SEMIANNUAL REPORT
November 30, 1996
INVESCO
EMERGING
GROWTH
FUND
(Effective 2/1/97, INVESCO
Small Company Growth Fund)
A Smart Choice
For Maximum
Growth Potential
INVESCO FUNDS
<PAGE>
Economic Overview December 1996
Overheating -- or headed into a recession? That's the question analysts
have posed all year about the U.S. economy.
During the third quarter of 1996, growth moderated to a "normal/dull" level
of 2.2%. Representing a slowdown from the second quarter's relatively torrid
pace of 4.7%, the current level of economic expansion should be moderate enough
to stave off inflation fears. The rate of increase in wages, benefits, and
prices for consumer and industrial goods has not accelerated over the past 12
months; the Consumer Price Index will likely end 1996 up an annualized rate of
about 3.0% -- in line with the historical average.
A moderate inflation level represents a positive factor for the economy. At
the same time, though, the longevity of the current expansion -- over six years
- -- remains a cause for concern; the post-World War II average is only four and a
half years. Negative growth hasn't been experienced since the first quarter of
1993. If the growth rate again approaches 5%, many economists expect the Federal
Reserve Board to launch a preemptive strike against inflation, with the
concomitant danger of cutting the expansion short.
In mid-autumn, concern about the Fed and the national elections caused a
modest pullback in equity markets. Since then, with the political status quo
generally maintained vis-a-vis the president and Congress, and the economy
slowing on its own, the S&P 500 resumed its upward hike.
1997 is a post-presidential election year, when the stock market typically
drops, and volatility may well continue. Currently, valuations for many
individual stocks appear high. Moderate action from the Fed over the winter --
an increase of .25% in short-term interest rates, for example -- might be
interpreted by investors in a positive light, with a subsequent calming
influence on price swings. Conversely, heavy-handed measures could be viewed as
likely to trigger a recession, with negative consequences for corporate earnings
estimates -- and stock prices; securities markets around the globe immediately
dropped following Fed Chairman Alan Greenspan's December remark that current
stock prices may reflect "irrational exuberance."
INVESCO Emerging Growth Fund
For the one-year period ended 11/30/96, INVESCO Emerging Growth Fund had a
total return of 19.64%. During the same period, the Russell 2000 had a total
return of 16.52%, and the S&P 500, 27.83%. For the six months ended 11/30/96,
the fund had a total return of -7.79%; during that period, the Russell 2000 had
a total return of -1.73%, and the S&P 500, 14.43%. The fund's short-term
underperformance versus the indexes may be attributed to our relatively low
exposure to energy and finance stocks during this period. (Of course, past
performance is not a guarantee of future results.)(1),(2)
Emerging Growth Fund
Average Annualized Total Return
as of 11/30/96(1)
1 year 19.64%
------------------------------------------
Since inception (12/91) 18.06%
------------------------------------------
The line graph illustrates the value of a $10,000 investment in INVESCO
Emerging Growth Fund, plus reinvested dividends and capital gain distributions,
from inception through 11/30/96. The chart and other total return figures cited
<PAGE>
reflect the fund's operating expenses, but the indexes do not have expenses,
which would, of course, have lowered their performance. (Please note that
effective 11/97, we will compare the fund only to the Russell 2000, an unmanaged
index which reflects performance of smaller-capitalization stocks, and exclude
the S&P 500, an unmanaged index illustrating performance of the very broad
universe of large- and small-cap equities.)(1)
Graph: Total Return Performance(1),(2)
This line graph compares the value of a $10,000 investment in
INVESCO Emerging Growth Fund to the value of a $10,000 investment in
the S&P 500 Index and the Russell 2000 Index, assuming in each case
reinvestment of all dividends and capital gain distributions, for
the period from inception (12/91) through 11/96.
