KNOWLEDGE o DISCIPLINE o SERVICE o CHOICE
- --------------------------------------------------------------------------------
YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
- --------------------------------------------------------------------------------
INVESCO Combination
Stock & Bond Funds
EQUITY INCOME
BALANCED
TOTAL RETURN
SEMI
ANN
UAL
SEMIANNUAL REPORT | NOVEMBER 30, 1999 [INVESCO ICON] INVESCO
<PAGE>
INVESCO IS PLEASED
TO ANNOUNCE THAT
MORNINGSTAR RECENTLY
NAMED EQUITY INCOME
AND BALANCED FUNDS
MANAGER JERRY PAUL
AS FIXED-INCOME "FUND
MANAGER OF THE YEAR."
"AS THOSE OF YOU WHO
ARE RECOVERING FROM
THE HOLIDAY SHOPPING
SEASON KNOW, THIS
CONTINUES TO BE AN
ECONOMY DRIVEN BY
THE CONSUMER." PAGE 5
GRAPH: Equity Income Fund 10-Year Total Return vs. S&P 500 Index and Lehman
Government /Corporate Bond Index
This line graph compares the value of a $10,000 investment in INVESCO
Equity Income Fund to the value of a $10,000 investment in the S&P 500
Index and a $10,000 investment in the Lehman Government/Corporate Bond
Index, assuming in each case reinvestment of all dividends and capital gain
distributions, for the ten year period ended 11/30/99.
GRAPH: Balanced Fund since inception (11/93) Total Return vs. S&P 500
Index and Lehman Government/Corporate Bond Index
This line graph compares the value of a $10,000 investment in INVESCO
Balanced Fund to the value of a $10,000 investment in the S&P 500 Index and
a $10,000 investment in the Lehman Government/Corporate Bond Index,
assuming in each case reinvestment of all dividends and capital gain
distributions, for the period from inception (11/93) through 11/30/99.
Graph: Total Return Fund 10-Year Total Return vs. S&P 500 Index and Lehman
Government/Corporate Bond Fund Index
This line graph compares the value of a $10,000 investment in INVESCO Total
Return Fund to the value of a $10,000 investment in the S&P 500 Index and a
$10,000 investment in the Lehman Government/Corporate Bond Index, assuming
in each case reinvestment of all dividends and capital gain distributions,
for the ten year period ended 11/30/99.
TOTAL RETURN,
PERIODS ENDED 11/30/99(1)
6 MONTHS 1 YEAR 5 YEARS* 10 YEARS* PAGE NUMBER
- --------------------------------------------------------------------------------
Equity Income Fund 5.75% 15.17% 19.29% 15.02% 3
- --------------------------------------------------------------------------------
Balanced Fund 7.02% 18.50% 20.28% 18.30%** 5
- --------------------------------------------------------------------------------
Total Return Fund -6.49% -1.16% 15.30% 12.41% 7
- --------------------------------------------------------------------------------
* AVERAGE ANNUALIZED
** SINCE INCEPTION 12/93
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
periods ended 11/30/99. 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)
<PAGE>
EQUITY INCOME FUNDS
Your Fund's Performance: A Report from the Manager
- --------------------------------------------------------------------------------
Dear Shareholder:
This is our first report to you since we made some changes in the fund last
spring and summer, including changing the fund's name to better reflect its
investment approach. We are happy to report that these modifications have
coincided with strong performance by our portfolio. Indeed, our fund's results
over the year ended November 30, 1999, placed it 27th out of 242 equity income
funds tracked by Lipper Inc. for the one-year period, 26th out of 117 funds for
the five-year period, and 4th out of 43 funds for the 10-year period. We are
especially proud of our record, given our firm commitment to high-yielding
stocks in a market that has heavily favored technology companies, most of which
do not pay dividends.(3)
For the six-month period ended November 30, 1999, the value of your shares rose
5.75%. This performance lagged that of the S&P 500 Index, which increased 7.36%
over the same period, but it greatly exceeded that of the Lehman
Government/Corporate Bond Index, which gained just 0.43%. (Of course, past
performance is no guarantee of future results.)(1),(2)
Our success over the past six months has stemmed from the continued strength in
consumer spending, which is feeding into the profits of many growing companies
that pay healthy dividends to shareholders. In our last report, for example, we
described our investments in consumer-oriented companies such as Tandy
Corporation, best known for its chain of nearly 7,000 Radio Shack stores. Tandy
has outperformed thanks to its successful consumer electronics business and--
despite some recent setbacks--should benefit further from its plans to become a
physical portal to the Internet by partnering with Microsoft's Web service, MSN.
