ANNUAL REPORT
May 31, 1995
INVESCO
EMERGING
GROWTH
FUND
A Smart Choice
For Maximum
Growth Potential
INVESCO FUNDS
<PAGE>
Market Overview
Unemployment is up. The yield curve is flat. The dollar, housing starts,
and consumer confidence are all down. Gross Domestic Product expanded by just
2.7% during the first quarter 1995. And inflation has jumped well above 3% on an
annualized basis.
Taken altogether, this could be good news. These signs may indicate that
economic growth is approaching a sustainable, moderate level.
Analysts know that a rapidly growing economy puts stress on credit
availability. To meet increasing demand, companies may borrow to expand capacity
with new equipment and facilities. They add workers at a brisk rate, and those
workers are able to command higher wages in a "seller's market." Demand thus
outraces supply when it comes to the key resources of credit and employees.
Ultimately, something has to give -- and that something is interest rates. They
rise, and eventually the increased cost of borrowing slows down the entire
cycle.
Fearing the long-term corrosive effects of inflation, the Federal Reserve
Board actively sought to slow the U.S. economy in 1994. Over a period of 12
months beginning in February 1994, they doubled short-term interest rates.
For five quarters running, the GDP had racked up impressive gains,
including a solid +5.1% for the last quarter of 1994. Then, reacting to the
relentless pressure of high short-term interest rates, growth contracted to a
more moderate 2.7% for the first three months of 1995.
To many market watchers, "moderate" is synonymous with "sustainable."
Now that they've reined in the galloping expansion, the Fed will act to
keep it going at a sustainable trot. Their strategy is likely to include at
least one cut in the Fed Funds rate in the next several months. (This is the
rate charged on overnight loans between member banks.)
In our opinion, interest rates will probably drop further in 1995. That
will ease inflationary pressure somewhat, as well as have a positive impact on
the bond market. Short-term rates could drop to 5.5% or less, compared to a 6%
Fed Funds rate as of late June. The benchmark 30-year Treasury bond is now
yielding around 6.6%; we may expect to see that gradually decrease. Bond prices,
of course, have enjoyed growing strength since the fourth quarter of 1994.
Given the advances in equities during the first half of 1995, we're likely
to see a correction as the market "digests" its gains. We do not anticipate a
significant setback in prices over the third and fourth quarters, however. Some
industrial, construction, and consumer cyclical stocks have lagged the overall
market due to earlier fears about the economy; since the recent cut in interest
rates may herald an economic rebound, these stocks may well enjoy advances over
the next few months.
Emerging Growth Fund
Average Annualized Total Returns
as of 5/31/95
1 year 4.98%
Average annualized since inception (12/91) 14.31%
<PAGE>
Graph:
Emerging Growth Fund
Total Return Performance*
This line graph illustrates the value of a $10,000 investment in INVESCO
Emerging Growth Fund, plus dividends and capital gain distributions, since the
fund's inception (12/91) through 5/31/95.
The line graph represents the value of a $10,000 investment in INVESCO
Emerging Growth Fund, plus reinvested dividends and capital gain distributions,
since the fund's inception (12/91) through 5/31/95.
The chart and other total return figures cited reflect the fund's operating
expenses, but the indexes do not have expenses, which would have lowered their
performance.
Performance
For the fiscal year ended 5/31/95, the total return of Emerging Growth Fund
was 4.98%. In comparison, the Russell 2000 Index was up 10.21%, and the S&P 500
Index was up 20.12% in the same period. The three-year, average annualized total
return of Emerging Growth Fund was 16.61%, compared with the S&P 500 Index,
which had an average annual total return of 11.80% in the same period. (Of
course, past performance is no guarantee of future results.)*
Strategy Summary
While stock values in general increased during the year, the stocks of
large companies increased substantially more than the stocks of small companies,
such as those targeted by Emerging Growth Fund. In fact, the S&P 500, which
comprises the largest companies, was up 20.12% in the last 12 months, while the
Russell 2000 Index, which better reflects the performance of smaller-company
stocks, rose half as much.
The stronger performance of the S&P 500 Index reflects the fact that
investors flocked to the more predictable performance of larger companies. As a
result, younger firms in the small-cap category, as well as many growth stocks,
tended to lag behind as the market rose to record highs from December 1994 to
June 1995.