Strategic Summary
Over the first half of 1996, smaller-capitalization stocks kept pace with
the S&P 500, and turned in particularly strong results during the second
quarter. Over the past six months, however, investors have favored stocks with
lower price-earnings ratios and higher dividend yields, and larger-caps have
advanced more strongly. This underperformance of smaller-caps has been
particularly true for companies that went public over the past two years.
Graph: Fund Diversification by Value
This graph reflects the diversification of the Emerging Growth Fund
by value of total net assets in basic materials, capital goods and
construction, consumer cyclical, consumer staples, energy, finance,
technology, transportation and services, utilities, and net cash and
equivalents, as of November 30, 1996, May 31, 1996 and November 30,
1995.
The national elections -- and their potential effect on the economy through
legislative initiatives such as health care -- have been a significant
distraction. And according to many analysts, the problem for small-caps has been
the uncertain economy. The possibility of higher inflation has made investors
less willing to pay now for earnings growth later. The market's concern over
sustainability of corporate earnings growth has resulted in a short-term bias
towards "proven" winners from the past. However, the strong run-up in stock
prices of those stocks has also increased the likelihood that many are now fully
valued.
With the economy settled back down into a moderate expansion, and prices of
many larger-caps unreasonably high, investors may well turn to the undervalued
smaller-cap market. If inflation remains low, the earnings growth potential of
smaller-caps looks even better on a comparative basis.
Over the past six months, we have adjusted the fund's portfolio to reflect
our expectations of a slower-growing economy, while continuing to focus on
stocks of companies with market capitalizations up to $1 billion.
The market's top industry groups in 1996 were technology, finance, and
energy. Technology has long been a core part of the fund's long-term strategy.
We have not built up a corresponding weighting in energy companies, as price
advances may have been driven by short-term phenomena and are likely to adjust
as Iran starts delivering oil to the international market. We did add to our
holdings in finance over the autumn with new positions in insurance, a savings &
loan, and a health care-finance related firm.
<PAGE>
We remain overweighted in the computer software industry, where stocks are
selling at low valuation levels while offering dynamic growth potential in
earnings. We're excited about the growth prospects of the following companies in
the computer software industry: Cognos Inc -- a company which develops, markets,
and supports, both directly and through resellers worldwide, advanced
client/server development and reporting tools; Saville Systems PLC (ADR) -- a
company which develops customer billing systems; and Veritas Software -- a
developer, marketer, and supporter of advanced storage management products and
software quality tools.
For much of the year, stocks such as HBO & Co were among our stronger
holdings. More recently, medical related stocks were a drag on performance, due
to much-exaggerated concerns over the specter of revived legislative problems
emanating from a re-elected Clinton Administration. We have closed positions in
which our target price was met or we believed future earnings growth would
decelerate. Pharmaceuticals, which have outperformed the broad market, remain of
interest; newer positions in medical related-drugs stocks include Amrion Inc,
Arris Pharmaceutical, and Rexall Sundown.
As a group, consumer cyclicals underperformed in 1996. Lodging and apparel
companies, however, were the exceptions. Holdings in these areas include Stage
Stores.
Naturally, future performance cannot be predicted. But as the domestic
economy continues to slow in 1997 and interest rates stabilize, we hope to see a
reversal in the flow of funds from over-valued large-cap stocks into
under-valued small cap stocks. Emerging Growth Fund will continue to look for
companies withaccelerating earnings growth due to rapid sales growth, new
products, or services. With its relatively high cash position, the fund has
positioned itself to take advantage of selective buying opportunities that
currently exist in small-cap stocks.
Fund Management
INVESCO Emerging Growth Fund is co-managed by Timothy J. Miller, Stacie L.
Cowell and Trent E. May, all Chartered Financial Analysts.
Tim received his MBA from the University of Missouri, and a BSBA from St.
Louis University. A 16-year veteran of the investment business, he is a
Chartered Financial Analyst. Before joining INVESCO in 1992, Tim was an analyst
and portfolio manager with Mississippi Valley Advisors.
Previously, Stacie was a senior equities analyst with Founders Asset
Management, and a capital markets and trading analyst with Chase Manhattan Bank.
