets. Stocks
therefore seemed poised for at least a temporary rebound, and the sudden surge
at the end of October gave some hope that more good news is in store.
YEAR 2000 COMPUTER ISSUE
(UNAUDITED)
Many computer systems in use today may not be able to recognize any date after
December 31, 1999. If these systems are not fixed by that date, it is possible
that they could generate erroneous information or fail altogether. INVESCO has
committed substantial resources in an effort to make sure that its own major
computer systems will continue to function on and after January 1, 2000. Of
course, INVESCO cannot fix systems that are beyond its control. If INVESCO's own
systems, or the systems of third parties upon which it relies, do not perform
properly after December 31, 1999, the funds could be adversely affected.
In addition, the markets for, or values of, securities in which the funds invest
may possibly be hurt by computer failures affecting portfolio investments or
trading of securities beginning January 1, 2000. For example, improperly
functioning computer systems could result in securities trade settlement
problems and liquidity issues, production issues for individual companies and
overall economic uncertainties. Individual issuers may incur increased costs in
making their own systems Year 2000 compliant. The combination of market
uncertainty and increased costs means that there is a possibility that Year 2000
computer issues may adversely affect the funds' investments. At this time, it is
generally believed that foreign issuers, particularly those in emerging and
other markets, may be more vulnerable to Year 2000 problems than will be issuers
in the U.S.
<PAGE>
FIVE LARGEST COMMON STOCK HOLDINGS
INVESCO SECTOR FUNDS, INC.
OCTOBER 31, 1999
DESCRIPTION VALUE
- --------------------------------------------------------------------------------
ENERGY FUND
Talisman Energy $ 13,260,000
USX-Marathon Group 9,978,225
Burlington Resources 9,102,375
Nabors Industries 9,075,000
Exxon Corp 8,517,187
FINANCIAL SERVICES FUND
Citigroup Inc $ 78,965,669
Wells Fargo 72,090,175
Bank of New York 67,854,250
Morgan Stanley Dean Witter & Co 64,885,812
American Express 59,983,000
GOLD FUND
Placer Dome $ 8,487,500
Barrick Gold 7,325,000
Meridian Gold 7,125,000
Franco-Nevada Mining 7,052,825
Goldcorp Inc Class A Shrs 5,400,975
HEALTH SCIENCES FUND
Johnson & Johnson $ 101,350,339
Warner-Lambert Co 100,386,167
Bristol-Myers Squibb 87,533,989
Merck & Co 83,674,290
Schering-Plough Corp 79,762,568
LEISURE FUND
AT&T Corp-Liberty Media Group Class A Shrs $ 34,698,067
Harrah's Entertainment 32,062,750
Omnicom Group 18,128,000
Gemstar International Group Ltd 16,150,063
MediaOne Group 15,342,394
TECHNOLOGY FUND
America Online $ 75,283,594
Cisco Systems 62,802,320
Nokia Corp Sponsored ADR Representing Ord Shrs 59,768,925
Gemstar International Group Ltd 58,258,375
Conexant Systems 54,157,500
<PAGE>
FIVE LARGEST COMMON STOCK HOLDINGS (CONTINUED)
DESCRIPTION VALUE
- --------------------------------------------------------------------------------
Utilities Fund
AT&T Canada Class B Shrs Depository Receipts $ 12,706,500
SBC Communications 11,670,393
Sprint Corp 11,295,500
COLT Telecom Group PLC Sponsored ADR Representing 4 Ord Shrs 8,662,350
BellSouth Corp 7,281,000
Composition of holdings is subject to change.
STATEMENT OF INVESTMENT SECURITIES
INVESCO SECTOR FUNDS, INC.
OCTOBER 31, 1999
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
ENERGY FUND
99.69 COMMON STOCKS
0.88 ELECTRICAL EQUIPMENT
Plug Power(a) 107,400 $ 1,718,400
================================================================================
17.07 NATURAL GAS
Coastal Corp 190,000 8,003,750
El Paso Energy 150,500 6,170,500
Kinder Morgan 205,000 4,125,625
ONEOK Inc 100,000 2,918,750
Western Gas Resources 285,000 4,684,687
Williams Cos 200,000 7,500,000
================================================================================
33,403,312
69.96 Oil & Gas
11.89 DOMESTIC INTEGRATED
Amerada Hess 90,000 5,163,750
Murphy Oil 145,000 8,129,063
USX-Marathon Group 342,600 9,978,225
================================================================================
23,271,038
21.43 DRILLING & EQUIPMENT
Atwood Oceanics(a) 109,000 3,167,812
Cooper Cameron(a) 31,800 1,230,263
Dril-Quip Inc(a) 269,300 6,294,888
Grey Wolf(a) 1,070,600 2,810,325
Nabors Industries(a) 400,000 9,075,000
Noble Drilling(a) 295,000 6,545,312
R&B Falcon(a) 300,000 3,731,250
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
Smith International(a) 60,000 $ 2,073,750
Transocean Offshore CJ 172,000 4,676,250
Unit Corp(a) 355,400 2,310,100
================================================================================
41,914,950
26.33 EXPLORATION & PRODUCTION
Apache Corp 175,000 6,825,000
Basin Exploration(a) 107,000 1,758,813
Burlington Resources 261,000 9,102,375
Cabot Oil & Gas Class A Shrs 131,200 2,115,600
Evergreen Resources(a) 340,100 7,354,662
Kerr-McGee Corp 106,000 5,697,500
Ocean Energy(a) 240,000 2,205,000
Santa Fe Snyder(a) 261,500 2,255,438
Swift Energy(a) 90,000 933,750
Talisman Energy(a) CA 510,000 13,260,000
================================================================================
51,508,138
10.31 INTERNATIONAL INTEGRATED
Conoco Inc Class B Shrs 300,000 8,137,500
Exxon Corp 115,000 8,517,187
Imperial Oil Ltd CA 150,000 3,506,250
================================================================================
20,160,937
TOTAL OIL & GAS 136,855,063
================================================================================
11.78 OIL WELL EQUIPMENT & SERVICES
Baker Hughes 270,000 7,543,125
Halliburton Co 60,000 2,261,250
Schlumberger Ltd NL 70,000 4,239,375
Veritas DGC(a) 240,900 3,387,656
Weatherford International(a) 165,600 5,609,700
================================================================================
23,041,106
TOTAL COMMON STOCKS
(Cost $176,026,999) 195,017,881
================================================================================
0.31 SHORT-TERM INVESTMENTS --
REPURCHASE AGREEMENTS
Repurchase Agreement with
State Street dated 10/29/1999
due 11/1/1999 at 5.130%,
repurchased at $606,259
(Collateralized by US Treasury
Notes, due 12/31/1999 at 5.625%,
value $622,114) (Cost $606,000) $606,000 606,000
================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $176,632,999)
(Cost for Income Tax Purposes
$179,338,426) $ 195,623,881
================================================================================
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
FINANCIAL SERVICES FUND
84.24 COMMON STOCKS
35.26 BANKS
Bank of New York 1,620,400 $ 67,854,250
Chase Manhattan 535,100 46,754,362
City National 121,100 4,692,625
Comerica Inc 100,000 5,943,750
Fifth Third Bancorp 607,700 44,855,856
First Security 400,000 10,250,000
Firstar Corp 2,018,016 59,279,220
Huntington Bancshares 455,400 13,491,225
Morgan (J P) & Co 46,000 6,020,250
North Fork Bancorp 965,000 19,963,437
Northern Trust 357,000 34,472,813
UnionBanCal Corp 100,000 4,343,750
Wells Fargo 1,505,800 72,090,175
Zions Bancorp 774,100 45,623,519
================================================================================
435,635,232
4.85 CONSUMER FINANCE
American Express 389,500 59,983,000
================================================================================
22.47 FINANCIAL
Associates First Capital Class A Shrs 1,208,800 44,121,200
Capital One Financial 789,000 41,817,000
Citigroup Inc 1,458,950 78,965,669
Financial Federal(a) 10,000 215,000
Freddie Mac 631,900 34,162,094
MicroFinancial Inc 60,000 656,250
Providian Financial 425,650 46,395,850
Schwab (Charles) Corp 802,600 31,251,238
================================================================================
277,584,301
7.35 INSURANCE
AFLAC Inc 400,000 20,450,000
American International Group 59,335 6,107,797
AXA Financial 1,330,400 42,655,950
Hartford Life Class A Shrs 305,700 15,972,825
Nationwide Financial Services
Class A Shrs 150,000 5,681,250
================================================================================
90,867,822
4.57 INSURANCE BROKERS
Marsh & McLennan 714,400 56,482,250
================================================================================
5.25 INVESTMENT BANK/BROKER FIRM
Morgan Stanley Dean Witter & Co 588,200 64,885,812
================================================================================
2.57 RAILROADS
Kansas City Southern Industries 669,100 31,740,431
================================================================================
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
1.92 SAVINGS & LOAN
Charter One Financial 964,262 $ 23,684,685
================================================================================
TOTAL COMMON STOCKS
(Cost $796,305,900) 1,040,863,533
================================================================================
15.76 SHORT-TERM INVESTMENTS -- COMMERCIAL PAPER
7.28 CONSUMER FINANCE
General Motors Acceptance,
5.250%, 11/2/1999 $50,000,000 50,000,000
Sears Roebuck Acceptance,
5.310%, 11/4/1999 $ 40,000,000 40,000,000
================================================================================
90,000,000
8.48 FINANCIAL
Ford Motor Credit, 5.290%,
11/3/1999 $ 30,000,000 30,000,000
Ford Motor Credit, 5.270%,
11/5/1999 $ 19,736,000 19,736,000
General Electric, 5.300%,
11/1/1999 $ 30,000,000 30,000,000
General Electric Capital, 5.240%,
11/3/1999 $ 25,000,000 25,000,000
================================================================================
104,736,000
TOTAL SHORT-TERM INVESTMENTS
(Cost $194,736,000) 194,736,000
================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $991,041,900)
(Cost for Income Tax Purposes
$992,199,600) $ 1,235,599,533
================================================================================
GOLD FUND
97.67 COMMON STOCKS
97.67 GOLD & PRECIOUS METALS MINING
Aber Resources Ltd(a) CA 270,000 $ 1,501,875
Agnico Eagle Mines(a) CA 550,000 4,400,000
AngloGold Ltd Sponsored ADR
Representing 1/2 Ord Shr SF 185,000 5,191,562
Apex Silver Mines Ltd(a) CJ 245,900 3,335,019
Barrick Gold CA 400,000 7,325,000
Battle Mountain Gold(a) 1,000,000 2,687,500
Claude Resources(a) CA 346,700 249,848
Crown Resources(a)(b) 905,000 2,658,438
Francisco Gold(a) CA 276,700 1,363,842
Franco-Nevada Mining Ltd CA 380,000 7,052,825
Freeport McMoRan Copper & Gold
Class A Shrs(a) 360,000 5,085,000
Geomaque Explorations Ltd(a) CA 1,500,000 693,453
Glamis Gold Ltd(a) CA 175,000 350,000
Goldcorp Inc Class A Shrs(a) CA 855,600 5,400,975
Guyanor Ressources SA Class B
Shrs(a)(b) FR 1,000,000 489,496
Homestake Mining 288,000 2,412,000
IAMGOLD(a) CA 1,660,000 3,724,250
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
Ivanhoe Mines Ltd(a) CA 1,776,000 $ 1,509,280
Lihir Gold Ltd Sponsored ADR
Representing 20 Ord Shrs(a) AS 161,900 2,630,875
Manhattan Minerals(a) CA 400,000 1,245,496
Meridian Gold(a) CA 1,000,000 7,125,000
Metallica Resources(a) CA 500,000 285,000
Nevsun Resources Ltd(a) CA 800,000 326,331
Newmont Mining 235,000 5,155,313
Pacific Rim Mining(a)(b) CA 966,400 1,031,510
Placer Dome CA 700,000 8,487,500
Repadre Capital(a) CA 500,000 679,856
Rio Narcea Gold Mines Ltd(a) CA 545,900 690,308
Solitario Resources(a) CA 191,000 168,808
SouthernEra Resources Ltd(a) CA 490,000 726,222
Star Resources(a)(b) CA 3,578,500 754,188
Stillwater Mining(a) 240,000 4,830,000
Teck Corp Class B Shrs CA 330,000 3,051,193
Viceroy Resources(a) CA 1,900,000 1,420,899
================================================================================
TOTAL COMMON STOCKS
(Cost $122,909,054) 94,038,862
================================================================================
2.33 SHORT-TERM INVESTMENTS --
REPURCHASE AGREEMENTS
Repurchase Agreement with
State Street dated 10/29/1999
due 11/1/1999 at 5.130%,
repurchased at $2,247,961
(Collaterized by US Treasury