Our defensive strategy, exemplified by a relatively high cash component,
constrained fund performance during the year. At 5/31/94, short-term investments
equaled 27.03% of holdings; six months later, that figure was still above 10%.
This cash allocation helped to keep losses to a minimum, but obviously also
limited opportunity for capital appreciation.
<PAGE>
Sector Analysis
In an effort to guard against possible downturns in specific sectors, we
concentrated on fewer stocks overall, and diversified by industry more broadly
than in the past. To preserve liquidity, we avoided shares in thinly traded
companies. In summary, computer software and health care stocks were two of the
better performers, while retail and basic materials were disappointing.
Technology. As of fiscal year-end 5/31/95, technology-related stocks
represented 31.09% of the portfolio, up from 18.91%, six months before. Results
for the sector were mixed. Gains came from computer software companies, such as
Progress Software and Hyperion Software, as well as electronics concerns,
including Three-Five Systems and S3 Inc. A maker of control instruments, Elsag
Bailey Process Automation NV ADR, was up as well. ParcPlace Systems (computer
software) and Chipcom Corp. (computer systems) finished the year with a
disappointing performance.
Graph:
Fund Diversification by Value
This bar graph reflects the allocation of the Emerging Growth Fund's
portfolio by value of net assets in Basic Materials, Capital Goods &
Construction, Consumer Cyclical, Consumer Staples, Energy, Finance, Technology,
Transportation & Services, Utilities, and Cash & Equivalents for the periods
ended 5/94, 11/94, and 5/95.
Recent additions to technology holdings include Sierra On-Line, a computer
game company that we expect to grow as advanced game machines come on the market
in the fall. To take advantage of a strong semiconductor industry, we have
selected certain industry suppliers, such as Watkins-Johnson Co., Brooks
Automation, Semitool
Inc. and Credence Systems.
Health care. Avoiding a lackluster HMO industry, the fund found rewarding
opportunities in service providers such as Abbey Healthcare Group, HomedCo, and
Living Centers of America. We have since taken profits in some of these stocks.
Looking ahead, we plan to increase the exposure to selected health care stocks.
Retail. Despite the strong economy, retail stocks lagged during the last six
months. Investments in MacFrugals Bargains Closeouts, Broadway Stores,
Catherines Stores, Starbucks Corp., and AnnTaylor Stores have been liquidated.
In the future, we will emphasize niche-style, retail stocks with a novel concept
and growing volume, such as Apple South, a franchisee of Applebees restaurants.
Basic Materials. Like retail stocks, basic materials failed to deliver for
investors despite the strong economy. We sold some or all of Sterling Chemicals,
Albany International, and Rock-Tenn Co., as well as the steel companies National
Steel, Geneva,and Weirton.
Other sectors. Profitable stocks were located in a variety of other
industries over the year, particularly in banking, the thrift industry,
insurance, publishing, manufacturing, and oil and gas exploration.
<PAGE>
Looking Ahead
Assuming normal market conditions, we expect to maintain relatively lower
cash positions in the coming months. Our goal is to be as fully invested as
possible, rather than attempt to time market movements by varying the cash
position. We expect to focus on sectors that have potential for high return,
such as technology, health, telecommunications, and consumer retail. Within the
sectors, our goal is to identify growing companies with higher earnings growth
prospects relative to the overall market.
Fund Manager
INVESCO Emerging Growth Fund is managed by INVESCO Vice President John
Schroer. A Chartered Financial Analyst, Schroer received his BS and MBA from the
University of Wisconsin-Madison. He began his investment career in 1990 and was
an assistant vice president with Trust Company of the West prior to joining
INVESCO in 1993. He was manager of Strategic Environmental Services Portfolio
from 5/30/93 to 7/1/95. He also is co-manager of Strategic Health Sciences
Portfolio. Schroer assumed responsibility for Emerging Growth Fund from INVESCO
Vice President Doug Pratt on May 15, 1995. Doug is now co-portfolio manager of
Growth Fund, as well as manager of Strategic Financial Services Fund.