She earned her BA in Economics from Colgate University.
Trent earned a BS from the Florida Institute of Technology and an MBA from
Rollins College. Before joining INVESCO, he was a senior equity fund
manager/analyst at Munder capital Management.
(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 considered representative
of the performance of the broad U.S. stock market. The Russell 2000
is an unmanaged index indicative of smaller-capitalization stocks.
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Ten Largest Common Stock Holdings
November 30, 1996
Description Value
- --------------------------------------------------------------
HA-LO Industries $8,327,550
Saville Systems PLC Sponsored ADR 8,283,375
Cognos Inc 7,786,200
SITEL Corp 7,520,800
PAREXEL International 7,079,400
Orion Capital 6,867,488
CBT Group PLC Sponsored ADR 6,808,000
APAC TeleServices 6,737,850
Veritas Software 6,283,812
Wind River Systems 5,985,881
Composition of holdings is subject to change.
-------------------------------------------
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Statement of Investment Securities
November 30, 1996
UNAUDITED
- --------------------------------------------------------------------------------
Shares or
Principal
Description Amount Value
- --------------------------------------------------------------------------------
COMMON STOCKS 83.50%
ADVERTISING 3.07%
HA-LO Industries* 216,300 $8,327,550
------------
BIOTECHNOLOGY 1.26%
INCYTE Pharmaceuticals* 90,000 3,420,000
------------
BUSINESS & COMMERCIAL SERVICES 8.37%
APAC TeleServices* 142,600 6,737,850
Employee Solutions* 150,000 2,775,000
SITEL Corp* 380,800 7,520,800
TeleTech Holdings* 85,000 2,677,500
Warrantech Corp* 210,000 3,018,750
------------
22,729,900
------------
<PAGE>
- --------------------------------------------------------------------------------
Shares or
Principal
Description Amount Value
- --------------------------------------------------------------------------------
COMPUTER PERIPHERALS
& SUPPLIES 1.21%
Security Dynamics Technologies* 80,000 3,290,000
------------
COMPUTER SERVICES 1.16%
Technology Solutions* 70,000 3,150,000
------------
COMPUTER SOFTWARE 21.25%
Avant Corp* 126,700 3,705,975
Brooktrout Technology* 80,000 2,570,000
CBT Group PLC Sponsored ADR* 118,400 6,808,000
Cognos Inc* 204,900 7,786,200
Forrester Research* 12,000 256,500
HNC Software* 105,000 3,123,750
Hyperion Software* 135,000 2,919,375
Information Management Resources* 28,000 462,000
JDA Software Group* 115,000 3,076,250
Project Software & Development* 85,000 3,527,500
Saville Systems PLC Sponsored ADR* 199,000 8,283,375
Scopus Technology* 87,000 3,251,625
Vantive Corp* 71,000 2,449,500
Veritas Software* 135,500 6,283,812
Visio Corp* 65,000 3,217,500
------------
57,721,362
------------
COMPUTER SYSTEMS 5.57%
BTG Inc* 75,000 1,509,375
HBO & Co 92,000 5,232,500
Pegasystems Inc* 80,000 2,390,000
Wind River Systems* 121,850 5,985,881
------------
15,117,756
------------
EDUCATION & TRAINING 1.77%
Learning Tree International* 54,200 2,452,550
Sylvan Learning Systems* 90,000 2,351,250
------------
4,803,800
------------
ELECTRICAL EQUIPMENT 1.85%
Cable Design Technologies* 93,000 2,720,250
SBS Technologies* 86,000 2,311,250
------------
5,031,500
------------
<PAGE>
- --------------------------------------------------------------------------------
Shares or
Principal
Description Amount Value
- --------------------------------------------------------------------------------
ENGINEERING 1.09%
Willbros Group* 280,000 2,975,000
------------