The combined service will allow customers to sign up for Internet access for
their home PCs while shopping at Radio Shack outlets.
"DOUBLE PLAYS"
Lately, we have expanded our holdings into other areas as well. This decision
has been based partly on the fact that the market's advance has been extremely
narrow, leaving many attractive growth companies priced inexpensively relative
to the rest of the market. This is certainly the case in the financial sector,
where the tremendous vitality within the sector, as measured by IPO activity and
commission flow from brokerage operations, does not yet seem factored into share
prices. Aside from seemingly low valuations, large banking firms such as Chase
- --------------------------------------------------------------------------------
FUND MANAGERS
CHARLES P. MAYER (EQUITY)
SENIOR VICE PRESIDENT AND DIRECTOR OF INVESTMENTS, INVESCO FUNDS GROUP. BA, ST.
PETER'S COLLEGE; MBA, ST. JOHN'S UNIVERSITY. JOINED INVESCO IN 1993. BEGAN
INVESTMENT CAREER IN 1969. HAS MANAGED THIS FUND SINCE 1993.
DONOVAN J. (JERRY) PAUL, CFA, CPA (FIXED INCOME)
SENIOR VICE PRESIDENT AND DIRECTOR OF FIXED-INCOME INVESTMENTS, INVESCO FUNDS
GROUP. BBA, UNIVERSITY OF IOWA; MBA, UNIVERSITY OF NORTHERN IOWA. JOINED INVESCO
IN 1994. BEGAN INVESTMENT CAREER IN 1976. HAS MANAGED THIS FUND SINCE 1994.
<PAGE>
and the Bank of New York also appear to us poised to benefit from the new vistas
opened by the recent reform of banking laws.
Health care is another sector that has the potential to offer this "double play"
opportunity. Following their strong performance last year, health care stocks
have languished recently. This has lowered the price-to-earnings multiples of
many of these reliable growth stocks. At the same time, the recent battle
between Pfizer and American Home Products for Warner-Lambert suggests that a new
era of consolidation within the pharmaceutical industry may have begun.
BROADENING LEADERSHIP
Looking forward, the gains in technology that are spurring intensive global
competition seem likely to keep a lid on the market's largest worry, the threat
of inflation and higher interest rates. While we would not be surprised to see
interest rates increase marginally in 2000, we see little evidence that rates
will dramatically accelerate upward. Indeed, we are optimistic about our
corporate bond holdings, which seem to us attractively priced based on their
underlying fundamentals.
We are even more optimistic for the future of America's largest,
well-established firms, and we believe many of these companies remain
attractively priced. Perhaps the best scenario investors can envision is that
the remarkable leadership shown by the top tier of technology firms could spread
outward to other sectors of the market as the American economy continues to
steam ahead. Should this be the case, we feel we are well-positioned through our
ownership of a wide variety of industry leaders across all market sectors.
We look forward to reporting to you again in six months, and thank you for your
continued confidence in INVESCO.
/s/Charles P. Mayer /s/Donovan J. (Jerry) Paul
Charles P. Mayer Donovan J. (Jerry) Paul
Senior Vice President Senior Vice President
<PAGE>
BALANCED FUND
Your Fund's Performance: A Report from the Manager
- --------------------------------------------------------------------------------
Dear Shareholder:
This is our first communication to you in some time in which we can report that
relatively little has changed in the interim. Last May, the markets were nervous
about the potential impact of rising interest rates, yet the indexes stood only
slightly below record levels. We face largely the same situation today, although
technology stocks have regained momentum to climb to new records. Thus, perhaps
it is appropriate to stress the continuity we see in both the markets and our
fund's focus.
For the six-month period ended November 30, 1999, the value of your shares rose
7.02%. This performance modestly lagged the S&P 500 Index, which gained 7.36%
over the same period. However, the fund's performance substantially exceeded
that of the Lehman Government/Corporate Bond Index, which finished the period
just 0.43% higher. (Of course, past performance is no guarantee of future
results.)(1),(2) We are pleased to note that this performance helped the fund
rank 30th out of 444 balanced funds tracked by Lipper Inc. for the one-year
period, and 11th out of 209 for the five-year period.(3)
STILL THE CONSUMER'S ECONOMY
As those of you who are recovering from the holiday shopping season know, the
economy continues to be driven by the consumer. Healthy wage gains, low
inflation, and booming stock prices have helped keep consumer confidence high,
as has the appreciation in home prices. A robust housing market has also
encouraged legions of first-time homebuyers to spend large sums on appliances
and home furnishings. These factors helped the U.S. economy expand at a
remarkable 5.7% rate in the third quarter of 1999.