Notes, due 1/31/2001 at
4.500%, value $2,298,021)
(Cost $2,247,000) $2,247,000 2,247,000
================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $125,156,054)
(Cost for Income Tax Purposes
$129,711,984) $ 96,285,862
================================================================================
HEALTH SCIENCES FUND
85.18 COMMON STOCKS & WARRANTS
16.77 BIOTECHNOLOGY
Affymetrix Inc(a) 6,700 $ 590,437
Amgen Inc(a) 638,100 50,888,475
Biogen Inc(a) 652,000 48,329,500
Chiron Corp(a) 658,100 18,796,981
Ecogen Technologies I(a)(b)(e) 100 1
Enzon Inc(a) 366,700 10,748,894
Genentech Inc(a) 283,200 41,276,400
Gilead Sciences(a) 106,756 6,745,645
Human Genome Sciences(a) 60,300 5,268,712
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
ICOS Corp(a) 187,600 $ 5,381,775
IDEC Pharmaceuticals(a) 44,800 5,205,200
Immunex Corp(a) 377,550 23,785,650
MedClone Trust(a)(e) 144,405 1
MedImmune Inc(a) 339,050 37,973,600
Millennium Pharmaceuticals(a) 71,900 5,041,987
Titan Pharmaceuticals(a) 488,215 4,119,314
Transkaryotic Therapies(a) 64,300 2,989,950
Xenometrix Inc(a)(e) 121,058 23,969
================================================================================
267,166,491
1.03 CONGLOMERATES
Monsanto Co 424,300 16,335,550
================================================================================
2.21 ELECTRONICS -- INSTRUMENTS
PE Corp-PE Biosystems Group 310,900 20,169,638
Waters Corp 284,300 15,103,438
================================================================================
35,273,076
57.50 HEALTH CARE DRUGS -- PHARMACEUTICALS
Abbott Laboratories 1,102,030 44,494,461
Allergan Inc 376,800 40,458,900
American Home Products 481,275 25,146,619
AstraZeneca Group PLC Sponsored ADR
Representing Ord Shrs 1,308,850 59,879,888
Bristol-Myers Squibb 1,139,580 87,533,989
Forest Laboratories(a) 109,200 5,009,550
Glaxo Wellcome PLC Sponsored ADR
Representing 2 Ord Shrs 407,000 24,369,125
Inhale Therapeutic Systems(a) 165,900 4,572,619
Johnson & Johnson 967,545 101,350,339
Jones Pharmaceutical 92,800 2,876,800
Lilly (Eli) & Co 854,065 58,823,727
Merck & Co 1,051,680 83,674,290
Pfizer Inc 1,998,905 78,956,748
Pharmacia & Upjohn 895,545 48,303,458
QLT PhotoTherapeutics(a) 258,700 10,962,413
Schering-Plough Corp(b) 1,611,365 79,762,568
Shire Pharmaceuticals Group PLC(a) 245,750 2,661,458
SmithKline Beecham PLC Sponsored ADR
Representing 5 Ord Shrs 115,725 7,406,400
Takeda Chemical Industries Ltd 332,000 19,055,960
Warner-Lambert Co 1,257,775 100,386,167
Yamanouchi Pharmaceutical Ltd 676,000 30,638,942
================================================================================
916,324,421
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
1.43 HEALTH CARE -- SERVICES
Columbia/HCA Healthcare 941,900 $ 22,723,337
================================================================================
6.24 MEDICAL EQUIPMENT & DEVICES
Bard (C R) Inc 436,400 23,538,325
Baxter International 502,045 32,570,169
Clarus Medical Systems Warrants
(Exp 2000)(a)(b)(c)(e) 2,224 0
Guidant Corp 200,500 9,899,687
Medtronic Inc 824,586 28,551,290
Xomed Surgical Products(a) 79,900 4,858,919
================================================================================
99,418,390
TOTAL COMMON STOCKS & WARRANTS
(Cost $1,102,674,675) 1,357,241,265
================================================================================
0.32 PREFERRED STOCKS
0.09 BIOTECHNOLOGY
Ingenex Inc, Series B Shrs,
Pfd(a)(e) 103,055 62,864
MedClone Trust, Series G Shrs,
Conv Pfd(a)(e) 581,396 75,581
Osiris Therapeutics, Series C Shrs,
Conv Pfd(a)(e) 382,353 1,300,000
================================================================================
1,438,445
0.23 HEALTH CARE -- SERVICES
Physicians Online, Series A Shrs,
Conv Pfd(a)(b)(e) 361,350 3,667,703
================================================================================
0.00 MEDICAL EQUIPMENT & DEVICES
Clarus Medical Systems
Series I Shrs, Pfd(a)(b)(e) 106,664 1
Series II Shrs, Pfd(a)(b)(e) 22,239 33,357
Janus Biomedical, Series A Shrs,
Conv Pfd(a)(b)(e) 400,000 1
================================================================================
33,359
TOTAL PREFERRED STOCKS
(Cost $6,974,797) 5,139,507
================================================================================
14.50 SHORT-TERM INVESTMENTS
0.03 FIXED INCOME SECURITIES
0.03 HEALTH CARE -- SERVICES
Physicians Online
Bridge Notes, 11.000%,
10/31/2000(b)(d)(e) $ 292,070 292,070
Bridge Notes II, 11.000%,
2/28/2000(b)(d)(e) $ 256,977 256,977
================================================================================
TOTAL FIXED INCOME SECURITIES
(Cost $549,047) 549,047
================================================================================
14.47 COMMERCIAL PAPER
3.00 CONSUMER FINANCE
American Express Credit, 5.280%,
11/4/1999 $ 47,860,000 47,860,000
================================================================================
11.47 FINANCIAL
Chevron USA, 5.270%, 11/3/1999 $ 45,000,000 45,000,000
Ford Motor Credit, 5.300%, 11/2/1999 $ 45,697,000 45,697,000
General Electric, 5.280%, 11/5/1999 $ 47,000,000 47,000,000
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
Heller Financial, 5.280%,
11/1/1999 $ 45,000,000 $ 45,000,000
================================================================================
182,697,000
TOTAL COMMERCIAL PAPER
(Cost $230,557,000) 230,557,000
================================================================================
TOTAL SHORT-TERM INVESTMENTS
(Cost $231,106,047) 231,106,047
================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $1,340,755,519)
(Cost for Income Tax Purposes
$1,355,942,222) $ 1,593,486,819
================================================================================
LEISURE FUND
90.11 COMMON STOCKS
0.62 AUTOMOBILES
General Motors Class H Shrs(a) 38,000 $ 2,766,875
================================================================================
2.21 BEVERAGES
Heineken NV NL 192,300 9,801,115
================================================================================
20.75 BROADCASTING
ACTV Inc(a) 67,900 1,073,669
AMFM Inc(a) 102,200 7,154,000
AT&T Corp-Liberty Media Group
Class A Shrs(a) 874,282 34,698,067
Belo (A H) Corp Class A Shrs 135,400 2,758,775
CBS Corp(a) 56,400 2,753,025
Clear Channel Communications(a) 53,300 4,283,987
EchoStar Communications
Class A Shrs(a) 238,200 14,738,625
Emmis Communications Class A
Shrs(a) 13,200 952,050
Fox Entertainment Group Class A
Shrs(a) 34,800 752,550
Infinity Broadcasting Class A
Shrs(a) 59,300 2,049,556
Salem Communications Class A
Shrs(a) 57,800 1,437,775
Sinclair Broadcast Group Class
A Shrs(a) 385,200 3,852,000
Spanish Broadcasting System Class
A Shrs(a) 169,700 4,518,263
Television Broadcasts Ltd
Sponsored ADR Representing 2
Ord Shrs HK 154,500 1,650,493
TV Guide Class A Shrs(a) 169,300 8,909,413
UnitedGlobalCom Inc Class A Shrs(a) 5,200 452,400
================================================================================
92,034,648
12.09 CABLE
Adelphia Communications Class
A Shrs(a) 11,900 650,037
Cablevision Systems Class A
Shrs(a) 47,500 3,209,219
Comcast Corp Special Class
A Shrs 275,956 11,624,646
Flextech PLC(a) UK 110,100 1,590,287
Insight Communications(a) 154,900 3,659,512
Jones Intercable Class A Shrs(a) 148,000 8,084,500
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
MediaOne Group(a) 215,900 $ 15,342,394
NTL Inc(a) 84,618 6,378,082
Sogecable SA(a) SP 30,300 833,152
USA Networks(a) 49,700 2,239,606
================================================================================
53,611,435
1.55 COMPUTER RELATED
Activision Inc(a) 72,100 1,018,412
Electronic Arts(a) 62,400 5,042,700
Galileo International 27,500 826,719
================================================================================
6,887,831
0.89 CONSUMER -- JEWELRY, NOVELTIES & GIFTS
De Beers Consolidated Mines
Deferred ADR Representing Ord
Shrs SF 145,100 3,926,769
================================================================================
10.35 ENTERTAINMENT
Disney (Walt) Co 84,399 2,226,024
Gemstar International Group
Ltd(a) 185,900 16,150,063
Granada Group PLC UK 173,458 1,369,057
Seagram Co Ltd CA 105,900 5,228,813
SFX Entertainment Class A Shrs(a) 105,900 3,699,881
Time Warner 156,400 10,899,125
Viacom Inc
Class A Shrs(a) 82,080 3,739,770
Class B Non-Voting Shrs(a) 57,604 2,577,779
================================================================================
45,890,512
8.71 GAMING
Harrah's Entertainment(a) 1,108,000 32,062,750
Mandalay Resort Group(a) 57,300 1,067,212
MGM Grand(a) 23,739 1,210,689
Mirage Resorts(a) 48,200 701,912
Park Place Entertainment(a) 227,300 2,983,313
Sun International Hotels Ltd(a) BD 28,900 585,225
================================================================================
38,611,101
0.21 HOUSEHOLD FURNITURE & APPLIANCES
Harman International Industries 22,770 930,724
================================================================================
6.26 LEISURE TIME
American Classic Voyages(a) 86,800 2,170,000
Bally Total Fitness Holdings(a) 51,100 1,229,594
Carnival Corp 144,600 6,434,700
Cedar Fair LP 102,800 2,049,575
International Game Technology 179,600 3,345,050
K2 Inc 64,000 512,000
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
Premier Parks(a) 53,600 $ 1,551,050
Royal Caribbean Cruises Ltd 88,000 4,669,500
Steiner Leisure Ltd(a) 277,200 5,249,475
Vail Resorts(a) 24,600 547,350
================================================================================
27,758,294
3.27 LODGING -- HOTELS
Hilton Hotels 153,700 1,421,725
Marriott International Class A Shrs 388,000 13,070,750
================================================================================
14,492,475
1.37 MANUFACTURING
Pittway Corp Class A Shrs 183,600 6,058,800
================================================================================
7.51 PUBLISHING
Central Newspapers Class A Shrs 15,000 644,062
Harcourt General 56,200 2,163,700
Houghton Mifflin 68,500 2,902,687
Information Holdings(a) 29,605 532,890
Martha Stewart Living Omnimedia
Class A Shrs(a) 47,800 1,762,625
McClatchy Co Class A Shrs 97,700 3,834,725
McGraw-Hill Cos 70,000 4,173,750
Meredith Corp 98,000 3,497,375
Pearson PLC UK 50,000 1,121,555
Scripps (E W) Co Class A Shrs 64,900 2,997,569
Times Mirror Class A Shrs 18,700 1,348,738
Valassis Communications(a) 193,900 8,337,700
================================================================================
33,317,376
0.36 REAL ESTATE INVESTMENT TRUST
Golf Trust of America 17,400 312,112
Starwood Hotels & Resorts Worldwide 55,900 1,282,206
================================================================================
1,594,318
2.38 RETAIL
Hastings Entertainment(a) 99,700 517,194
Neiman Marcus Group Class B Shrs(a) 16,933 363,001
Topps Co(a) 104,000 1,020,500
Tuesday Morning(a) 102,700 2,362,100
Wal-Mart Stores 110,000 6,283,750
================================================================================
10,546,545
9.27 SERVICES
Cendant Corp(a) 51,867 855,805
Harte-Hanks Inc 357,100 7,075,044
Omnicom Group 206,000 18,128,000
Penton Media 37,800 699,300
WPP Group PLC(a) UK 1,132,400 12,273,115
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
Young & Rubicam 44,800 $ 2,049,600
================================================================================
41,080,864
0.30 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 22,648 1,058,794
PT Pasifik Satelit Nusantara
Sponsored ADR Representing
3 Ord Shrs(a) ID 40,000 265,000
================================================================================
1,323,794
0.82 TEXTILE -- APPAREL MANUFACTURING
Jones Apparel Group(a) 14,400 455,400
Polo Ralph Lauren(a) 172,600 3,193,100
================================================================================
3,648,500
0.40 TOBACCO
Philip Morris 71,000 1,788,313