*Total return assumes reinvestment of dividends and capital gain distributions
for the periods indicated. Past performance is not a guarantee of future
results. Investment return and principal value will fluctuate so that, when
redeemed, an investor's shares may be worth more or less when purchased. The S&P
500 is an unmanaged index considered representative of common stock performance;
the Russell 2000 is an unmanaged index reflecting performance of smaller-cap
stocks.
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Ten Largest Common Stock Holdings
May 31,1995
Description Value
- ----------------------------------------------------
Wolverine Tube $ 4,837,500
Zions Bancorp 4,525,000
S3 Inc 4,407,812
Elsag Bailey Process Automation NV ADR 4,240,000
Progress Software 4,020,000
Avid Technology 3,932,250
Orion Capital 3,875,000
Easco Inc 3,718,750
Three-Five Systems 3,687,500
Houghton Mifflin 3,596,250
Composition of holdings is subject to change.
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Statement of Investment Securities
May 31, 1995
Shares or
Principal
Description Amount Value
- -------------------------------------------------------------------------------
COMMON STOCKS 84.81%
AEROSPACE & DEFENSE 1.36%
Watkins-Johnson Co 55,000 $ 2,461,250
------------
ALUMINUM MANUFACTURING 2.06%
Easco Inc* 250,000 3,718,750
------------
BANKING 3.57%
BancTec Inc* 125,000 1,921,875
Zions Bancorp 100,000 4,525,000
------------
6,446,875
------------
BIOTECHNOLOGY 1.14%
UroMed Corp* 335,000 2,051,875
------------
BROADCASTING 1.45%
Evergreen Media Class A* 125,000 2,625,000
------------
CHEMICALS 4.51%
Cytec Industries* 75,000 2,765,625
Mississippi Chemical 200,000 3,150,000
Sterling Chemicals* 210,000 2,231,250
------------
8,146,875
------------
COMPUTER SERVICES 2.65%
America Online* 4,000 142,500
Broadway & Seymour* 170,000 3,038,750
Cambridge Technology Partners* 50,000 1,612,500
------------
4,793,750
------------
COMPUTER SOFTWARE 10.82%
Banyan Systems* 100,000 1,650,000
Diamond Multimedia Systems* 19,000 344,375
Hyperion Software* 25,000 928,125
Microsoft Corp* 41,000 3,472,188
ParcPlace Systems* 220,000 2,860,000
Progress Software* 80,000 4,020,000
SPSS Inc* 100,000 1,337,500
Sierra On-Line* 100,000 1,812,500
State Of The Art* 60,000 622,500
Structural Dynamics Research* 180,000 2,486,250
------------
19,533,438
------------
<PAGE>
COMPUTER SYSTEMS 1.44%
Bay Networks* 1,000 36,500
Chipcom Corp* 120,000 2,565,000
------------
2,601,500
------------
CONTROL INSTRUMENTS 2.35%
Elsag Bailey Process Automation NV ADR* 160,000 4,240,000
------------
COSMETICS & TOILETRIES 1.12%
Maybelline Inc 100,000 2,012,500
------------
ELECTRICAL EQUIPMENT 3.82%
Brooks Automation* 120,000 2,280,000
C-Cube Microsystems* 60,000 1,530,000
Cidco Inc* 95,000 3,087,500
------------
6,897,500
------------
ELECTRONICS 6.60%
S3 Inc* 162,500 4,407,812
Semitool Inc* 95,000 2,743,125
Three-Five Systems* 125,000 3,687,500
Zebra Technologies Class A* 23,900 1,075,500
------------
11,913,937
------------
FINANCE RELATED 4.75%
Foothill Group Class A 100,000 2,475,000
Money Store 40,000 1,235,000
Primark Corp* 100,000 1,625,000
VeriFone Inc* 150,000 3,243,750
------------
8,578,750
------------
FOOD PRODUCTS & BEVERAGES 1.74%
WLR Foods 225,000 3,150,000
------------
HEALTH CARE SERVICES 1.32%
Herbalife International 230,000 2,386,250
------------
INSURANCE 4.23%
Home State Holdings* 90,000 877,500
Orion Capital 100,000 3,875,000
PXRE Corp 70,000 1,513,750
Transnational Re Class A* 70,000 1,382,500
------------
7,648,750
------------
<PAGE>
MACHINERY 2.64%
BW/IP Inc 50,000 900,000