It is worth noting, however, that consumer spending remains narrowly
focused--consumers are still highly selective about what they buy, and they have
not given up their hunt for a bargain. We have attempted to profit from this
selectivity by being selective ourselves. Our investments have focused on
discount retailers such as Wal-Mart and Dayton Hudson (which operates Target and
Mervyn's), for example, rather than on upscale department store chains or
specialty stores.
- --------------------------------------------------------------------------------
FUND MANAGERS
CHARLES P. MAYER (EQUITY)
SENIOR VICE PRESIDENT AND DIRECTOR OF INVESTMENTS, INVESCO FUNDS GROUP. BA, ST.
PETER'S COLLEGE; MBA, ST. JOHN'S UNIVERSITY. JOINED INVESCO IN 1993. BEGAN
INVESTMENT CAREER IN 1969. HAS MANAGED THIS FUND SINCE 1993.
DONOVAN J. (JERRY) PAUL, CFA, CPA (FIXED INCOME)
SENIOR VICE PRESIDENT AND DIRECTOR OF FIXED-INCOME INVESTMENTS, INVESCO FUNDS
GROUP. BBA, UNIVERSITY OF IOWA; MBA, UNIVERSITY OF NORTHERN IOWA. JOINED INVESCO
IN 1994. BEGAN INVESTMENT CAREER IN 1976. HAS MANAGED THIS FUND SINCE 1994.
PETER M. LOVELL (EQUITY)
VICE PRESIDENT, INVESCO FUNDS GROUP, INC. BA, COLORADO STATE UNIVERSITY; MBA,
REGIS UNIVERSITY. JOINED INVESCO IN 1994. BEGAN INVESTMENT CAREER IN 1992. HAS
MANAGED THIS FUND SINCE 1998.
<PAGE>
As well as looking for bargains, consumers have also dedicated their spending
toward upgrading their home entertainment systems, a trend referred to by some
as the "digital upgrade cycle." We told you in our last report that we were
optimistic that this trend still had some way to go, and events in the past six
months have justified our confidence. Indeed, DVD players have enjoyed a faster
introduction--or "rollout"--than any earlier consumer electronics innovation,
including VCRs and CD players.
It is important to realize that the effects of strong consumer spending are felt
throughout the economy; indeed, it now accounts for roughly two-thirds of
economic activity. Even given our commitment to investing across all economic
sectors, the consumer spending theme can serve as a general guidepost for our
fund. Much of our technology exposure, for example, has a direct link to the
digital upgrade cycle. Dell Computer and the digital satellite provider GM
Hughes, for example, are both profiting from robust sales of such equipment. Our
corporate bond holdings in areas such as telecommunications have also benefited
from the tendency of Americans to increase their use of technology.
TOO MUCH OF A GOOD THING?
Undoubtedly, too much spending and too much growth pose their own problems.
Worries about inflation have prompted the Federal Reserve Board to raise
short-term interest rates three times since our last report. The Fed's
intervention has helped push long-term interest rates up to their highest levels
in two years. Rising rates, in turn, have also led to greater market volatility,
although higher rates have yet to take a serious toll on the stocks of the
fastest-growing companies.
Consumer spending is highly sensitive to interest rates, of course, as is the
bond component of our portfolio. We remain on guard for more interest rate
increases, but the signals at this point are mixed. On the one hand, the central
bank appears to have accomplished its goal of slowing down the economy somewhat
by indirectly increasing mortgage rates, which have cooled the red-hot
homebuilding sector. If growth slows a bit further, the Federal Reserve may not
feel the need to continue raising rates in 2000. On the other hand, continued
growth above the 3.5% range, generally considered the inflation-free "speed
limit" for the economy, might prompt another round of rate hikes.
Looking forward, we remain optimistic for the markets--and perhaps more
optimistic than we were when we last wrote you. A continuing strong economy
should benefit both the stocks in our portfolio and our holdings of corporate
bonds. While it is probably true that all good things must come to an end, we
see little evidence that the phenomenal U.S. expansion will be derailed anytime
soon.
Thank you for your continued investment in INVESCO Balanced Fund.
/s/Charles P. Mayer /s/ Donovan J. (Jerry) Paul /s/Peter M. Lovell
Charles P. Mayer Donovan J. (Jerry) Paul Peter M. Lovell
Senior Vice President Senior Vice President Vice President
<PAGE>
TOTAL RETURN FUND
Your Fund's Performance: A Report from the Manager
- --------------------------------------------------------------------------------
Dear Shareholder:
This has been a disappointing six months for our fund. When we last wrote you,
we noted that value stocks had made something of a comeback after a long period
of under-performance relative to higher-priced issues. Unfortunately, that rally
proved a short-lived one. The market has since reverted to its pattern of
favoring a select number of stocks, which are now as expensive as any time in
recent memory.