================================================================================
0.79 TOYS
Hasbro Inc 12,000 247,500
Mattel Inc 104,200 1,393,675
Nintendo Co Ltd JA 11,860 1,880,826
================================================================================
3,522,001
TOTAL COMMON STOCKS
(Cost $221,318,034) 399,592,290
================================================================================
2.31 PREFERRED STOCKS
0.42 BROADCASTING
ProSieben Media AG, Pfd GM 46,100 1,872,329
================================================================================
0.62 ENTERTAINMENT
News Corp Ltd Sponsored ADR
Representing 4 Ltd Voting
Pfd Shrs AS 99,978 2,755,644
================================================================================
1.27 LEISURE TIME
Royal Caribbean Cruises Ltd,
Series A Shrs 7.250%, Conv Pfd 35,000 5,600,000
================================================================================
TOTAL PREFERRED STOCKS (Cost $5,114,014) 10,227,973
================================================================================
3.07 OTHER SECURITIES
3.07 TOBACCO
Cie Financiere Richemont AG A,
Units (Each unit consists of
one bearer shr at 100 Swiss
Francs par in the Company
and one bearer participation
certificate at no par issued
by Richmont SA Luxembourg)
(Cost $9,847,625) SZ 7,127 13,620,676
================================================================================
4.51 SHORT-TERM INVESTMENTS -- COMMERCIAL PAPER
4.51 INSURANCE
American General, 5.310%, 11/1/1999
(Cost $19,990,000) $ 19,990,000 19,990,000
================================================================================
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $256,269,673)
(Cost for Income Tax Purposes
$257,015,052) $ 443,430,939
================================================================================
TECHNOLOGY FUND
91.46 COMMON STOCKS & RIGHTS
0.96 BROADCASTING
EchoStar Communications Class A
Shrs(a) 464,700 $ 28,753,313
================================================================================
11.47 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
CIENA Corp(a) 677,400 23,878,350
General Instrument(a) 477,600 25,700,850
Harmonic Inc(a) 283,800 16,850,625
JDS Uniphase(a) 273,000 45,556,875
Nokia Corp Sponsored ADR
Representing Ord Shrs 517,200 59,768,925
Nortel Networks 360,800 22,347,050
PairGain Technologies(a) 743,000 9,101,750
Polycom Inc(a) 88,800 4,440,000
Powerwave Technologies(a) 639,300 41,594,456
QUALCOMM Inc(a) 149,600 33,323,400
Scientific-Atlanta Inc 596,000 34,121,000
Tellabs Inc(a) 423,600 26,792,700
================================================================================
343,475,981
19.11 COMPUTER SOFTWARE & SERVICE
BEA Systems(a) 896,100 40,884,562
BMC Software(a) 527,000 33,826,812
BroadVision Inc(a) 457,200 33,375,600
CBT Group Public Ltd Sponsored ADR
Representing Ord Shrs(a) 1,766,400 36,432,000
Inktomi Corp(a) 162,200 16,453,163
Internet HOLDRs Trust Depositary
Receipts(a) 274,200 31,344,487
Internet Initiative Japan Sponsored ADR
Representing 1/2000 Ord Shr(a) 426,900 22,945,875
Legato Systems(a) 883,200 47,472,000
Lycos Inc(a) 422,800 22,619,800
Mercury Interactive(a) 449,800 36,490,025
Microsoft Corp(a) 452,000 41,838,250
National Information Consortium(a) 1,265,300 41,438,575
Parametric Technology(a) 389,700 7,428,656
Peregrine Systems(a) 859,900 37,728,112
Siebel Systems(a) 221,800 24,356,413
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
SOFTBANK Corp 87,400 $ 36,263,128
Software.com Inc(a) 438,800 29,536,725
Verio Inc(a) 523,500 19,533,094
Verity Inc(a) 175,000 12,053,125
================================================================================
572,020,402
1.71 COMPUTER SYSTEMS
Apple Computer(a) 639,000 51,199,875
================================================================================
1.63 COMPUTERS -- HARDWARE
Sun Microsystems(a) 460,700 48,747,819
================================================================================
6.23 COMPUTERS -- NETWORKING
Cisco Systems(a) 848,680 62,802,320
Extreme Networks(a) 113,300 9,099,406
Internet Capital Group(a) 108,900 12,673,238
Juniper Networks(a) 60,800 16,758,000
Network Appliance(a) 540,000 39,960,000
Redback Networks(a) 97,800 11,295,900
Whittman-Hart Inc(a) 886,200 34,063,313
================================================================================
186,652,177
2.11 COMPUTERS -- PERIPHERALS
Advanced Digital Information(a) 693,000 25,814,250
EMC Corp(a) 511,900 37,368,700
================================================================================
63,182,950
4.42 ELECTRICAL EQUIPMENT
Celestica Inc(a) 535,700 29,798,312
Flextronics International Ltd(a) 479,400 34,037,400
Sanmina Corp(a) 269,700 24,289,856
Solectron Corp(a) 586,400 44,126,600
================================================================================
132,252,168
0.39 ELECTRONICS -- INSTRUMENTS
SanDisk Corp(a) 191,600 11,615,750
================================================================================
22.53 ELECTRONICS -- SEMICONDUCTOR
Altera Corp(a) 558,400 27,152,200
Analog Devices(a) 502,500 26,695,313
Applied Micro Circuits(a) 482,200 37,521,187
Atmel Corp(a) 706,900 28,276,000
Chartered Semiconductor Manufacturing
ADR Representing 10 Ord Shrs(a) 96,600 3,199,875
Conexant Systems(a) 580,000 54,157,500
Cypress Semiconductor(a) 775,900 19,833,944
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
Fairchild Semiconductor Class A Shrs(a) 338,400 $ 8,544,600
Galileo Technology Ltd(a) 318,300 7,281,113
Intel Corp 527,700 40,863,769
LSI Logic(a) 693,400 36,880,212
Linear Technology 287,600 20,114,025
Maxim Integrated Products(a) 493,600 38,963,550
MEMC Electronic Materials(a) 1,012,200 14,423,850
Microchip Technology(a) 474,800 31,633,550
National Semiconductor(a) 427,500 12,798,281
PMC-Sierra Inc(a) 304,100 28,661,425
QLogic Corp(a) 307,500 32,018,437
RF Micro Devices(a) 822,500 42,461,562
SDL Inc(a) 405,400 49,990,887
Texas Instruments 388,400 34,858,900
Vitesse Semiconductor (a) 997,000 45,737,375
Xilinx Inc(a) 412,400 32,424,950
================================================================================
674,492,505
1.95 ENTERTAINMENT
Gemstar International Group Ltd(a) 670,600 58,258,375
================================================================================
5.50 EQUIPMENT -- SEMICONDUCTOR
ASM Lithography Holding NV
New York Registered Shrs(a) 390,000 28,323,750
Applied Materials(a) 273,700 24,581,681
KLA-Tencor Corp(a) 178,400 14,127,050
Lam Research(a) 576,800 48,703,550
Novellus Systems(a) 149,200 11,563,000
Taiwan Semiconductor Manufacturing
Ltd Sponsored ADR Representing
5 Ord Shrs(a) 667,182 23,101,177
Teradyne Inc(a) 369,400 14,221,900
================================================================================
164,622,108
0.17 OIL & GAS RELATED
Veritas DGC(a) 368,100 5,176,406
================================================================================
0.75 RETAIL
Amazon.com Inc(a) 157,100 11,095,188
eBay Inc(a) 84,700 11,445,088
================================================================================
22,540,276
8.43 SERVICES
America Online(a) 580,500 75,283,594
CMGI Inc(a) 212,400 23,244,525
Concord EFS(a) 468,150 12,669,309
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
Fiserv Inc(a) 878,800 $ 28,121,600
Safeguard Scientifics(a) 306,500 25,784,313
Sapient Corp(a) 200,900 25,690,088
TSI International Software Ltd(a) 816,600 19,598,400
VeriSign Inc(a) 142,700 17,623,450
VERITAS Software(a) 184,300 19,881,363
Viant Corp(a) 44,800 4,457,600
================================================================================
252,354,242
2.48 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Nextel Communications Class A
Shrs(a) 413,000 35,595,437
Proxim Inc(a) 511,000 23,921,188
Vodafone AirTouch PLC Sponsored ADR
Representing 10 Ord Shrs 305,750 14,656,891
================================================================================
74,173,516
1.62 TELEPHONE
Amdocs Ltd(a) 769,920 21,413,400
Bell Atlantic 375,200 24,364,550
Pac-West Telecomm Rights(a)(c) 17,840 0
Rhythms NetConnections(a) 91,050 2,657,522
================================================================================
48,435,472
TOTAL COMMON STOCKS
(Cost $1,635,578,099) 2,737,953,335
================================================================================
1.01 PREFERRED STOCKS
0.00 BIOTECHNOLOGY
Ingenex Inc, Series B Shrs,
Pfd(a)(e) 51,527 31,431
================================================================================
1.01 COMPUTER SOFTWARE & SERVICE
SAP AG Sponsored ADR Representing
1/12 Pfd Shr 829,000 30,310,312
================================================================================
TOTAL PREFERRED STOCKS
(Cost $32,314,785) 30,341,743
================================================================================
7.53 SHORT-TERM INVESTMENTS
6.85 COMMERCIAL PAPER
2.84 CONSUMER FINANCE
American Express Credit, 5.220%,
11/1/1999 $45,000,000 45,000,000
General Motors Acceptance, 5.280%,
11/5/1999 $40,000,000 40,000,000
================================================================================
85,000,000
4.01 FINANCIAL
Chevron USA, 5.270%, 11/2/1999 $40,000,000 40,000,000
Ford Motor Credit, 5.290%, 11/3/1999 $40,000,000 40,000,000
Prudential Funding, 5.270%, 11/4/1999 $40,000,000 40,000,000
================================================================================
120,000,000
TOTAL COMMERCIAL PAPER
(Cost $205,000,000) 205,000,000
================================================================================
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
0.68 REPURCHASE AGREEMENTS
Repurchase Agreement with State
Street dated 10/29/1999 due
11/1/1999 at 5.130%,
repurchased at $20,370,705
(Collateralized by US Treasury
Inflationary Index Notes, due
1/15/2009 at 3.875%, value
$20,789,801) (Cost $20,362,000) $ 20,362,000 $ 20,362,000
================================================================================
TOTAL SHORT-TERM INVESTMENTS
(Cost $225,362,000) 225,362,000
================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $1,893,254,884)
(Cost for Income Tax Purposes
$1,902,936,858) $2,993,657,078
================================================================================
UTILITIES FUND
86.74 COMMON STOCKS
2.69 MACHINERY
Mannesmann AG Registered Shrs 37,500 $ 5,908,496
================================================================================
0.85 SERVICES
Navigant Consulting(a) 65,000 1,856,562
================================================================================
12.96 TELECOMMUNICATIONS
Crown Castle International(a) 107,400 2,067,450
MCI WorldCom(a) 64,490 5,534,048
Qwest Communications International(a) 117,102 4,215,672
Sprint Corp 152,000 11,295,500
Vodafone AirTouch PLC Sponsored ADR
Representing 10 Ord Shrs 110,000 5,273,125
================================================================================
28,385,795
70.24 UTILITIES
24.04 ELECTRIC
AES Corp(a) 38,400 2,167,200
Alliant Energy 89,946 2,445,407
Calpine Corp(a) 63,600 3,664,950
CMS Energy 33,700 1,242,687
Consolidated Edison 67,000 2,558,562
DTE Energy 66,200 2,197,012
Duke Energy 70,809 4,000,708
Edison International 135,400 4,011,225
FPL Group 29,600 1,489,250
GPU Inc 33,700 1,143,694
Montana Power 134,500 3,824,844
New Century Energies 65,400 2,129,587
NiSource Inc 26,600 545,300
Northern States Power 50,600 1,087,900
PacifiCorp 169,500 3,495,938
PG&E Corp 55,800 1,279,913
Pinnacle West Capital 58,700 2,164,563
<PAGE>
SHARES,
COUNTRY UNITS OR
CODE IF PRINCIPAL
% DESCRIPTION NON US AMOUNT VALUE
PP&L Resources 53,241 $ 1,440,835
Reliant Energy 96,600 2,632,350
SCANA Corp 49,800 1,238,775
Texas Utilities 100,400 3,890,500
Unicom Corp 104,600 4,007,488
================================================================================