FINANCE RELATED 1.19%
AMRESCO Inc* 150,000 3,225,000
------------
HEALTH CARE RELATED 3.81%
Health Images 210,100 3,282,812
HealthCare Financial Partners* 40,000 500,000
NCS HealthCare Class A* 88,000 2,420,000
Total Renal Care Holdings* 121,400 4,157,950
------------
10,360,762
------------
HOTELS 1.42%
Prime Hospitality* 231,400 3,847,025
------------
INSURANCE 6.32%
Frontier Insurance Group 70,000 2,677,500
HCC Insurance Holdings 111,200 3,113,600
Mercury General 79,100 4,508,700
Orion Capital 110,100 6,867,488
------------
17,167,288
------------
MEDICAL RELATED 10.92%
ESC Medical Systems Ltd* 150,000 3,993,750
Omnicare Inc 140,600 4,288,300
PAREXEL International* 136,800 7,079,400
Quintiles Transnational* 93,300 5,644,650
Renal Treatment Centers* 121,500 3,159,000
St Jude Medical* 75,000 3,131,250
SEQUUS Pharmaceuticals* 165,000 2,371,875
------------
29,668,225
------------
MEDICAL RELATED - DRUGS 4.29%
Amrion Inc* 173,650 3,972,244
Arris Pharmaceutical* 113,000 1,469,000
Medicis Pharmaceutical Class A* 75,000 3,290,625
Rexall Sundown* 114,800 2,913,050
------------
11,644,919
------------
<PAGE>
- --------------------------------------------------------------------------------
Shares or
Principal
Description Amount Value
- --------------------------------------------------------------------------------
RETAIL 5.12%
Insight Enterprises* 102,000 3,429,750
Proffitts Inc* 48,000 1,944,000
Sports Authority* 140,000 3,465,000
Stage Stores* 143,000 2,681,250
US Office Products* 77,200 2,393,200
------------
13,913,200
------------
SAVINGS & LOAN 1.28%
FirstFed Financial* 145,000 3,461,875
------------
SEMICONDUCTOR EQUIPMENT 1.00%
Teradyne Inc* 115,000 2,716,875
------------
TELECOMMUNICATIONS 1.55%
PairGain Technologies* 66,100 4,222,138
------------
TOTAL COMMON STOCKS
(Cost $185,387,948) 226,794,175
------------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 16.50%
Repurchase Agreement with
State Street Bank & Trust Co
dated 11/29/1996 due 12/2/1996
at 5.250%, repurchased at
$44,849,613 (Collateralized by
US Treasury Notes due 5/31/1998
at 6.000%, value $45,736,108)
(Cost $44,830,000) $44,830,000 44,830,000
------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $230,217,948)
(Cost for Income Tax Purposes
$230,649,832) $271,624,175
============
* Security is non-income producing.
See Notes to Financial Statements
<PAGE>
INVESCO Emerging Opportunity Funds, Inc.-
Emerging Growth Fund
Statement of Assets and Liabilities
November 30, 1996
UNAUDITED
ASSETS
Investment Securities at Value~
(Cost $230,217,948)~ $271,624,175
Receivables:
Investment Securities Sold 788,738
Fund Shares Sold 4,015,617
Dividends and Interest 28,025
Organization Costs 536
Prepaid Expenses 115,208
---------------
TOTAL ASSETS 276,572,299
---------------
LIABILITIES
Payables:
Custodian 430,606
Investment Securities Purchased 5,340,607
Fund Shares Repurchased 412,021
Accrued Distribution Expenses 55,142
Accrued Expenses and Other Payables 21,191
---------------
TOTAL LIABILITIES 6,259,567
---------------
Net Assets at Value $270,312,732
===============
NET ASSETS
Paid-in Capital* $216,350,243
Accumulated Undistributed Net
Investment Loss (1,023,119)
Accumulated Undistributed Net
Realized Gain on Investment
Securities 13,579,381
Net Appreciation of Investment
Securities 41,406,227
---------------
Net Assets at Value $270,312,732
===============
Net Asset Value, Offering and
Redemption Price per Share $13.26
===============
~ Investment securities at cost and value at November 30, 1996 include a
repurchase agreement of $44,830,000.