For the six-month period ended November 30, 1999, the value of your shares fell
6.49%. This performance considerably lagged that of the S&P 500 Index, which
gained 7.36% over the same period, as it did that of the Lehman
Government/Corporate Bond Index, which rose 0.43%. (Of course, past performance
is no guarantee of future results.)(1),(2)
AN UNUSUAL COMBINATION
Unfortunately, an orientation toward value stocks and bond investing over this
past year has meant suffering the worst of both worlds. Bond prices have fallen
as interest rates have climbed, meaning that the fixed-income component of our
portfolio has actually contributed negative total returns. At the same time, the
markets have risen on a narrow list of high-growth stocks while shunning many
cyclical stocks.
This has been a highly unusual combination of events. Typically, climbing
interest rates occur as the economy is accelerating, which is also the time that
cyclical companies and those involved in commodity production--traditionally the
hunting grounds of value investors--are thriving. Also, rising interest rates
typically have a more negative effect on growth-oriented firms with higher
price-to-earnings ratios, because the higher rates mean investors are willing to
pay less for future profits. Thus, a value portfolio should be expected to avoid
the sort of "double whammy" that we experienced in 1999.
So we return to the primary question for value investors: What do the past
year's events tell us about what might happen in the future? Has the market
undergone a fundamental shift now that we are in a "new economy"? Are value
stocks destined to continue to underperform even if the market environment
appears amenable to a value approach? Or, on the other hand, will the market
return to its longer-term patterns?
- --------------------------------------------------------------------------------
FUND MANAGERS
EDWARD C. MITCHELL, JR., CFA, CIC
CHAIRMAN & PORTFOLIO MANAGER, INVESCO CAPITAL MANAGEMENT. BA, UNIVERSITY OF
VIRGINIA, MBA; UNIVERSITY OF COLORADO. JOINED INVESCO IN 1979. BEGAN INVESTMENT
CAREER IN 1969. HAS MANAGED THIS FUND SINCE 1987.
JAMES O. BAKER, CFA
PORTFOLIO MANAGER, INVESCO CAPITAL MANAGEMENT. BA, MERCER UNIVERSITY. JOINED
INVESCO IN 1992. BEGAN INVESTMENT CAREER IN 1977. HAS MANAGED THIS FUND SINCE
1993.
THEY ARE ASSISTED BY DAVID S. GRIFFEN, CFA, AND MARGARET HOOGS, CFA.
<PAGE>
THE WEIGHT OF HISTORY
We think that the weight of history suggests the latter scenario is more likely.
Undoubtedly, the new economy has spawned some great new companies based on
technologies with significant promise. But investors now have to determine: Are
those companies really worth valuations that amount to several hundred times
earnings? Yahoo, for example, was recently admitted to the S&P 500 Index with a
valuation of more than 200 times its current sales. For comparison's sake, the
price-to-sales ratio of General Electric, an excellent company with solid
earnings, has been hovering between 1 and 5 over the past several years.
Such extreme valuations are not without precedent. Just as seemingly anything
with "dot com" in its name flourishes today, for example, so the suffix
"tronics" could instantly vault a company to market leadership in the 1960s. But
such highflyers have almost always come back to earth, leaving investors once
again paying attention to the price they pay for future earnings.
This year has been a very frustrating one for us, but we take some comfort in
the fact that our medium- and long-term records are still quite solid. Even
given the very strong performance of growth stocks over the past several years,
for example, we rank almost exactly in the middle of the Balanced Funds category
tracked by Lipper Inc. for the five-year period ended November 30, 1999. For the
10-year period, we rank in the top third. Total Return Fund ranked 417th out of
444 funds for the one-year period; 189th out of 327 balanced funds for the
three-year period; 104th out of 209 for the five-year period; and 20th out of 60
for the 10-year period.(3)
We cannot promise when or even if the market will once again take a more
reasoned look at stock valuations. We can, however, assure you that we will do
our best to position the fund for the return to historically normal
conditions--an eventuality we fully expect.
/s/Edward C. Mitchell, Jr. /s/James O. Baker
Edward C. Mitchell, Jr. James O. Baker
Chairman & Portfolio Manager Portfolio Manager
- --------------------------------------------------------------------------------
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 LEHMAN GOVERNMENT/CORPORATE
BOND INDEX IS CONSIDERED REPRESENTATIVE OF THE BROAD U.S. FIXED INCOME MARKETS.