52,658,688
8.52 NATURAL GAS
Coastal Corp 94,000 3,959,750
Columbia Energy Group 39,000 2,535,000
Enron Corp 84,000 3,354,750
New Jersey Resources 55,800 2,270,362
ONEOK Inc 51,000 1,488,563
TransCanada PipeLines Ltd 115,000 1,387,188
Williams Cos 98,000 3,675,000
================================================================================
18,670,613
37.68 TELEPHONE
ALLTEL Corp 87,000 7,242,750
Amdocs Ltd(a) 224,500 6,243,906
AT&T Canada Class B Shrs Depository
Receipts(a) 394,000 12,706,500
BellSouth Corp 161,800 7,281,000
CenturyTel Inc 138,825 5,613,736
COLT Telecom Group PLC Sponsored ADR
Representing 4 Ord Shrs(a) 73,100 8,662,350
GTE Corp 81,800 6,135,000
McLeodUSA Inc(a) 122,700 5,475,487
SBC Communications 229,112 11,670,393
Telefonica SA Sponsored ADR
Representing 3 Ord Shrs(a) 122,574 6,121,039
US WEST 88,300 5,391,819
================================================================================
82,543,980
TOTAL UTILITIES 153,873,281
================================================================================
TOTAL COMMON STOCKS
(Cost $118,352,615) 190,024,134
================================================================================
13.26 SHORT-TERM INVESTMENTS --
REPURCHASE AGREEMENTS
Repurchase Agreement with
State Street dated 10/29/1999
due 11/1/1999 at 5.130%,
repurchased at $29,053,415
(Collaterized by US Treasury
Inflationary Index Notes,
due 1/15/2009 at 3.875%,
value $29,651,277)
(Cost $29,041,000) $ 29,041,000 29,041,000
================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $147,393,615)
(Cost for Income Tax Purposes
$147,952,602) $ 219,065,134
================================================================================
<PAGE>
(a) Security is non-income producing.
(b) Security is an affiliated company (See Notes).
(c) Security has no market value at October 31, 1999.
(d) Rate is subject to change. Rate shown reflects current rate.
(e) The following are restricted securities at October 31, 1999:
SCHEDULE OF RESTRICTED OR ILLIQUID SECURITIES
VALUE AS
AQUISITION ACQUISITION % OF
DESCRIPTION DATE(S) COST NET ASSETS
- --------------------------------------------------------------------------------
HEALTH SCIENCES FUND
Clarus Medical Systems
Series I Shrs, Pfd 12/23/92 $ 2,000,000 0.00%
Series II Shrs, Pfd 5/3/95 111,196 0.00
Warrants (Exp 2000) 5/3/95 0 0.00
Ecogen Technologies I 11/18/92-
1/28/94 1,140,000 0.00
Ingenex Inc, Series B Shrs, Pfd 9/27/94 600,000 0.00
Janus Biomedical, Series A Shrs,
Conv Pfd 3/2/94 1,000,000 0.00
MedClone Trust 9/30/97 101,310 0.00
MedClone Trust, Series G Shrs,
Conv Pfd 10/21/93 1,000,001 0.00
Osiris Therapeutics, Series C Shrs,
Conv Pfd 5/26/94 1,300,000 0.08
Physicians Online
Bridge Notes, 11.000%, 10/31/2000 6/10/98 292,070 0.02
Bridge Notes II, Zero Coupon,
2/28/2000 7/16/99 256,977 0.02
Series A Shrs, Conv Pfd 8/31/93 963,600 0.23
Xenometrix Inc 1/7/94 1,163,691 0.00
================================================================================
0.35%
================================================================================
TECHNOLOGY FUND
Ingenex Inc, Series B Shrs, Pfd 9/27/94 $ 300,000 0.00%
================================================================================
<PAGE>
SUMMARY OF INVESTMENTS BY COUNTRY
% OF
COUNTRY INVESTMENT
COUNTRY CODE SECURITIES VALUE
- --------------------------------------------------------------------------------
ENERGY FUND
Canada CA 8.57% $ 16,766,250
Cayman Islands CJ 2.39 4,676,250
Netherlands NL 2.17 4,239,375
United States US 86.87 169,942,006
================================================================================
100.00% $ 195,623,881
================================================================================
GOLD FUND
Australia AS 2.73%$ 2,630,875
Canada CA 61.86 59,563,659
Cayman Islands CJ 3.47 3,335,019
France FR 0.51 489,496
South Africa SF 5.39 5,191,562
United States US 26.04 25,075,251
================================================================================
100.00% $ 96,285,862
================================================================================
LEISURE FUND
Australia AS 0.62% $ 2,755,644
Bermuda BD 0.13 585,225
Canada CA 1.18 5,228,813
Germany GM 0.42 1,872,329
Hong Kong HK 0.37 1,650,493
Indonesia ID 0.06 265,000
Japan JA 0.42 1,880,826
Netherlands NL 2.21 9,801,115
South Africa SF 0.89 3,926,769
Spain SP 0.19 833,152
Switzerland SZ 3.07 13,620,676
United Kingdom UK 3.69 16,354,014
United States US 86.75 384,656,883
================================================================================
100.00% $ 443,430,939
================================================================================
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
INVESCO SECTOR FUNDS, INC.
OCTOBER 31, 1999
FINANCIAL
ENERGY SERVICES
FUND FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 176,632,999 $ 991,041,900
================================================================================
At Value(a) $ 195,623,881 $ 1,235,599,533
Cash 682,820 0
Foreign Currency (Cost $0 and $9,308,
respectively) 0 9,018
Receivables:
Investment Securities Sold 13,690,115 4,641,426
Fund Shares Sold 11,062,297 45,572,760
Dividends and Interest 44,509 1,486,848
Prepaid Expenses and Other Assets 25,443 98,473
================================================================================
TOTAL ASSETS 221,129,065 1,287,408,058
================================================================================
LIABILITIES
Payables:
Custodian 0 15,186
Distributions to Shareholders 0 139,760
Investment Securities Purchased 6,838,963 22,082,498
Fund Shares Repurchased 18,080,893 22,279,347
Accrued Distribution Expenses 45,918 228,040
Accrued Expenses and Other Payables 27,242 108,238
================================================================================
TOTAL LIABILITIES 24,993,016 44,853,069
================================================================================
NET ASSETS AT VALUE $ 196,136,049 $ 1,242,554,989
================================================================================
NET ASSETS
Paid-in Capital(b) $ 205,942,383 $ 891,967,390
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income
(Loss) (14,351) 3,087
Accumulated Undistributed Net Realized
Gain (Loss) on Investment Securities
and Foreign Currency Transactions (28,782,865) 106,030,181
Net Appreciation of Investment Securities
and Foreign Currency Transactions 18,990,882 244,554,331
================================================================================
NET ASSETS AT VALUE $ 196,136,049 $ 1,242,554,989
================================================================================
Shares Outstanding 14,333,913 41,789,581
NET ASSET VALUE, Offering and Redemption
Price per Share $ 13.68 $ 29.73
================================================================================
(a) Investment securities at cost and value at October 31, 1999 includes a
repurchase agreement of $606,000 for Energy Fund.
(b) The Fund has two billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million have been allocated to Energy
Fund and 100 million have been allocated to Financial Services Fund.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
INVESCO SECTOR FUNDS, INC.
OCTOBER 31, 1999
HEALTH
GOLD SCIENCES
FUND FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 125,156,054 $ 1,340,755,519
================================================================================
At Value(a) $ 96,285,862 $ 1,593,486,819
Cash 2,050,411 17,558
Receivables:
Investment Securities Sold 2,002,770 825
Fund Shares Sold 116,156 4,939,272
Dividends and Interest 8,661 1,077,021
Prepaid Expenses and Other Assets 33,673 123,504
================================================================================
TOTAL ASSETS 100,497,533 1,599,644,999
================================================================================
LIABILITIES
Payables:
Distributions to Shareholders 0 29,963
Investment Securities Purchased 44,426 20,063,895
Fund Shares Repurchased 613,346 5,062,638
Accrued Distribution Expenses 24,992 324,791
Accrued Expenses and Other Payables 61,831 135,107
================================================================================
TOTAL LIABILITIES 744,595 25,616,394
================================================================================
NET ASSETS AT VALUE $ 99,752,938 $ 1,574,028,605
================================================================================
NET ASSETS
Paid-in Capital(b) $ 295,919,697 $ 1,168,444,150
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income
(Loss) (754,980) 2,830,922
Accumulated Undistributed Net Realized
Gain (Loss) on Investment Securities
and Foreign Currency Transactions (166,541,894) 150,022,213
Net Appreciation (Depreciation) of
Investment Securities and Foreign
Currency Transactions (28,869,885) 252,731,320
================================================================================
NET ASSETS AT VALUE $ 99,752,938 $ 1,574,028,605
================================================================================
Shares Outstanding 54,373,564 26,957,802
NET ASSET VALUE, Offering and Redemption
Price per Share $ 1.83 $ 58.39
================================================================================
(a) Investment securities at cost and value at October 31, 1999 includes a
repurchase agreement of $2,247,000 for Gold Fund.
(b) The Fund has two billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million have been allocated to Gold
Fund and 100 million have been allocated to Health Sciences Fund.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
INVESCO SECTOR FUNDS, INC.
OCTOBER 31, 1999
LEISURE UTILITIES
FUND FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 256,269,673 $ 147,393,615
================================================================================
At Value(a) $ 443,430,939 $ 219,065,134
Cash 0 1,515
Receivables:
Investment Securities Sold 3,691,610 0
Fund Shares Sold 3,524,795 6,426,304
Dividends and Interest 175,800 477,718
Appreciation on Forward Foreign Currency
Contracts 18,588 0
Prepaid Expenses and Other Assets 45,098 31,393
================================================================================
TOTAL ASSETS 450,886,830 226,002,064
================================================================================
LIABILITIES
Payables:
Custodian 7,635 0
Distributions to Shareholders 0 22,731
Investment Securities Purchased 6,769,451 879,937
Fund Shares Repurchased 630,596 1,699,331
Accrued Distribution Expenses 88,524 42,172
Accrued Expenses and Other Payables 42,809 23,576
================================================================================
TOTAL LIABILITIES 7,539,015 2,667,747
================================================================================
NET ASSETS AT VALUE $ 443,347,815 $ 223,334,317
================================================================================
NET ASSETS
Paid-in Capital(b) $ 222,836,799 $ 138,369,436
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income
(Loss) (40,573) (12,297)
Accumulated Undistributed Net Realized
Gain on Investment Securities and
Foreign Currency Transactions 33,390,065 13,305,659
Net Appreciation of Investment Securities
and Foreign Currency Transactions 187,161,524 71,671,519
================================================================================
NET ASSETS AT VALUE $ 443,347,815 $ 223,334,317
================================================================================
Shares Outstanding 10,260,011 12,631,263
NET ASSET VALUE, Offering and Redemption
Price per Share $ 43.21 $ 17.68
================================================================================
(a) Investment securities at cost and value at October 31, 1999 includes a
repurchase agreement of $29,041,000 for Utilities Fund.