* The Fund has 600 million authorized shares of common stock, par value of $0.01
per share, of which 20,381,056 were outstanding at November 30, 1996.
See Notes to Financial Statements
<PAGE>
INVESCO Emerging Opportunity Funds, Inc.-
Emerging Growth Fund
Statement of Operations
Six Months Ended November 30, 1996
UNAUDITED
INVESTMENT INCOME
INCOME
Dividends $116,886
Interest 970,036
---------------
TOTAL INCOME 1,086,922
---------------
EXPENSES
Investment Advisory Fees 1,059,346
Distribution Expenses 353,366
Transfer Agent Fees 516,599
Administrative Fees 26,202
Custodian Fees and Expenses 32,524
Directors' Fees and Expenses 12,154
Organization Expenses 3,215
Professional Fees and Expenses 17,244
Registration Fees and Expenses 58,662
Reports to Shareholders 41,709
Other Expenses 4,358
---------------
TOTAL EXPENSES 2,125,379
Fees and Expenses Paid Indirectly (21,717)
---------------
NET EXPENSES 2,103,662
---------------
NET INVESTMENT LOSS (1,016,740)
---------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on Investment
Securities 6,861,492
Change in Net Depreciation of
Investment Securities (38,577,770)
---------------
NET LOSS ON INVESTMENT SECURITIES (31,716,278)
---------------
Net Decrease in Net Assets from
Operations $(32,733,018)
===============
See Notes to Financial Statements
<PAGE>
INVESCO Emerging Opportunity Funds, Inc.-
Emerging Growth Fund
Statement of Changes in Net Assets
Six Months Year
Ended Ended
November 30 May 31
--------------- ------------
1996 1996
UNAUDITED
OPERATIONS
Net Investment Loss $(1,016,740) $(1,624,741)
Net Realized Gain on
Investment Securities 6,861,492 15,778,132
Change in Net Appreciation
(Depreciation) of Investment
Securities (38,577,770) 80,619,041
--------------- ------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM OPERATIONS (32,733,018) 94,772,432
--------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET REALIZED GAIN ON
INVESTMENT SECURITIES 0 (3,120,041)
--------------- ------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 279,892,302 662,626,265
Reinvestment of Distributions 0 3,055,949
--------------- ------------
279,892,302 665,682,214
Amounts Paid for Repurchases
of Shares (346,875,664) (541,032,810)
--------------- ------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM FUND
SHARE TRANSACTIONS (66,983,362) 124,649,404
--------------- ------------
Total Increase (Decrease) in
Net Assets (99,716,380) 216,301,795
NET ASSETS
Beginning of Period 370,029,112 153,727,317
--------------- ------------
End of Period (Including
Accumulated Undistributed
Net Investment Loss of
($1,023,119) and ($6,379),
respectively) $270,312,732 $370,029,112
=============== ============
------------------------------------
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 21,208,349 55,676,741
Shares Issued from Reinvestment
of Distributions 0 261,428
--------------- ------------
21,208,349 55,938,169
Shares Repurchased (26,552,245) (46,615,111)
--------------- ------------
Net Increase (Decrease) in
Fund Shares (5,343,896) 9,323,058
=============== ============
See Notes to Financial Statements
<PAGE>
INVESCO Emerging Opportunity Funds, Inc. -
Emerging Growth Fund
Notes to Financial Statements
UNAUDITED
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO
Emerging Opportunity Funds, Inc. (the "Fund"), was incorporated in Maryland and
presently consists of the Emerging Growth Fund. The investment objective of the
Fund is to seek long-term capital growth. The Fund is registered under the
Investment Company Act of 1940 (the "Act") as a diversified, open-end management
investment company. Effective February 1, 1997, the Fund's name will change to
INVESCO Emerging Opportunity Funds, Inc. - Small Company Growth Fund.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION - Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales price
in the market where such securities are primarily traded. If last sales prices
are not available, securities are valued at the highest closing bid price
obtained from one or more dealers making a market for such securities or by a
pricing service approved by the Fund's board of directors.