(3) LIPPER INC. IS AN INDEPENDENT MUTUAL FUND ANALYST. RANKINGS ARE BASED
ON TOTAL RETURN PERFORMANCE UNADJUSTED FOR COMMISSIONS.
<PAGE>
INVESCO | SEMIANNUAL REPORT | NOVEMBER 30, 1999
Moving Forward
- --------------------------------------------------------------------------------
MARKET HEADLINES: JUNE 1999
TO NOVEMBER 1999
The six months ended November 30, 1999 represented the first period in awhile in
which the world's markets were not preoccupied with economic turmoil. With
concerns over currency meltdowns and banking crises finally out of the way,
investors could once again focus on the longer-term economic potential of the
world's economies. In Asia, the financial spigots reopened as confidence
returned, while in Europe the markets moved higher, though more modestly. In the
United States, attention returned to the remarkable economic expansion, now
entering its ninth year.
The U.S. economy finished the last year of the millennium with the strongest job
market in decades--a seemingly sure indicator that inflation would soon be on
the way. Indeed, several moderately troubling inflation signals such as tighter
job markets and healthy wage increases were enough for Alan Greenspan and his
fellow Federal Reserve Board Governors to raise short-term interest rates on
three occasions, leading market interest rates higher.
By the fall, Fed intervention 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 interest rates and a flatter stock market.
Meanwhile, bond prices languished due to higher rates and an imbalance between
supply and demand.
With the world economy coming back to life and consumers still spending,
however, rising rates barely slowed down most major U.S. companies. Indeed,
profit growth at many firms surged back from last year'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
throughout the summer and early fall. Interestingly, many market watchers became
more optimistic about performance in 2000, based partly on their hope that the
Y2K issue would no longer hang over the markets. Indeed, October and November
saw a strong rally driven largely by strong mutual fund inflows, which suggested
that an increasingly confident investing public was putting its money to
work--and the first indications of holiday spending suggested that the Grinch
would not steal Christmas in 1999.
<PAGE>
TEN LARGEST COMMON STOCK HOLDINGS
INVESCO Combination Stock & Bond Funds, Inc.
NOVEMBER 30, 1999
UNAUDITED
DESCRIPTION VALUE
- --------------------------------------------------------------------------------
Balanced Fund
Tandy Corp $ 7,923,025
General Electric 7,436,000
Citigroup Inc 7,122,275
Warner-Lambert Co 7,049,437
General Motors Class H Shrs 6,944,187
Kansas City Southern Industries 6,700,781
Chase Manhattan 6,674,400
Wal-Mart Stores 6,494,337
McDonald's Corp 6,300,000
Maxim Integrated Products 6,256,344
Equity Income Fund
Kansas City Southern Industries $ 160,818,750
Bank of New York 159,500,000
General Electric 156,000,000
Tandy Corp 131,810,325
AlliedSignal Inc 113,643,750
US WEST 111,712,500
Merck & Co 109,900,000
Warner-Lambert Co 107,625,000
Dayton Hudson 98,787,500
Exxon Corp 95,175,000
Total Return Fund
AT&T Corp $ 43,599,262
Merck & Co 43,175,000
Nucor Corp 41,671,462
International Business Machines 37,844,550
Repsol SA Sponsored ADR Representing Ord Shrs 35,939,700
Columbia/HCA Healthcare 32,520,150
Hewlett-Packard Co 30,483,337
Morgan Stanley Dean Witter & Co 30,156,250
Computer Associates International 29,835,000
Bank of America 29,536,650
Composition of holdings is subject to change.
<PAGE>
STATEMENT OF INVESTMENT SECURITIES
INVESCO Combination Stock & Bond Funds, Inc.