(b) The Fund has two billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million have been allocated to Leisure
Fund and 100 million have been allocated to Utilities Fund.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
INVESCO SECTOR FUNDS, INC.
OCTOBER 31, 1999
TECHNOLOGY
FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 1,893,254,884
================================================================================
At Value(a) $ 2,993,657,078
Receivables:
Investment Securities Sold 32,636,528
Fund Shares Sold 21,319,326
Dividends and Interest 295,966
Prepaid Expenses and Other Assets 108,151
================================================================================
TOTAL ASSETS 3,048,017,049
================================================================================
LIABILITIES
Payables:
Custodian 81,642
Investment Securities Purchased 9,796,972
Fund Shares Repurchased 4,099,285
Accrued Distribution Expenses - Class II 395,434
Accrued Expenses and Other Payables 105,973
================================================================================
TOTAL LIABILITIES 14,479,306
================================================================================
NET ASSETS AT VALUE $ 3,033,537,743
================================================================================
NET ASSETS
Paid-in Capital(b) $ 1,701,874,652
Accumulated Undistributed (Distributions in Excess of)
Net Investment Loss (64,798)
Accumulated Undistributed Net Realized Gain on
Investment Securities and Foreign Currency Transactions 231,325,695
Net Appreciation of Investment Securities and
Foreign Currency Transactions 1,100,402,194
================================================================================
NET ASSETS AT VALUE, Applicable to Shares Outstanding $ 3,033,537,743
================================================================================
NET ASSETS AT VALUE:
Class I $ 951,925,040
================================================================================
Class II $ 2,081,612,703
================================================================================
Shares Outstanding
Class I 16,292,818
Class II 35,787,213
NET ASSET VALUE, Offering and Redemption Price per Share
Class I $ 58.43
Class II $ 58.17
================================================================================
(a) Investment securities at cost and value at October 31, 1999 includes a
repurchase agreement of $20,362,000.
(b) The Fund has two billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million have been allocated to each
individual class.
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
INVESCO SECTOR FUNDS, INC.
YEAR ENDED OCTOBER 31, 1999
FINANCIAL
ENERGY SERVICES
FUND FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 2,395,544 $ 16,987,514
Interest 276,249 3,376,617
Foreign Taxes Withheld (13,193) (221,224)
================================================================================
TOTAL INCOME 2,658,600 20,142,907
================================================================================
EXPENSES
Investment Advisory Fees 1,236,589 8,448,427
Distribution Expenses 425,204 3,362,922
Transfer Agent Fees 773,666 3,485,376
Administrative Fees 64,206 383,458
Custodian Fees and Expenses 27,483 219,546
Directors' Fees and Expenses 16,372 69,446
Interest Expense 14,939 20,027
Professional Fees and Expenses 17,534 52,036
Registration Fees and Expenses 37,767 169,936
Reports to Shareholders 156,122 698,482
Other Expenses 5,656 47,775
================================================================================
TOTAL EXPENSES 2,775,538 16,957,431
Fees and Expenses Paid Indirectly (33,949) (228,582)
================================================================================
NET EXPENSES 2,741,589 16,728,849
================================================================================
NET INVESTMENT INCOME (LOSS) (82,989) 3,414,058
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 6,819,439 110,696,938
Foreign Currency Transactions (15,203) (3,992,343)
================================================================================
Total Net Realized Gain 6,804,236 106,704,595
================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 18,193,660 66,360,947
Foreign Currency Transactions 0 (3,286,753)
================================================================================
Total Net Appreciation 18,193,660 63,074,194
================================================================================
NET GAIN ON INVESTMENT SECURITIES
AND FOREIGN CURRENCY TRANSACTIONS 24,997,896 169,778,789
================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 24,914,907 $ 173,192,847
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
INVESCO SECTOR FUNDS, INC.
YEAR ENDED OCTOBER 31, 1999
HEALTH
GOLD SCIENCES
FUND FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 361,271 $ 12,902,180
Interest 213,834 7,299,828
Foreign Taxes Withheld (36,714) (249,185)
================================================================================
TOTAL INCOME 538,391 19,952,823
================================================================================
EXPENSES
Investment Advisory Fees 767,252 9,661,782
Distribution Expenses 269,862 3,914,446
Transfer Agent Fees 840,794 3,728,045
Administrative Fees 39,652 465,978
Custodian Fees and Expenses 48,675 209,313
Directors' Fees and Expenses 13,994 71,913
Interest Expense 31,584 12,030
Professional Fees and Expenses 18,231 63,253
Registration Fees and Expenses 41,086 129,416
Reports to Shareholders 172,286 808,800
Other Expenses 9,306 46,368
================================================================================
TOTAL EXPENSES 2,252,722 19,111,344
Fees and Expenses Paid Indirectly (75,289) (206,287)
================================================================================
NET EXPENSES 2,177,433 18,905,057
================================================================================
NET INVESTMENT INCOME (LOSS) (1,639,042) 1,047,766
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities (30,067,989) 161,920,608
Foreign Currency Transactions (1,952,631) (6,379,464)
================================================================================
Total Net Realized Gain (Loss) (32,020,620) 155,541,144
================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 23,489,415 (56,836,634)
Foreign Currency Transactions 4,620,706 6,369,060
================================================================================
Total Net Appreciation (Depreciation) 28,110,121 (50,467,574)
================================================================================
NET GAIN (LOSS) ON INVESTMENT SECURITIES
AND FOREIGN CURRENCY TRANSACTIONS (3,910,499) 105,073,570
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS $ (5,549,541) $ 106,121,336
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
INVESCO SECTOR FUNDS, INC.
YEAR ENDED OCTOBER 31, 1999
LEISURE UTILITIES
FUND FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 1,773,834 $ 3,937,315
Interest 791,997 590,694
Foreign Taxes Withheld (40,664) (18,131)
================================================================================
TOTAL INCOME 2,525,167 4,509,878
================================================================================
EXPENSES
Investment Advisory Fees 2,538,217 1,487,535
Distribution Expenses 853,746 495,845
Transfer Agent Fees 958,999 544,152
Administrative Fees 117,284 69,173
Custodian Fees and Expenses 94,630 29,032
Directors' Fees and Expenses 20,276 16,183
Professional Fees and Expenses 24,394 19,229
Registration Fees and Expenses 47,447 43,976
Reports to Shareholders 243,782 132,633
Other Expenses 9,693 6,714
================================================================================
TOTAL EXPENSES 4,908,468 2,844,472
Fees and Expenses Absorbed by Investment Adviser 0 (346,779)
Fees and Expenses Paid Indirectly (63,162) (18,980)
================================================================================
NET EXPENSES 4,845,306 2,478,713
================================================================================
NET INVESTMENT INCOME (LOSS) (2,320,139) 2,031,165
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 36,753,141 13,701,403
Foreign Currency Transactions (125,352) (102,652)
================================================================================
Total Net Realized Gain 36,627,789 13,598,751
================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 124,880,602 24,409,177
Foreign Currency Transactions (2,284,298) (397,742)
================================================================================
Total Net Appreciation 122,596,304 24,011,435
================================================================================
NET GAIN ON INVESTMENT SECURITIES
AND FOREIGN CURRENCY TRANSACTIONS 159,224,093 37,610,186
================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 156,903,954 $ 39,641,351
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
INVESCO SECTOR FUNDS, INC.
YEAR ENDED OCTOBER 31, 1999 (NOTE 1)
TECHNOLOGY
FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 1,618,524
Interest 5,299,607
Foreign Taxes Withheld (84,619)
================================================================================
TOTAL INCOME 6,833,512
================================================================================
EXPENSES
Investment Advisory Fees 10,576,104
Distribution Expenses - Class II 3,489,968
Transfer Agent Fees 3,515,997
Administrative Fees 579,399
Custodian Fees and Expenses 191,395
Directors' Fees and Expenses 68,870
Professional Fees and Expenses 57,533
Registration Fees and Expenses
Class I 35,071
Class II 101,032
Reports to Shareholders 690,583
Other Expenses 45,143
================================================================================
TOTAL EXPENSES 19,351,095
Fees and Expenses Paid Indirectly (130,878)
================================================================================
NET EXPENSES 19,220,217
================================================================================
NET INVESTMENT LOSS (12,386,705)
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain on:
Investment Securities 341,709,239
Foreign Currency Transactions 43,030
================================================================================
Total Net Realized Gain 341,752,269
================================================================================
Change in Net Appreciation of:
Investment Securities 928,039,143
Foreign Currency Transactions 2,433,196
================================================================================
Total Net Appreciation 930,472,339
================================================================================
NET GAIN ON INVESTMENT SECURITIES
AND FOREIGN CURRENCY TRANSACTION 1,272,224,608
================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,259,837,903
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
ENERGY FUND
YEAR ENDED OCTOBER 31
- --------------------------------------------------------------------------------
1999 1998
OPERATIONS
Net Investment Income (Loss) $ (82,989) $ 16,233
Net Realized Gain (Loss) on Investment
Securities and Foreign Currency
Transactions 6,804,236 (35,129,895)
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 18,193,660 (40,132,785)
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS 24,914,907 (75,246,447)
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (167,166)
In Excess of Net Investment Income (115,167) (2,454)
Net Realized Gain on Investment Securities and
Foreign Currency Transactions 0 (4,468,073)
In Excess of Net Realized Gain on Investment
Securities and Foreign Currency Transactions 0 (35,552,458)
================================================================================
TOTAL DISTRIBUTIONS (115,167) (40,190,151)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 943,138,107 591,680,044
Reinvestment of Distributions 108,078 37,731,064
================================================================================
943,246,185 629,411,108
Amounts Paid for Repurchases of Shares (909,365,271) (696,170,359)
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 33,880,914 (66,759,251)
================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS 58,680,654 (182,195,849)
NET ASSETS
Beginning of Period 137,455,395 319,651,244
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in
Excess of) Net Investment Loss
of ($14,351) and ($10,238),
respectively) $ 196,136,049 $ 137,455,395
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 74,761,155 44,134,902
Shares Issued from Reinvestment of
Distributions 10,747 2,803,292
================================================================================
74,771,902 46,938,194
Shares Repurchased (72,598,537) (51,273,648)
================================================================================
NET INCREASE (DECREASE) IN FUND SHARES 2,173,365 (4,335,454)
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FINANCIAL SERVICES FUND
YEAR ENDED OCTOBER 31
- --------------------------------------------------------------------------------
1999 1998
OPERATIONS
Net Investment Income $ 3,414,058 $ 12,285,909
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 106,704,595 108,562,536
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 63,074,194 (5,267,763)
================================================================================
NET INCREASE IN NET ASSETS
FROM OPERATIONS 173,192,847 115,580,682
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (3,356,533) (12,269,881)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (109,018,838) (148,103,393)
================================================================================
TOTAL DISTRIBUTIONS (112,375,371) (160,373,274)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 1,613,190,305 1,718,344,847
Reinvestment of Distributions 108,801,157 150,190,546
================================================================================
1,721,991,462 1,868,535,393
Amounts Paid for Repurchases of Shares (1,957,908,508) (1,519,342,944)
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (235,917,046) 349,192,449
================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS (175,099,570) 304,399,857
NET ASSETS
Beginning of Period 1,417,654,559 1,113,254,702
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in
Excess of) Net Investment Income
of $3,087 and ($21,917), respectively) $ 1,242,554,989 $ 1,417,654,559
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 55,199,855 57,179,200
Shares Issued from Reinvestment of Distributions 4,049,413 5,459,331
================================================================================
59,249,268 62,638,531
Shares Repurchased (67,294,030) (51,007,064)
================================================================================
NET INCREASE (DECREASE) IN FUND SHARES (8,044,762) 11,631,467
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
GOLD FUND
YEAR ENDED OCTOBER 31
- --------------------------------------------------------------------------------