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 at the time of purchase, or market
value if maturity is greater than 60 days.
B. REPURCHASE AGREEMENTS - Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Fund's custodian. The collateral is evaluated daily to ensure
its market value exceeds the current market value of the repurchase agreements
including accrued interest.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security
transactions are accounted for on the trade date and dividend income is recorded
on the ex dividend date. Interest income, which may be comprised of stated
coupon rate, market discount and original issue discount, is recorded on the
accrual basis. Cost is determined on the specific identification basis.
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.
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.
<PAGE>
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 nontaxable dividends, net operating losses and expired capital
loss carryforwards.
F. 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.
G. EXPENSES - Under an agreement between the 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, Transfer Agent Fees
are reduced by credits earned by the 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 six months ended November 30, 1996, Fees and Expenses Paid
Indirectly consisted of $19,651 included in Custodian Fees and Expenses and
$2,066 included in Transfer Agent Fees.
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 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.
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 $20.00 per
shareholder account, or per participant in an omnibus account. IFG may pay such
fee for participants in omnibus accounts to affiliates or third parties. The fee
is paid monthly at one-twelfth of the annual fee and is based upon the actual
number of accounts in existence during each month.
A plan of distribution pursuant to Rule 12b-1 of the Act provides for
reimbursement of marketing and advertising expenditures to IFG (the
"Distributor") to a maximum of 0.25% of annual average net assets. Amounts
accrued by the Fund are available to reimburse the Distributor for actual
expenditures incurred within a rolling twelve-month period. For the six months
ended November 30, 1996, the Fund paid the Distributor $371,006 for
reimbursement of expenses incurred.
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months
ended November 30, 1996, the aggregate cost of purchases and proceeds from sales
of investment securities (excluding all U.S. Government securities and
short-term securities) were $215,432,320 and $320,340,900, respectively.
There were no purchases or sales of U.S. Government securities.
<PAGE>
NOTE 4 -- APPRECIATION AND DEPRECIATION. At November 30, 1996, the gross
appreciation of securities in which there was an excess of value over tax cost
amounted to $47,795,918 and the gross depreciation of securities in which there
was an excess of tax cost over value amounted to $6,821,575, resulting in net
appreciation of $40,974,343.
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 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 were based on an annual rate equal to 25% of the retainer fee at the time
of retirement. As of July 1, 1996, benefits are based on an annual rate of 40%
of the retainer fee at the time of retirement.
Pension expenses for the six months ended November 30, 1996, included in
Directors' Fees and Expenses in the Statement of Operations were $1,764.
Unfunded accrued pension costs of $10,493 and pension liability of $18,636 are
included in Prepaid Expenses and Accrued Expenses, respectively, in the
Statement of Assets and Liabilities.
NOTE 6 -- LINE OF CREDIT. The Fund has available a Redemption Line of
Credit Facility ("LOC"), from a consortium of national banks, to be used for
temporary or emergency purposes to fund redemptions of investor shares. The LOC
permits borrowings to a maximum of 10% of the Net Assets at Value of the Fund.
The Fund agrees to pay annual fees and interest on the unpaid principal balance
based on prevailing market rates as defined in the agreement. For the six months
ended November 30, 1996, there were no such borrowings.