NOVEMBER 30, 1999
UNAUDITED
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
<S> <C> <C> <C>
Balanced Fund
61.24 COMMON STOCKS
1.50 AUTOMOBILES
General Motors Class H Shrs(a) 81,100 $ 6,944,187
===========================================================================================
4.93 BANKS
Bank of New York 134,800 5,375,150
Chase Manhattan 86,400 6,674,400
Morgan (J P) & Co 41,900 5,509,850
Wells Fargo 112,900 5,249,850
===========================================================================================
22,809,250
2.30 BEVERAGES
Anheuser-Busch Cos 59,700 4,466,306
Coca-Cola Co 91,800 6,179,287
===========================================================================================
10,645,593
2.42 BROADCASTING
AT&T Corp-Liberty Media Group Class A Shrs(a) 112,000 4,683,000
Clear Channel Communications(a) 63,100 5,071,662
TV Guide Class A Shrs(a) 23,000 1,459,782
===========================================================================================
11,214,444
0.88 CABLE
Charter Communications Class A Shrs(a) 176,000 4,081,000
===========================================================================================
2.20 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Lucent Technologies 68,200 4,982,862
Motorola Inc 45,600 5,209,800
===========================================================================================
10,192,662
2.33 COMPUTER RELATED
Dell Computer(a) 128,700 5,534,100
Microsoft Corp(a) 57,900 5,271,614
===========================================================================================
10,805,714
0.78 ELECTRIC UTILITIES
Unicom Corp 112,500 3,592,969
===========================================================================================
1.61 ELECTRICAL EQUIPMENT
General Electric 57,200 7,436,000
===========================================================================================
3.47 ELECTRONICS -- SEMICONDUCTOR
Intel Corp 69,200 5,306,775
Maxim Integrated Products(a) 77,900 6,256,344
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Texas Instruments 47,000 $ 4,514,937
===========================================================================================
16,078,056
1.02 ENTERTAINMENT
Gemstar International Group Ltd(a) 42,000 4,735,500
===========================================================================================
1.54 FINANCIAL
Citigroup Inc 132,200 7,122,275
===========================================================================================
0.81 FOODS
Heinz (HJ) Co 89,000 3,726,875
===========================================================================================
1.21 GAMING
Harrah's Entertainment(a) 202,100 5,583,012
===========================================================================================
5.43 HEALTH CARE DRUGS -- PHARMACEUTICALS
Bristol-Myers Squibb 58,200 4,252,237
Johnson & Johnson 45,700 4,741,375
Merck & Co 70,200 5,510,700
SmithKline Beecham PLC Sponsored ADR
Representing 5 Ord Shrs 53,500 3,557,750
Warner-Lambert Co 78,600 7,049,437
===========================================================================================
25,111,499
0.92 HEALTH CARE RELATED
Medtronic Inc 110,000 4,276,250
===========================================================================================
1.94 HOUSEHOLD PRODUCTS
Colgate-Palmolive Co 79,400 4,357,075
Procter & Gamble 42,900 4,633,200
===========================================================================================
8,990,275
1.15 INSURANCE
Allmerica Financial 96,100 5,303,519
===========================================================================================
1.16 INVESTMENT BANK/BROKER FIRM
Morgan Stanley Dean Witter & Co 44,400 5,355,750
===========================================================================================
1.77 MANUFACTURING
AlliedSignal Inc 70,400 4,210,800
Textron Inc 55,800 3,965,287
===========================================================================================
8,176,087
3.27 OIL & GAS RELATED
Apache Corp 68,000 2,435,250
BP Amoco PLC Sponsored ADR Representing 6 Ord Shrs 67,600 4,119,375
Exxon Corp 64,800 5,139,450
Schlumberger Ltd 57,500 3,453,594
===========================================================================================
15,147,669
1.19 PAPER & FOREST PRODUCTS
Champion International 44,400 2,461,425
Weyerhaeuser Co 49,400 3,025,750
===========================================================================================
5,487,175
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
1.45 RAILROADS
Kansas City Southern Industries 112,500 $ 6,700,781
===========================================================================================