1999 1998
OPERATIONS
Net Investment Loss $ (1,639,042) $ (1,116,660)
Net Realized Loss on Investment Securities
and Foreign Currency Transactions (32,020,620) (65,297,806)
Change in Net Appreciation of Investment
Securities and Foreign Currency Transactions 28,110,121 6,058,834
================================================================================
NET DECREASE IN NET ASSETS
FROM OPERATIONS (5,549,541) (60,355,632)
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
In Excess of Net Investment Income 0 (1,637,391)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 662,595,028 703,190,475
Reinvestment of Distributions 0 1,520,914
================================================================================
662,595,028 704,711,389
Amounts Paid for Repurchases of Shares (664,541,935) (686,554,223)
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (1,946,907) 18,157,166
================================================================================
TOTAL DECREASE IN NET ASSETS (7,496,448) (43,835,857)
NET ASSETS
Beginning of Period 107,249,386 151,085,243
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in
Excess of) Net Investment Loss
of ($754,980) and ($3,948,406),
respectively) $ 99,752,938 $ 107,249,386
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 348,656,765 319,522,708
Shares Issued from Reinvestment of Distributions 0 652,176
================================================================================
348,656,765 320,174,884
Shares Repurchased (350,729,790) (310,832,754)
================================================================================
NET INCREASE (DECREASE) IN FUND SHARES (2,073,025) 9,342,130
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
HEALTH SCIENCES FUND
YEAR ENDED OCTOBER 31
- --------------------------------------------------------------------------------
1999 1998
OPERATIONS
Net Investment Income $ 1,047,766 $ 2,746,844
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 155,541,144 196,825,886
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions (50,467,574) 68,341,567
================================================================================
NET INCREASE IN NET ASSETS
FROM OPERATIONS 106,121,336 267,914,297
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (985,748) (4,765,887)
In Excess of Net Investment Income (12,718) (53,859)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (198,906,192) (147,796,033)
In Excess of Net Realized Gain on Investment
Securities and Foreign Currency Transactions 0 0
================================================================================
TOTAL DISTRIBUTIONS (199,904,658) (152,615,779)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 1,811,722,158 1,309,995,468
Reinvestment of Distributions 190,797,614 142,313,946
================================================================================
2,002,519,772 1,452,309,414
Amounts Paid for Repurchases of Shares (1,662,903,600) (1,183,910,039)
================================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 339,616,172 268,399,375
================================================================================
TOTAL INCREASE IN NET ASSETS 245,832,850 383,697,893
NET ASSETS
Beginning of Period 1,328,195,755 944,497,862
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in Excess
of) Net Investment Income of
$2,830,922 and ($53,538), respectively) $ 1,574,028,605 $ 1,328,195,755
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 30,290,410 22,644,603
Shares Issued from Reinvestment of Distributions 3,296,314 2,979,770
================================================================================
33,586,724 25,624,373
Shares Repurchased (28,009,716) (20,669,473)
================================================================================
NET INCREASE IN FUND SHARES 5,577,008 4,954,900
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
LEISURE FUND
YEAR ENDED OCTOBER 31
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS
Net Investment Loss $ (2,320,139) $ (191,426)
Net Realized Gain on Investment
Securities, Foreign Currency
Transactions and Futures Contracts 36,627,789 15,595,389
Change in Net Appreciation of Investment
Securities and Foreign Currency Transactions 122,596,304 15,720,560
================================================================================
NET INCREASE IN NET ASSETS
FROM OPERATIONS 156,903,954 31,124,523
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
In Excess of Net Investment Income 0 (8,831)
Net Realized Gain on Investment Securities,
Foreign Currency Transactions and
Futures Contracts (15,505,553) (22,821,029)
================================================================================
TOTAL DISTRIBUTIONS (15,505,553) (22,829,860)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 398,970,871 217,846,689
Reinvestment of Distributions 15,149,269 21,894,580
================================================================================
414,120,140 239,741,269
Amounts Paid for Repurchases of Shares (340,851,793) (235,970,629)
================================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 73,268,347 3,770,640
================================================================================
TOTAL INCREASE IN NET ASSETS 214,666,748 12,065,303
NET ASSETS
Beginning of Period 228,681,067 216,615,764
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in Excess
of) Net Investment Loss of ($40,573)
and ($18,027), respectively) $ 443,347,815 $ 228,681,067
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 10,888,255 7,793,967
Shares Issued from Reinvestment of
Distributions 532,486 899,529
================================================================================
11,420,741 8,693,496
Shares Repurchased (9,350,638) (8,465,353)
================================================================================
NET INCREASE IN FUND SHARES 2,070,103 228,143
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
UTILITIES FUND
YEAR ENDED OCTOBER 31
- --------------------------------------------------------------------------------
1999 1998
OPERATIONS
Net Investment Income $ 2,031,165 $ 3,225,819
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 13,598,751 2,637,629
Change in Net Appreciation of Investment
Securities and Foreign Currency Transactions 24,011,435 30,143,538
================================================================================
NET INCREASE IN NET ASSETS
FROM OPERATIONS 39,641,351 36,006,986
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (2,503,335) (3,220,692)
Net Realized Gain on Investment Securities and
Foreign Currency Transactions (2,496,522) (3,970,217)
================================================================================
TOTAL DISTRIBUTIONS (4,999,857) (7,190,909)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 245,057,189 446,364,689
Reinvestment of Distributions 4,762,842 6,686,820
================================================================================
249,820,031 453,051,509
Amounts Paid for Repurchases of Shares (238,436,543) (436,981,400)
================================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 11,383,488 16,070,109
================================================================================
TOTAL INCREASE IN NET ASSETS 46,024,982 44,886,186
NET ASSETS
Beginning of Period 177,309,335 132,423,149
================================================================================
End of Period (Including Accumulated Undistributed
Net Investment Income (Loss) of ($12,297) and
$482,480, respectively) $ 223,334,317 $ 177,309,335
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 14,379,908 32,309,451
Shares Issued from Reinvestment of Distributions 297,014 489,728
================================================================================
14,676,922 32,799,179
Shares Repurchased (14,079,699) (31,429,955)
================================================================================
NET INCREASE IN FUND SHARES 597,223 1,369,224
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
TECHNOLOGY FUND
YEAR ENDED OCTOBER 31
- --------------------------------------------------------------------------------
1999 1998
(Note 1)
OPERATIONS
Net Investment Loss $ (12,386,705) $ (5,170,961)
Net Realized Gain (Loss) on Investment
Securities and Foreign Currency
Transactions 341,752,269 (96,330,143)
Change in Net Appreciation of Investment
Securities and Foreign Currency Transactions 930,472,339 75,738,741
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS 1,259,837,903 (25,762,363)
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
In Excess of Net Investment Income - Class II 0 (32,284)
Net Realized Gain on Investment Securities and Foreign
Currency Transactions - Class II 0 (94,248,558)
In Excess of Net Realized Gain on Investment Securities and
Foreign Currency Transactions - Class II 0 (98,305,920)
================================================================================
TOTAL DISTRIBUTIONS 0 (192,586,762)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares
Class I 835,394,390 0
Class II 2,550,589,823 1,501,056,910
Reinvestment of Distributions - Class II 0 181,493,943
================================================================================
3,385,984,213 1,682,550,853
================================================================================
Amounts Paid for Repurchases of Shares
Class I (128,663,679) 0
Class II (2,492,391,489) (1,495,399,337)
================================================================================
(2,621,055,168) (1,495,399,337)
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 764,929,045 187,151,516
================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,024,766,948 (31,197,609)
NET ASSETS
Beginning of Period 1,008,770,795 1,039,968,404
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in Excess
of) Net Investment Loss of ($64,798)
and ($43,470), respectively) $ 3,033,537,743 $ 1,008,770,795
================================================================================
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
TECHNOLOGY FUND (CONTINUED)
YEAR ENDED OCTOBER 31
- --------------------------------------------------------------------------------
1999 1998
(Note 1)
FUND SHARE TRANSACTIONS
Shares Sold
Class I 19,201,080 0
Class II 61,886,040 51,002,134
Shares Issued from Reinvestment of
Distributions - Class II 0 7,022,355
================================================================================
81,087,120 58,024,489
================================================================================
Shares Repurchased
Class I (2,908,262) 0
Class II (62,037,041) (50,998,957)
================================================================================
(64,945,303) (50,998,957)
================================================================================
NET INCREASE IN FUND SHARES 16,141,817 7,025,532
================================================================================
See Notes to Financial Statements
<PAGE>
INVESCO Notes to financial statements -- INVESCO SECTOR FUNDS, INC.
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Sector
Funds, Inc. (formerly known as INVESCO Strategic Funds, Inc. which were formerly
known as INVESCO Strategic Portfolios, Inc.) is incorporated in Maryland and
presently consists of seven separate Funds: Energy Fund, Financial Services
Fund, Gold Fund, Health Sciences Fund, Leisure Fund, Technology Fund and
Utilities Fund (individually the "Fund" and collectively, the "Funds"). On
December 29, 1998, the board of directors of the Fund approved a name change to
INVESCO Sector Funds, Inc. On February 3, 1999, the board of directors of the
Fund approved the liquidation of Environmental Services Fund and effective May
21, 1999, Environmental Services Fund liquidated its assets and closed the Fund.
The investment objectives of the Funds are to seek capital appreciation through
investments in specific business sectors. Additionally, Utilities Fund 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 Funds year-end will
change from October 31 to March 31.
Effective December 22, 1998, Technology Fund offers two classes of shares,
referred to as Class I shares and Class II shares. Class I shares are not
subject to any distribution fees, while Class II shares are subject to an annual
distribution fee to a maximum of 0.25% of the Fund's annual average net assets
attributable to Class II shares. Income, expenses (other than those attributable
to a specific class) and gains and losses are allocated daily to each class of
shares based on the relative proportion of net assets represented by such class.
Operating expenses directly attributable to a specific class are charged against
operations of that class.
On May 20, 1999, shareholders of INVESCO Specialty Funds, Inc. - Realty Fund,
and on May 28, 1999, shareholders of INVESCO Specialty Funds, Inc. -
Telecommunications Fund approved an Agreement and Plan of Reorganization and
Termination providing for the conversion of each Fund from a separate series of
INVESCO Specialty Funds, Inc. to a separate series of INVESCO Sector Funds, Inc.
effective March 20, 2000.
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
at the close of the regular trading day on that exchange (generally, 4:00 p.m.
New York time) in the market where such securities are primarily traded. If last
sales prices are not available, securities are valued at the highest closing bid
prices at the close of the regular trading day (generally, 4:00 p.m. New York
time) and 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.
<PAGE>
If market quotations or pricing service valuations are not readily available,
securities are valued at fair value as determined in good faith under procedures
established 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 currencies 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.
B. REPURCHASE AGREEMENTS -- Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Fund's custodian. The collateral is evaluated daily to ensure
its market value exceeds the current market value of the repurchase agreements
including accrued interest. In the event of default on the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the other party to the agreement, realization and/or retention of
the collateral or proceeds may be subject to legal proceedings.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security transactions
are accounted for on the trade date and dividend income is recorded on the ex
dividend date. 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. Income and expenses on foreign
securities are translated into U.S dollars at rates of exchange prevailing when
accrued. 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. The cost of foreign securities
is translated into U.S. dollars at the rates of exchange prevailing when such
securities are acquired.
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 short-term 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 short-term 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.