Goulds Pumps 100,000 2,337,500
Regal-Beloit Corp 100,000 1,537,500
------------
4,775,000
------------
MEDICAL PRODUCTS 0.20%
Ventritex Inc* 25,000 359,375
------------
METAL MANUFACTURING 2.68%
Wolverine Tube* 150,000 4,837,500
------------
METALS & MINING 1.86%
Amax Gold* 10,000 53,750
INDRESCO Inc* 125,000 1,703,125
Pegasus Gold 135,000 1,603,125
------------
3,360,000
------------
MOTION PICTURES & TELEVISION 2.18%
Avid Technology* 107,000 3,932,250
------------
OIL & GAS RELATED 1.99%
Devon Energy 100,000 2,150,000
Flores & Rucks* 100,000 1,125,000
Total Petroleum North America Ltd 25,000 328,125
------------
3,603,125
------------
POLLUTION CONTROL RELATED 1.05%
Sanifill Inc* 70,000 1,890,000
------------
PROTECTION - SAFETY EQUIPMENT
& SERVICES 0.39%
Corrections Corp of America* 20,000 700,000
------------
PUBLISHING 1.99%
Houghton Mifflin 70,000 3,596,250
------------
RECREATION PRODUCTS & SERVICES 2.53%
Anthony Industries 150,000 2,475,000
Argosy Gaming* 106,400 1,396,500
Scientific Games Holdings* 28,000 707,000
------------
4,578,500
------------
<PAGE>
RETAIL 4.39%
Apple South 150,000 2,606,250
Arbor Drugs 70,000 1,172,500
Hannaford Brothers 100,000 2,675,000
Quality Food Centers 75,000 1,481,250
------------
7,935,000
------------
SAVINGS & LOAN 1.93%
TCF Financial 75,000 3,487,500
------------
SEMICONDUCTOR EQUIPMENT 1.25%
Credence Systems* 65,000 2,250,625
------------
TELECOMMUNICATIONS 3.38%
Aspect Telecommunications* 35,000 1,426,250
Global Village Communication* 150,000 2,062,500
WorldCom Inc* 100,751 2,619,526
------------
6,108,276
------------
TRANSPORTATION 0.46%
Swift Transportation* 50,000 831,250
------------
UTILITIES 0.96%
Eastern Utilities Associates 75,000 1,734,375
------------
TOTAL COMMON STOCKS (Cost $153,821,070) 153,186,026
------------
SHORT-TERM INVESTMENTS
COMMERCIAL PAPER 15.19%
FINANCE RELATED 15.19%
American Express Credit 5.950%, 6/5/1995 $ 6,964,000 6,964,000
Associates Corp of North
America 6.150%, 6/1/1995 $ 6,954,000 6,954,000
Chevron Oil Finance 5.920%, 6/1/1995 $ 7,096,000 7,096,000
Prudential Funding 5.900%, 6/1/1995 $ 6,430,000 6,430,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $27,444,000) 27,444,000
------------
TOTAL INVESTMENT SECURITIES AT VALUE 100.00%
(Cost $181,265,070)
(Cost for Income Tax Purposes $181,425,696) $ 180,630,026
==============
* Security is non-income producing.
See Notes to Financial Statements
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Statement of Assets and Liabilities
May 31, 1995
ASSETS
Investment Securities at Value
(Cost $181,265,070) $180,630,026
Cash 10,785
Receivables:
Fund Shares Sold 171,037
Dividends and Interest 70,110
Organization Costs (Note 1) 10,179
Prepaid Expenses 50,067
------------
TOTAL ASSETS 180,942,204
------------
LIABILITIES
Payables:
Distributions to Shareholders 9,208
Investment Securities Purchased 26,845,587
Fund Shares Repurchased 303,413
Accrued Distribution Expenses 34,441
Accrued Expenses and Other Payables 22,238
------------
TOTAL LIABILITIES 27,214,887
------------
Net Assets at Value $153,727,317
============
NET ASSETS
Paid-in Capital* $158,684,201
Accumulated Undistributed Net Investment Income 15,532
Accumulated Undistributed Net Realized Loss
on Investment Securities (4,337,372)
Net Depreciation of Investment Securities (635,044)
------------
Net Assets at Value $153,727,317
============
Net Asset Value, Offering and Redemption
Price per Share $9.37
=====
* The Fund has 600 million authorized shares of common stock, par value
of $0.01 per share, of which 16,401,894 were outstanding at May 31,
1995.