1.36 RESTAURANTS
McDonald's Corp 140,000 6,300,000
===========================================================================================
6.89 RETAIL
Amazon.com Inc(a) 63,800 5,426,988
Circuit City Stores-Circuit City Group 120,000 5,820,000
Dayton Hudson 88,300 6,230,669
Tandy Corp 103,400 7,923,025
Wal-Mart Stores 112,700 6,494,337
===========================================================================================
31,895,019
1.24 SERVICES
America Online(a) 78,800 5,727,775
===========================================================================================
1.13 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Nextel Communications Class A Shrs(a) 53,000 5,253,625
===========================================================================================
2.73 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 100,000 5,587,500
Cable & Wireless PLC Sponsored ADR Representing
3 Ord Shrs 117,900 4,686,525
Qwest Communications International(a) 69,400 2,372,612
===========================================================================================
12,646,637
2.61 TELEPHONE
BellSouth Corp 110,500 5,103,719
SBC Communications 98,700 5,126,231
US WEST 30,000 1,861,875
===========================================================================================
12,091,825
TOTAL COMMON STOCKS (Cost $214,656,716) 283,431,423
===========================================================================================
1.05 PREFERRED STOCKS
1.05 COMPUTER RELATED
SAP AG Sponsored ADR Representing 1/12 Pfd Shrs
(Cost $5,277,677) 144,600 4,853,138
===========================================================================================
32.91 FIXED INCOME SECURITIES
8.73 US Government Obligations
US Treasury Notes
6.000%, 8/15/2004 $ 5,000,000 4,976,565
6.000%, 8/15/2009 $ 5,500,000 5,431,250
5.625%, 5/15/2008 $ 24,355,000 23,304,691
5.500%, 5/15/2009 $ 3,000,000 2,853,750
5.250%, 5/15/2004 $ 4,000,000 3,865,000
===========================================================================================
TOTAL US GOVERNMENT OBLIGATIONS
(Amortized Cost $42,160,922) 40,431,256
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
2.64 US GOVERNMENT AGENCY OBLIGATIONS
Freddie Mac, Gold, Participation Certificates
6.500%, 6/1/2011 $ 5,951,857 $ 5,840,067
6.500%, 9/1/2011 $ 5,979,485 5,867,177
Freddie Mac, Multiclass Mortgage, Gtd
Participation Certificates, Series 1449,
Class E, 6.000%, 11/15/2005 $ 481 479
Student Loan Marketing Association, Notes,
Series CQ 5.516%(e), 3/7/2001 $ 500,000 496,900
===========================================================================================
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Amortized Cost $12,133,335) 12,204,623
===========================================================================================
21.54 CORPORATE BONDS
0.39 AIRLINES
Delta Air Lines, Deb, 10.375%, 12/15/2022 $ 1,500,000 1,800,984
===========================================================================================
0.33 BUILDING MATERIALS
USG Corp, Sr Notes, 8.500%, 8/1/2005 $ 1,500,000 1,548,441
===========================================================================================
0.74 CABLE
TCI Communications, Sr Deb, 7.875%, 2/15/2026 $ 1,000,000 1,023,387
Tele-Communications Inc, Sr Deb, 9.800%, 2/1/2012 $ 2,000,000 2,383,284
===========================================================================================
3,406,671
0.18 CHEMICALS
Equistar Chemicals LP, Deb, 7.550%, 2/15/2026 $ 1,000,000 825,401
===========================================================================================
12.11 ELECTRIC UTILITIES
Arizona Public Service, 1st Mortgage, 8.000%,
2/1/2025 $ 1,500,000 1,454,250
Central Power & Light, 1st Mortgage, Series II
7.500%, 4/1/2023 $ 2,500,000 2,353,705
Commonwealth Edison, 1st Mortgage
Series 76, 8.250%, 10/1/2006 $ 2,000,000 1,982,664
7.000%, 7/1/2005 $ 1,000,000 1,039,619
Connecticut Light & Power, 1st Refunding Mortgage
Series 94C, 8.500%, 6/1/2024 $ 2,875,000 2,909,405
Consumers Energy, 1st & Refunding Mortgage
7.375%, 9/15/2023 $ 2,000,000 1,825,480
Detroit Edison, Secured Medium-Term Notes,
Series C 8.300%, 1/13/2023 $ 1,000,000 1,004,517
DQU-II Funding, Collateral Lease, 8.700%,
6/1/2016 $ 33,000 34,422
Duquesne Light
1st Collateral Trust, 8.375%, 5/15/2024 $ 2,000,000 1,981,554
Secured Medium-Term Notes, Series B
8.200%, 11/15/2022 $ 1,000,000 993,908
El Paso Electric, 1st Mortgage, Series D
8.900%, 2/1/2006 $ 4,000,000 4,177,460
Gulf Power, 1st Mortgage, 6.875%, 1/1/2026 $ 3,000,000 2,665,470
Gulf States Utilities, 1st Mortgage, 8.700%,
4/1/2024 $ 1,000,000 998,914