<PAGE>
INVESCO Emerging Opportunity Funds, Inc.--
Emerging Growth Fund
Financial Highlights
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Six Months Period
Ended Ended
November 30 Year Ended May 31 May 31
------------ --------------------------------------------- -------
1996 1996 1995 1994 1993 1992>
UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $14.38 $9.37 $11.40 $9.89 $7.55 $7.50
------------ --------------------------------------------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.05) (0.06) 0.04 (0.01) (0.04) (0.02)
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (1.07) 5.25 0.46 1.53 2.38 0.07
------------ -------------------------------------------- -------
Total from Investment Operations (1.12) 5.19 0.50 1.52 2.34 0.05
------------ -------------------------------------------- -------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.00 0.04 0.00 0.00 0.00
Distributions from Capital Gains 0.00 0.18 2.49 0.01 0.00 0.00
------------ -------------------------------------------- -------
Total Distributions 0.00 0.18 2.53 0.01 0.00 0.00
------------ -------------------------------------------- -------
Net Asset Value - End of Period $13.26 $14.38 $ 9.37 $11.40 $ 9.89 $ 7.55
============ ============================================ =======
TOTAL RETURN (7.79%)* 55.78% 4.98% 15.34% 30.95% 0.68%*
RATIOS
Net Assets - End of Period
($000 Omitted) $270,313 $370,029 $153,727 $176,510 $103,029 $25,579
Ratio of Expenses to Average
Net Assets# 0.75%*@ 1.48%@ 1.49% 1.37% 1.54% 1.93%~
Ratio of Net Investment Income (Loss)
to Average Net Assets# (0.36%)* (0.78%) 0.41% (0.26%) (0.70%) (0.95%)~
Portfolio Turnover Rate 87%* 221% 228% 196% 153% 50%*
Average Commission Rate Paid^^ $0.2792* - - - - -
</TABLE>
> From December 27, 1991, commencement of operations, to May 31, 1992.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the 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>
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- --------------------------------------------------------------------------------
International
International Growth 49 FSIGX IntlGr
Asian Growth 41 IVAGX AsianGr
European 56 FEURX Europ
European Small Company 37 IVECX EuroSmCo
Latin American Growth 34 IVSLX LatinAmGr
Pacific Basin 54 FPBSX PcBas
- --------------------------------------------------------------------------------
Sector
Energy 50 FSTEX Enrgy
Environmental Services 59 FSEVX Envirn
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Realty 42 * *
Technology 55 FTCHX Tech
Utilities 58 FSTUX Util
Worldwide Capital Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
- --------------------------------------------------------------------------------
Capital Appreciation
Growth 10 FLRFX Grwth
Dynamics 20 FIDYX Dynm
Small Company 74 IDSCX DivSmCo
Emerging Growth 60 FIEGX Emgrth
- --------------------------------------------------------------------------------
Growth & Income
Industrial Income 15 FIIIX IndInc
Value Equity 46 FSEQX ValEq
Multi-Asset Allocation 70 IMAAX MulAstAl
Balanced 71 IMABX Bal
Total Return 48 FSFLX TotRtn
- --------------------------------------------------------------------------------
Bond
Short-Term Bond 33 INIBX ShTrBd
Intermediate Government Bond 47 FIGBX IntGov
U.S. Government Securities 32 FBDGX USGvt
Select Income 30 FBDSX SelInc
High Yield 31 FHYPX HiYld
- --------------------------------------------------------------------------------
Tax-Exempt
Tax-Free Intermediate Bond 36 * *
Tax-Free Long-Term Bond 35 FTIFX TxFre
- --------------------------------------------------------------------------------
<PAGE>
FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- --------------------------------------------------------------------------------
Money Market
U.S. Government Money Fund 44 FUGXX InvGvtMF
Cash Reserves 25 FDSXX InvCshR
Tax-Free Money Fund 40 FFRXX InvTaxFree
* This fund does not meet size requirements to be assigned a ticker symbol in
newspaper listings.
For more information about any of the INVESCO Funds, including management fees
and expenses, please call us at 1-800-525-8085 for a prospectus. Read it
carefully before you invest or send money.
<PAGE>
INVESCO FUNDS
We're easy to stay in touch with:
Investor Services Representatives,
1-800-525-8085
PAL(R), your Personal Account Line,
1-800-424-8085
On the World Wide Web:
http://www.invesco.com
Denver Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center, 7800 E. Union Avenue,
Lobby Level
INVESCO Funds Group, Inc.,(SM) Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or
accompanied by a current prospectus.