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 Fund to sell a security at a fair price and may substantially delay the
sale of the security which each Fund seeks to sell. In addition, these
securities may exhibit greater price volatility than securities for which
secondary markets exist.
D. FEDERAL AND STATE TAXES -- The Fund has complied, 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, 1999, Energy Fund had $26,077,440 in net capital loss carryovers
which expire in the year 2006, Gold Fund had $1,051,643, $66,206,106,
$64,536,948 and $31,262,921 in net capital loss carryovers which expire in the
years 2003, 2005, 2006 and 2007, respectively. Net capital loss carryovers
utilized in 1999 by Energy and Technology Funds amounted to $6,034,682 and
$95,219,756, respectively.
<PAGE>
To the extent future capital gains and income are offset by capital loss
carryovers and deferred post-October 31 losses, such gains will not be
distributed to shareholders. Dividends paid by the Fund from 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, 1999,
amounts qualifying for the dividends received deduction available to the Fund's
corporate shareholders were as follows:
QUALIFYING
FUND PERCENTAGE
- --------------------------------------------------------------------------------
Energy Fund 0.00%
Financial Services Fund 99.98%
Gold Fund 0.00%
Health Sciences Fund 12.39%
Leisure Fund 0.00%
Utilities Fund 100.00%
Technology Fund 0.00%
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.
E. 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, 1999, the effects of such differences were as
follows:
ACCUMULATED
ACCUMULATED UNDISTRIBUTED
UNDISTRIBUTED NET REALIZED
NET GAIN ON
INVESTMENT INVESTMENT PAID-IN
FUND INCOME SECURITIES CAPITAL
- --------------------------------------------------------------------------------
Energy Fund $ 194,043 $ 116 $ (194,159)
Financial Services Fund (32,521) 32,521 0
Gold Fund 4,832,468 (1,284,264) (3,548,204)
Health Sciences Fund 2,835,160 (2,835,160) 0
Leisure Fund 2,297,593 (2,297,593) 0
Utilities Fund (22,607) 45,365 (22,758)
Technology Fund 12,365,377 (12,362,567) (2,810)
Net investment income (loss), net realized gains, paid-in capital and net assets
were not affected.
F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund enters into short-term 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. Any realized
gain or loss incurred by the Fund upon the sale of securities is included in the
Statement of Operations.
G. EXPENSES -- Each Fund or Class bears expenses incurred specifically on its
behalf and, in addition, each Fund or Class bears a portion of general expenses,
based on the relative net assets of each Fund or Class.
<PAGE>
Under an agreement between each Fund 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, Custodian Fees and Expenses for
Energy, Financial Services, Gold and Health Sciences Funds and Distribution Fees
for Energy and Gold Funds and Transfer Agent Fees for Gold Fund are reduced by
credits earned by each Fund 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, 1999, Fees and Expenses Paid Indirectly consisted
of the following:
CUSTODIAN FEES DISTRIBUTION TRANSFER
FUND AND EXPENSES FEES AGENT FEES
- --------------------------------------------------------------------------------
Energy Fund $ 20,941 $ 13,008 $ 0
Financial Services Fund 228,582 0 0
Gold Fund 33,041 14,111 28,137
Health Sciences Fund 206,287 0 0
Leisure Fund 63,162 0 0
Utilities Fund 18,980 0 0
Technology Fund 130,878 0 0
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Funds' investment adviser. As compensation for its
services to the Funds, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee for each Fund 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. Effective May 13, 1999, the
following breakpoints became contractual: 0.45% on average net assets in excess
of $2 billion, 0.40% on average net assets in excess of $4 billion, 0.375% on
average net assets in excess of $6 billion and 0.35% on average net assets in
excess of $8 billion.
A plan of distribution pursuant to Rule 12b-1 of the Act (the "Plan") provides
for compensation of marketing and advertising expenditures to INVESCO
Distributors, Inc. ("IDI" or the "Distributor"), a wholly owned subsidiary of
IFG, to a maximum of 0.25% of annual average net assets. For the year ended
October 31, 1999, Energy, Financial Services, Gold, Health Sciences, Leisure,
Utilities and Technology - Class II Funds paid the Distributor $395,044,
$3,408,103, $257,275, $3,852,126, $808,112, $489,536, and $3,286,919,
respectively, under the plan of distribution.
IFG receives a transfer agent fee from each Fund 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.
In accordance with an Administrative Services Agreement, each Fund paid 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. Effective May 13, 1999,
each Fund pays IFG an annual fee of $10,000, plus an additional amount computed
at an annual rate of 0.045% of average net assets.
IFG has voluntarily agreed, to absorb certain fees and expenses incurred by
Utilities Fund.
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended
October 31, 1999, 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>
FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Energy Fund $ 482,463,449 $ 442,213,930
Financial Services Fund 1,044,294,645 1,418,256,170
Gold Fund 138,880,914 143,254,139
Health Sciences Fund 1,819,058,099 1,789,219,171
Leisure Fund 169,452,143 113,489,077
Utilities Fund 59,333,873 64,528,235
Technology Fund 2,890,429,441 2,372,276,289
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At October 31, 1999, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation (depreciation) by Fund were as
follows:
NET
GROSS GROSS APPRECIATION
FUND APPRECIATION DEPRECIATION (DEPRECIATION)
- --------------------------------------------------------------------------------
Energy Fund $ 21,267,798 $ 4,982,343 $ 16,285,455
Financial Services Fund 252,821,292 9,421,359 243,399,933
Gold Fund 13,963,601 47,389,723 (33,426,122)
Health Sciences Fund 254,796,646 17,252,049 237,544,597
Leisure Fund 196,004,528 9,588,641 186,415,887
Utilities Fund 73,395,297 2,282,765 71,112,532
Technology Fund 1,110,872,132 20,151,912 1,090,720,220
NOTE 5 -- TRANSACTIONS WITH AFFILIATES AND AFFILIATED COMPANIES. Certain of the
Fund's officers and directors are also officers and directors of IFG or IDI.
Each Fund has adopted an unfunded defined benefit 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 50% of the sum of the
retainer fee at the time of retirement plus the meeting attendance fees.
Pension expenses for the year ended October 31, 1999, 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
FUND EXPENSES PENSION COSTS LIABILITY
- --------------------------------------------------------------------------------
Energy Fund $ 4,561 $ 4,721 $ 19,083
Financial Services Fund 29,031 33,491 95,832
Gold Fund 3,417 15,912 37,474
Health Sciences Fund 27,782 47,014 125,656
Leisure Fund 4,818 14,635 36,661
Utilities Fund 3,597 8,420 20,739
Technology Fund 23,418 30,327 95,199
The independent directors have contributed to a deferred fee agreement plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of selected INVESCO
Funds. The deferred amounts may be invested in the shares of any of the INVESCO
Funds, excluding the INVESCO Variable Investment Funds.
An affiliated company represents ownership by a Fund of at least 5% of the
voting securities of the issuer during the period, as defined in the Act. A
summary of the transactions during the year ended October 31, 1999, in which the
issuer was an affiliate of the Fund, is as follows:
<PAGE>
<TABLE>
<CAPTION>
REALIZED
PURCHASES SALES GAIN (LOSS)
----------------------------------------- ON INVESTMENTS VALUE AT
AFFILIATE SHARES COST SHARES COST SECURITIES 10/31/99
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GOLD FUND
Crown Resources -- -- 205,000 $ 1,357,563 $(1,048,978) $ 2,658,438
Guyanor Ressources
SA Class B Shrs -- -- -- -- -- 489,496
Pacific Rim Mining 41,500 $ 44,405 -- -- -- 1,031,510
Star Resources 208,500 29,183 -- -- -- 754,188
HEALTH SCIENCES FUND
Clarus Medical Systems
Series I, Pfd -- -- -- -- -- 1
Series II, Pfd -- -- -- -- -- 33,357
Warrants (Exp 2000) -- -- -- -- -- 0
Ecogen Technologies I -- -- -- -- -- 1
Janus Biomedical
Series A, Conv Pfd -- -- -- -- -- 1
Physicians Online
Bridge Notes, 11.000%
10/31/2000 -- -- -- -- -- 292,070
Bridge Notes II
11.000%
2/28/2000 256,977 256,977 -- -- -- 256,977
Series A, Conv Pfd -- -- -- -- -- 3,667,703
Resmed Inc -- -- 890,000 6,420,000 17,009,828 0
Schering-Plough Corp 1,722,665 55,838,808 738,200 35,973,904 (2,534,831) 79,762,568
</TABLE>
Dividend income in the amount of $634,910 was received from Schering-Plough Corp
and interest income in the amount of $32,574 and $8,480 was received from
Physicians Online, Bridge Notes, 11.000%, 10/31/2000 and Physicians Online,
Bridge Notes II, 11.000%, 2/28/2000, respectively, during the fiscal year ended
October 31, 1999. No dividend or interest income was received from any other
affiliated companies.
NOTE 6 -- LINE OF CREDIT. Each 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
Fund. Each Fund 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, 1999, there were no such borrowings.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
INVESCO Sector Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO Energy Fund, INVESCO
Financial Services Fund, INVESCO Gold Fund, INVESCO Health Sciences Fund,
INVESCO Leisure Fund, INVESCO Technology Fund and INVESCO Utilities Fund
(constituting INVESCO Sector Funds, Inc., formerly known as INVESCO Strategic
Funds, Inc., hereafter referred to as the "Fund") at October 31, 1999, 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 periods indicated, 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, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
December 1, 1999
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ENERGY FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER 31
- ----------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $11.30 $19.38 $15.03 $10.09 $10.77
==============================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)(a) 0.00 0.00 0.06 0.04 0.09
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 2.39 (5.04) 5.56 4.94 (0.68)
==============================================================================================
TOTAL FROM INVESTMENT OPERATIONS 2.39 (5.04) 5.62 4.98 (0.59)
==============================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income(b) 0.01 0.01 0.05 0.04 0.09
Distributions from Capital Gains 0.00 0.34 1.22 0.00 0.00
In Excess of Capital Gains 0.00 2.69 0.00 0.00 0.00
==============================================================================================
TOTAL DISTRIBUTIONS 0.01 3.04 1.27 0.04 0.09
==============================================================================================
Net Asset Value-- End of Period $13.68 $11.30 $19.38 $15.03 $10.09
==============================================================================================
TOTAL RETURN 21.19% (28.51%) 40.65% 49.33% (5.45%)
RATIOS
Net Assets--End of Period
($000 Omitted) $196,136 $137,455 $319,651 $236,169 $48,284
Ratio of Expenses to Average Net
Assets(c) 1.68% 1.58% 1.21% 1.30% 1.53%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.05%) 0.01% 0.39% 0.54% 0.72%
Portfolio Turnover Rate 279% 192% 249% 392% 300%
</TABLE>
(a) Net Investment Income (Loss) aggregated less than $0.01 on a per share basis
for the years ended October 31, 1999 and 1998.
(b) Distributions in excess of net investment income for the years ended October
31, 1999, 1998 and 1996, aggregated less than $0.01 on a per share basis.