See Notes to Financial Statements
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Statement of Operations
Year Ended May 31, 1995
INVESTMENT INCOME
INCOME
Dividends $ 964,369
Interest 2,503,153
Foreign Taxes Withheld (1,406)
------------
TOTAL INCOME 3,466,116
------------
EXPENSES
Investment Advisory Fees 1,370,549
Distribution Expenses 456,850
Transfer Agent Fees 635,770
Administrative Fees 37,411
Custodian Fees and Expenses 22,128
Directors Fees and Expenses 18,891
Organization Expenses 6,429
Professional Fees and Expenses 30,022
Registration Fees and Expenses 87,080
Reports to Shareholders 105,596
Other Expenses 8,281
------------
TOTAL EXPENSES 2,779,007
Fees and Expenses Absorbed
by Investment Adviser (63,858)
------------
NET EXPENSES 2,715,149
------------
NET INVESTMENT INCOME 750,967
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Loss on Investment Securities (4,319,462)
Change in Net Appreciation
of Investment Securities 10,422,490
------------
NET GAIN ON INVESTMENT SECURITIES 6,103,028
------------
Net Increase in Net Assets from Operations $ 6,853,995
============
See Notes to Financial Statements
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Statement of Changes in Net Assets
Year Ended May 31
------------------------
1995 1994
OPERATIONS
Net Investment Income (Loss) $ 750,967 $ (465,420)
Net Realized Gain (Loss) on
Investment Securities (4,319,462) 40,383,232
Change in Net Appreciation
(Depreciation) of Investment
Securities 10,422,490 (24,853,134)
--------------- ----------------
NET INCREASE IN NET
ASSETS FROM OPERATIONS 6,853,995 15,064,678
--------------- ----------------
DISTRIBUTIONS TO
SHAREHOLDERS
Net Investment Income (735,435) 0
Net Realized Gain on
Investment Securities (37,702,557) (135,411)
--------------- ----------------
TOTAL DISTRIBUTIONS (38,437,992) (135,411)
--------------- ----------------
FUND SHARE
TRANSACTIONS
Proceeds from Sales of Shares 243,179,612 450,092,111
Reinvestment of Distributions 37,994,518 131,441
--------------- ----------------
281,174,130 450,223,552
Amounts Paid for Repurchases
of Shares (272,372,582) (391,672,485)
--------------- ----------------
NET INCREASE IN NET
ASSETS FROM FUND SHARE
TRANSACTIONS 8,801,548 58,551,067
--------------- ----------------
Total Increase (Decrease) in
Net Assets (22,782,449) 73,480,334
NET ASSETS
Beginning of Period 176,509,766 103,029,432
--------------- ----------------
End of Period (Including
Accumulated Undistributed
Net Investment Income
of $15,532 and
$70,484, respectively) $ 153,727,317 $ 176,509,766
============== ================
-------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 22,648,812 38,430,724
Shares Issued from Reinvestment
of Distributions 4,141,671 10,854
--------------- ----------------
26,790,483 38,441,578
Shares Repurchased (25,866,344) (33,376,899)
--------------- ----------------
Net Increase in Fund Shares 924,139 5,064,679
============== ================
See Notes to Financial Statements
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -Emerging Growth Fund
Notes to Financial Statements
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Emerging
Opportunity Funds, Inc., a Maryland Corporation, currently consists of the
Emerging Growth Fund. The Fund is registered under the Investment Company Act of
1940 (the Act) as a diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
A. SECURITY VALUATION -- Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sale price
in the market where such securities are primarily traded. If last sale prices
are not available, securities are valued at the highest closing bid price
obtained from one or more dealers making a market for such securities or by a
pricing service approved by the Fund s board of directors.
Foreign securities are valued at the closing price on the principal
stock exchange on which they are traded. In the event the closing prices are
not available for foreign securities, prices will be obtained from the
principal stock exchange at or prior to the close of the New York Stock
Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith by
the Fund s board of directors.