(c) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FINANCIAL SERVICES FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER 31
- -----------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $28.45 $29.14 $22.94 $18.95 $15.31
=====================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.08 0.25 0.28 0.50 0.29
Net Gains on Securities
(Both Realized and Unrealized) 3.52 3.01 8.14 5.18 3.64
=====================================================================================================
TOTAL FROM INVESTMENT OPERATIONS 3.60 3.26 8.42 5.68 3.93
=====================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.08 0.25 0.28 0.50 0.29
In Excess of Net Investment Income 0.00 0.00 0.00 0.05 0.00
Distributions from Capital Gains 2.24 3.70 1.94 1.14 0.00
=====================================================================================================
TOTAL DISTRIBUTIONS 2.32 3.95 2.22 1.69 0.29
=====================================================================================================
Net Asset Value-- End of Period $29.73 $28.45 $29.14 $22.94 $18.95
=====================================================================================================
TOTAL RETURN 13.52% 11.76% 39.80% 31.48% 25.80%
RATIOS
Net Assets-- End of Period
($000 Omitted) $ 1,242,555 $ 1,417,655 $ 1,113,255 $ 542,688 $ 410,048
Ratio of Expenses to Average Net
Assets(a) 1.26% 1.05% 0.99% 1.11% 1.26%
Ratio of Net Investment Income
to Average Net Assets 0.25% 0.85% 1.19% 2.48% 2.10%
Portfolio Turnover Rate 83% 52% 96% 141% 171%
</TABLE>
(a) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOLD FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER 31
- --------------------------------------------------------------------------------------------------
1999(a) 1998 1997(a) 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 1.90 $ 3.21 $ 8.00 $ 5.21 $ 5.68
==================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.03) 0.01 (0.02) (0.01) 0.01
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (0.04) (1.29) (2.62) 2.80 (0.47)
==================================================================================================
TOTAL FROM INVESTMENT OPERATIONS (0.07) (1.28) (2.64) 2.79 (0.46)
==================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.00 0.00 0.00 0.01
In Excess of Net Investment Income 0.00 0.03 2.15 0.00 0.00
==================================================================================================
TOTAL DISTRIBUTIONS 0.00 0.03 2.15 0.00 0.01
==================================================================================================
Net Asset Value--End of Period $1.83 $1.90 $3.21 $8.00 $ 5.21
==================================================================================================
TOTAL RETURN (3.68%) (39.98%) (44.38%) 53.55% (8.12%)
RATIOS
Net Assets-- End of Period
($000 Omitted) $ 99,753 $ 107,249 $ 151,085 $277,892 $ 151,779
Ratio of Expenses to Average Net Assets(b) 2.20% 1.90% 1.47% 1.22% 1.32%
Ratio of Net Investment Income (Loss)
to Average Net Assets (1.60%) (0.93%) (0.41%) (0.08%) 0.13%
Portfolio Turnover Rate 141% 133% 148% 155% 72%
</TABLE>
(a) The per share information was computed based on average shares.
(b) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
HEALTH SCIENCES FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER 31
- ---------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 62.12 $ 57.50 $ 55.24 $ 50.47 $ 35.09
=========================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.14 0.13 0.06 0.07 (0.03)
Net Gains on Securities
(Both Realized and Unrealized) 5.02 13.55 10.85 8.78 15.41
=========================================================================================================
TOTAL FROM INVESTMENT OPERATIONS 5.16 13.68 10.91 8.85 15.38
=========================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income(a) 0.04 0.25 0.06 0.07 0.00
Distributions from Capital Gains 8.85 8.81 8.59 4.01 0.00
=========================================================================================================
TOTAL DISTRIBUTIONS 8.89 9.06 8.65 4.08 0.00
=========================================================================================================
Net Asset Value-- End of Period $58.39 $62.12 $57.50 $55.24 $50.47
=========================================================================================================
TOTAL RETURN 8.44% 28.58% 22.96% 17.99% 43.83%
RATIOS
Net Assets-- End of Period
($000 Omitted) $ 1,574,020 $ 1,328,196 $ 944,498 $ 933,828 $ 860,926
Ratio of Expenses to Average Net Assets(b) 1.22% 1.12% 1.08% 0.98% 1.15%
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.07% 0.25% 0.11% 0.11% (0.08%)
Portfolio Turnover Rate 127% 92% 143% 90% 107%
</TABLE>
(a) Distributions in excess of net investment income for the years ended October
31, 1999 and 1998, aggregated less than $0.01 on a per share basis.
(b) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LEISURE FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER 31
- ----------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
PER SHARE DATA
<S> <C> <C> <C> <C> <C>
Net Asset Value-- Beginning of Period $ 27.92 $ 27.21 $ 22.89 $ 23.78 $ 22.63
====================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)(a) 0.00 0.00 0.02 0.04 0.08
Net Gains on Securities
(Both Realized and Unrealized) 17.20 3.69 4.96 2.25 2.06
====================================================================================================
TOTAL FROM INVESTMENT OPERATIONS 17.20 3.69 4.98 2.29 2.14
====================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income(b) 0.00 0.00 0.02 0.04 0.08
Distributions from Capital Gains 1.91 2.98 0.64 2.25 0.91
In Excess of Capital Gains 0.00 0.00 0.00 0.89 0.00
====================================================================================================
TOTAL DISTRIBUTIONS 1.91 2.98 0.66 3.18 0.99
====================================================================================================
Net Asset Value-- End of Period $43.21 $27.92 $27.21 $22.89 $23.78
====================================================================================================
TOTAL RETURN 65.13% 15.16% 22.32% 10.66% 9.98%
RATIOS
Net Assets-- End of Period
($000 Omitted) $ 443,348 $ 228,681 $ 216,616 $ 252,297 $265,181
Ratio of Expenses to Average Net Assets(c) 1.44% 1.41% 1.41% 1.30% 1.29%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.68%) (0.09%) 0.05% 0.18% 0.31%
Portfolio Turnover Rate 35% 31% 25% 56% 119%
</TABLE>
(a) Net Investment Income aggregated less than $0.01 on a per share basis for
the years ended October 31, 1999 and 1998.
(b) Distributions in excess of net investment income for the years ended October
31, 1998, 1997, 1996 and 1995, aggregated less than $0.01 on a per share
basis.
(c) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
UTILITIES FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER 31
- -----------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 14.73 $ 12.42 $ 12.04 $ 10.61 $ 9.76
=====================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.17 0.30 0.32 0.37 0.44
Net Gains on Securities
(Both Realized and Unrealized) 3.20 2.56 1.25 1.43 0.84
=====================================================================================================
TOTAL FROM INVESTMENT OPERATIONS 3.37 2.86 1.57 1.80 1.28
=====================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income(a) 0.21 0.26 0.32 0.37 0.43
Distributions from Capital Gains 0.21 0.29 0.87 0.00 0.00
=====================================================================================================
TOTAL DISTRIBUTIONS 0.42 0.55 1.19 0.37 0.43
=====================================================================================================
Net Asset Value-- End of Period $17.68 $14.73 $12.42 $12.04 $ 10.61
=====================================================================================================
TOTAL RETURN 23.22% 23.44% 14.37% 17.18% 13.48%
RATIOS
Net Assets-- End of Period
($000 Omitted) $ 223,334 $ 177,309 $ 132,423 $ 153,082 $ 134,468
Ratio of Expenses to Average Net
Assets(b)(c) 1.26% 1.29% 1.22% 1.17% 1.18%
Ratio of Net Investment Income
to Average Net Assets(b) 1.02% 1.82% 2.74% 3.28% 4.47%
Portfolio Turnover Rate 32% 47% 55% 141% 185%
</TABLE>
(a) Distributions in excess of net investment income for the year ended October
31, 1996, aggregated less than $0.01 on a per share basis.
(b) Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended October 31, 1999, 1998, 1997, 1996 and 1995. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would
have been 1.43%, 1.36%, 1.27%, 1.25% and 1.30%, respectively, and ratio of
net investment income to average net assets would have been 0.85%, 1.75%,
2.69%, 3.20% and 4.34%, respectively.
(c) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
<PAGE>
FINANCIAL HIGHLIGHTS
TECHNOLOGY FUND -- CLASS I
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD
ENDED
OCTOBER 31
1999(a)(b)
- --------------------------------------------------------------------------------
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 33.85
================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (0.16)
Net Gains on Securities
(Both Realized and Unrealized) 24.74
================================================================================
TOTAL FROM INVESTMENT OPERATIONS 24.58
================================================================================
Net Asset Value-- End of Period $ 58.43
================================================================================
TOTAL RETURN 72.61%(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 951,925
Ratio of Expenses to Average Net Assets(c) 0.74%(e)
Ratio of Net Investment Loss to Average Net Assets (0.36%)(e)
Portfolio Turnover Rate 143%(f)
(a) From December 22, 1998, since inception of Class I, to October 31, 1999.
(b) The per share information was computed based on average shares.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(e) Annualized
(f) Portfolio Turnover is calculated at the Fund level, and therefore represents
a full year.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TECHNOLOGY FUND - CLASS II
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER 31
- -----------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 28.07 $ 35.97 $ 34.23 $ 34.33 $ 24.94
===========================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)(a) (0.07) 0.00 0.13 0.07 (0.02)
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 30.17 (1.45) 6.23 5.76 10.20
===========================================================================================================
TOTAL FROM INVESTMENT OPERATIONS 30.10 (1.45) 6.36 5.83 10.18
===========================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income(b) 0.00 0.00 0.13 0.07 0.00
Distributions from Capital Gains 0.00 3.16 4.49 5.86 0.79
In Excess of Capital Gains 0.00 3.29 0.00 0.00 0.00
Total Distributions 0.00 6.45 4.62 5.93 0.79
Net Asset Value-- End of Period $58.17 $28.07 $35.97 $34.23 $ 34.33
===========================================================================================================
TOTAL RETURN 107.23% (2.47%) 20.71% 19.98% 42.19%
RATIOS
Net Assets-- End of Period
($000 Omitted) $ 2,081,613 $ 1,008,771 $ 1,039,968 $ 789,611 $ 563,109
Ratio of Expenses to Average Net Assets(c) 1.20% 1.17% 1.05% 1.08% 1.12%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.79%) (0.49%) 0.41% 0.24% (0.06%)
Portfolio Turnover Rate 143% 178% 237% 168% 191%
</TABLE>
(a) Net Investment Income aggregated less than $0.01 on a per share basis for
the year ended October 31, 1998.
(b) Distributions in excess of net investment income for the years ended October
31, 1998 and 1996, aggregated less than $0.01 on a per share basis.
(c) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
INVESCO FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- --------------------------------------------------------------------------------
STOCK
Growth & Income 21 IVGIX Gro&Inc
Blue Chip Growth 10 FLRFX BlChpGro
Dynamics 20 FIDYX Dynm
Small Company Growth 60 FIEGX SmCoGth
INVESCO Endeavor 61 IVENX Endeavor
Value Equity 46 FSEQX ValEq
S&P 500 Index Fund-Class II 23 ISPIX SP500II
- --------------------------------------------------------------------------------
BOND
U.S. Government Securities 32 FBDGX USGvt
Select Income 30 FBDSX SelInc
High Yield 31 FHYPX HiYld
Tax-Free Bond 35 FTIFX TxFre
(formerly,Tax-Free Long-Term Bond)
- --------------------------------------------------------------------------------
COMBINATION STOCK & BOND
Equity Income 15 FIIIX EquityInc
(formerly Industrial Income)
Total Return 48 FSFLX TotRtn
Balanced 71 IMABX Bal
- --------------------------------------------------------------------------------
SECTOR
Energy 50 FSTEX Enrgy
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Realty 42 IVSRX Realty
Technology-Class II 55 FTCHX Tech
Telecommunications 39 ISWCX Telecomm
(formerly Worldwide Communications)
Utilities 58 FSTUX Util
- --------------------------------------------------------------------------------
INTERNATIONAL
International Blue Chip 09 IIBCX ItlBlChp
European 56 FEURX Europ
Latin American Growth 34 IVSLX LtnAmerGr
Pacific Basin 54 FPBSX PcBas
- --------------------------------------------------------------------------------
MONEY MARKET
U.S. Government Money 44 FUGXX InvGvtMF
Cash Reserves 25 FDSXX InvCshR
Tax-Free Money 40 FFRXX InvTaxFree
Money Market Reserve 96 IMRXX InvescoMMR
Tax-Exempt Reserve 95 ITTXX InvescoTTE
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>
YOU
SHOULD
KNOW
WHAT
INVESCO
KNOWS(TM)
[INVESCO ICON] INVESCO
We're easy to stay in touch with:
Investor Services: 1-800-525-8085
PAL(R), your Personal Account Line: 1-800-424-8085
On the World Wide Web: www.invesco.com
In Denver, visit one of our convenient Investor Centers:
Cherry Creek, 3003 East Third Avenue, Suite 1
Denver Tech Center, 7800 East Union Avenue, Lobby Level
INVESCO Distributors, Inc.,(SM) Distributor
Post Office Box 173706
Denver, CO 80217-3706
This information must be preceded or accompanied
by a current prospectus.
ASEC 9026 11/99