Short-term securities are stated at amortized cost (which approximates
market value) if maturity is 60 days or less, or at market value if maturity
is greater than 60 days.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security transactions
are accounted for on the trade date and dividend income is recorded on the
ex-dividend date. Interest income, which may be comprised of stated coupon
rate, market discount and original issue discount is recorded on the accrual
basis. Cost is determined on the specific identification basis.
C. FEDERAL AND STATE TAXES -- The Fund has complied and continues to comply with
the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has 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 May 31, 1995, the Fund had $1,667,321 in net capital loss
carryovers which expire in the year 2003.
The Fund incurred and elected to defer post-October 31 net capital
losses of $2,491,516 to the period ended May 31,1996. To the extent future
capital gains are offset by capital loss carryovers and deferred post
-October 31 losses, such gains will not be distributed to shareholders.
Dividends paid by the Fund from 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 May 31, 1995, 4.29% qualified for
the dividends received deduction available to the Fund s corporate
shareholders.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions
to shareholders are recorded by the Fund on the ex-dividend/distribution
date. The Fund distributes net realized capital gains, if any, to its
shareholders at least annually, if not offset by capital loss carryovers.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for nontaxable dividends, net operating losses, expiring
capital loss carryforwards and deferral of wash sales. As of May 31,1995,
there were no such differences.
<PAGE>
E. ORGANIZATION COSTS -- Organization costs advanced by INVESCO Funds Group,
Inc.(IFG) are amortized and are payable on a straight-line basis over a
sixty-month period from the date the Fund commenced operations. IFG has
agreed that if it redeems any of its initially acquired shares of the Fund
during the five years from the date the Fund commenced operations, the
proceeds payable to it in respect of such shares will be reduced by a pro
rata share of the Fund s unamortized organization costs.
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. IFG serves as the Fund's
investment adviser. As compensation for its services to the Fund, IFG receives
an investment advisory fee which is accrued daily at the applicable rate and
paid monthly. The fee is based on the annual rate of 0.75% on the first $350
million in 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.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company (ITC), a wholly owned subsidiary of IFG, investment decisions of the
Fund are made by ITC. Fees for such sub- advisory
services are paid by IFG.
In accordance with an Administrative Agreement, the Fund pays IFG an annual
fee of $10,000, plus an additional amount computed at an annual rate of 0.015%
of average net assets to provide administrative, accounting, and clerical
services. The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee at an annual rate of $14.00 per shareholder
account, or per participant in an omnibus account. IFG may pay such fee for
participants in omnibus accounts to affiliates or third parties. The fee is paid
monthly at one-twelfth of the annual fee and is based upon the actual number of
accounts in existence during each month.
A plan of distribution pursuant to Rule 12b-1 of the Act provides for
reimbursement of marketing and advertising expenditures to IFG (the Distributor)
to a maximum of 0.25% of average annual net assets. Amounts accrued by the
Fund are available to reimburse the Distributor for actual expenditures incurred
within a rolling twelve-month period. For the year ended May 31, 1995, the Fund
paid the Distributor $459,782 for reimbursement of expenses incurred.
IFG has voluntarily agreed, in some instances, to absorb certain fees and
expenses incurred by the Fund commencing September 1, 1994.
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended May
31, 1995, the aggregate cost of purchases and proceeds from sales of investment
securities (excluding all U.S Government securities and short-term securities)
were $326,307,028 and $302,854,756, respectively.
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At May 31, 1995, the gross appreciation
of securities in which there was an excess of value over tax cost amounted to
$8,487,761, and the gross depreciation of securities in which there was an
excess of tax cost over value amounted to $9,283,431, resulting in net
depreciation of $795,670.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES. Certain of the Fund s officers and
directors are also officers and directors of IFG or ITC.
The Fund has adopted an unfunded noncontributory defined benefit pension plan
covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 25% of the retainer fee at
the time of retirement. Pension expenses for the year ended May 31, 1995,
included in Directors Fees and Expenses in the Statement of Operations were
$4,086. Unfunded accrued pension costs of $7,591 and pension liability of
$11,677 are included in prepaid expenses and accrued expenses, respectively, in
the Statement of Assets and Liabilities.
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Financial Highlights
(For a Fund Share Outstanding throughout Each Period)
Period
Ended
Year Ended May 31 May 31
---------------------------------- ----------
1995 1994 1993 1992^
PER SHARE DATA
Net Asset Value -
Beginning of Period $11.40 $9.89 $7.55 $7.50
---------------------------------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.04 (0.01) (0.04) (0.02)
Net Gain on Securities
(Both Realized and Unrealized) 0.46 1.53 2.38 0.07
---------------------------------- ----------
Total from Investment Operations 0.50 1.52 2.34 0.05
---------------------------------- ----------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.04 0.00 0.00 0.00
Distributions from Capital Gains 2.49 0.01 0.00 0.00
---------------------------------- ----------
Total Distributions 2.53 0.01 0.00 0.00
---------------------------------- ----------
Net Asset Value - End of Period $9.37 $11.40 $9.89 $7.55
================================== ==========
TOTAL RETURN 4.98% 15.34% 30.95% 0.68%*
RATIOS
Net Assets - End of Period
($000 Omitted) $153,727 $176,510 $103,029 $25,579
Ratio of Expenses to
Average Net Assets# 1.49% 1.37% 1.54% 1.93%~
Ratio of Net Investment Income
(Loss) to Average Net Assets# 0.41% (0.26%) (0.70%) (0.95%)~
Portfolio Turnover Rate 228% 196% 153% 50%*
^ From December 27, 1991, commencement of operations, to May 31, 1992.
* These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
~ Annualized
# Various expenses of the Fund were voluntarily absorbed by INVESCO Funds
Group, Inc. for the year ended May 31, 1995. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have been
1.52% and ratio of net investment income to average net assets would have
been 0.38%.
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
INVESCO Emerging Opportunity 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 Emerging Growth Fund
(constituting the INVESCO Emerging Opportunity Funds, Inc., hereafter referred
to as the "Fund") at May 31, 1995, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the 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 May 31,
1995 by correspondence with the custodian and the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
Price Waterhouse LLP
Denver, Colorado
June 30, 1995
<PAGE>
FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- -------------------------------------------------------------------------------
International
Latin American Growth 34 * *
European Small Company 37 * *
European 56 FEURX Europ
Pacific Basin 54 FPBSX PcBas
International Growth 49 FSIGX IntlGr
- -------------------------------------------------------------------------------
Sector
Energy 50 FSTEX Enrgy
Environmental Services 59 FSEVX Envirn
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Technology 55 FTCHX Tech
Worldwide Capital
Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
- -------------------------------------------------------------------------------
Growth
Emerging Growth 60 FIEGX Emgrth
Small Company 74 * *
Dynamics 20 FIDYX Dynm
Growth 10 FLRFX Grwth
- -------------------------------------------------------------------------------
Equity-Income
Industrial Income 15 FIIIX IndInc
Utilities 58 FSTUX Util
- -------------------------------------------------------------------------------
Multiple-Asset
Multi-Asset Allocation 70 IMAAX MulAstAl
Balanced 71 IMABX Bal
- -------------------------------------------------------------------------------
Bond
High Yield 31 FHYPX HiYld
Select Income 30 FBDSX SelInc
U.S. Government Securities 32 FBDGX USGvt
Short-Term Bond 33 INIBX ShTrBd
- -------------------------------------------------------------------------------
Tax-Exempt
Tax-Free Long-Term Bond 35 FTIFX TxFre
Tax-Free Intermediate Bond 36 * *
- -------------------------------------------------------------------------------
Money Market
Tax-Free Money Fund 40 FFRXX N/A
Cash Reserves 25 FDSXX N/A
U.S. Government Money Fund 44 FUGXX N/A
*This fund does not meet size requirements to be assigned a ticker symbol or
appear in newspaper listings.
For more information about any of the INVESCO Funds, including management fees
and expenses, please call us at 1-800-525-8085 for a prospectus. Read it
carefully before you invest or send money.
<PAGE>
INVESCO FUNDS
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information,
Call toll-free: 1-800-525-8085
To reach PAL, your 24-hour Personal
Account Line, call: 1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied by an effective prospectus.