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Jersey Central Power & Light
1st Mortgage, 7.500%, 5/1/2023 $ 2,000,000 $ 1,894,640
Sr Secured Medium-Term Notes, Series C
7.980%, 2/16/2023 $ 2,000,000 1,939,246
Kentucky Utilities, 1st Mortgage
Series R, 7.550%, 6/1/2025 $ 2,000,000 1,880,838
Metropolitan Edison, Secured Medium-Term Notes
Series B, 8.150%, 1/30/2023 $ 2,000,000 1,959,968
New York State Electric & Gas, 1st Mortagage
8.300%, 12/15/2022 $ 1,500,000 1,475,546
Niagara Mohawk Power, 1st Mortgage
8.500%, 7/1/2023 $ 1,750,000 1,726,043
7.750%, 5/15/2006 $ 4,000,000 4,025,372
Potomac Edison, 1st Mortgage, 7.750%, 5/1/2025 $ 4,000,000 3,879,456
Public Service Electric & Gas, 1st Mortgage
6.375%, 5/1/2008 $ 1,400,000 1,315,867
Public Service of Colorado, 1st Mortgage,
9.875%, 7/1/2020 $ 1,500,000 1,587,486
Public Service of New Mexico, Series B
Sr Notes, 7.500%, 8/1/2018 $ 3,500,000 3,262,277
Texas Utilities, 1st Mortgage, 7.375%, 10/1/2025 $ 2,000,000 1,820,260
Union Electric, 1st Mortgage
8.750%, 12/1/2021 $ 3,250,000 3,338,819
8.250%, 10/15/2022 $ 500,000 502,805
Wisconsin Electric Power, 1st Mortgage, 8.375%,
12/1/2026 $ 2,000,000 2,017,760
===========================================================================================
56,047,751
0.74 ENTERTAINMENT
Paramount Communications, Sr Deb, 8.250%,
8/1/2022 $ 3,400,000 3,411,288
===========================================================================================
0.43 FINANCIAL
Associates Corp of North America, Sr Unsecured Euro
Euro Medium-Term Notes, Series 8, 7.375%,
6/11/2007(b) $ 2,000,000 2,010,522
===========================================================================================
1.03 INSURANCE
Equitable Cos, Sr Notes, 9.000%, 12/15/2004 $ 2,500,000 2,672,568
Progressive Corp, Sr Notes, 6.625%, 3/1/2029 $ 2,500,000 2,111,340
===========================================================================================
4,783,908
0.19 LODGING -- HOTELS
Hilton Hotels, Sr Notes, 7.200%, 12/15/2009 $ 1,000,000 880,684
===========================================================================================
1.95 OIL & GAS RELATED
Atlantic Richfield, Deb, 10.875%, 7/15/2005 $ 1,500,000 1,765,347
Mobil Corp, Deb, 8.625%, 8/15/2021 $ 3,000,000 3,395,205
Panhandle Eastern Pipe Line, Sr Notes, 6.500%,
7/15/2009 $ 1,000,000 927,351
Sun Inc, Deb, 9.375%, 6/1/2016 $ 1,000,000 1,050,580
Vastar Resources, Notes, 6.500%, 4/1/2009 $ 2,000,000 1,887,862
===========================================================================================
9,026,345
0.70 PAPER & FOREST PRODUCTS
Chesapeake Corp, Deb, 7.200%, 3/15/2005 $ 3,500,000 3,230,913
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.30 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp, Notes, 6.000%, 3/15/2009 $ 1,500,000 $ 1,381,611
===========================================================================================
2.45 TELEPHONE
Centel Capital, Deb, 9.000%, 10/15/2019 $ 2,500,000 2,718,678
Citizens Utilities, Deb, 7.000%, 11/1/2025 $ 675,000 598,712
GTE Corp, Deb, 7.900%, 2/1/2027 $ 2,250,000 2,198,140
Metronet Communications, Sr Discount Step-Up
Notes(c) Zero Coupon, 6/15/2008 $ 6,250,000 4,867,188
US WEST Communications, Notes, 5.650%, 11/1/2004 $ 1,000,000 944,524
===========================================================================================
11,327,242
TOTAL CORPORATE BONDS (Amortized Cost $105,943,873) 99,681,761
===========================================================================================
TOTAL FIXED INCOME SECURITIES (Amortized Cost $160,238,130) 152,317,640
===========================================================================================
4.80 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated
11/30/1999 due 12/1/1999 at 5.550%, repurchased
at $22,238,428 (Collateralized by US Treasury
Notes, due 1/15/2008 at 3.625%, value
$22,378,323) (Cost $22,235,000) $ 22,235,000 22,235,000
===========================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $402,407,523)
(Cost for Income Tax Purposes $402,448,593) $ 462,837,201
===========================================================================================
Equity Income Fund
85.31 COMMON STOCKS
0.51 AEROSPACE & DEFENSE
Northrop Grumman 440,000 $ 24,722,500
===========================================================================================
2.40 AUTOMOBILES
Ford Motor 800,000 40,400,000
General Motors Class H Shrs(a) 896,800 76,788,500
===========================================================================================
117,188,500
7.20 BANKS
Bank of New York 4,000,000 159,500,000
Chase Manhattan 850,000 65,662,500
Morgan (J P) & Co 500,000 65,750,000
Wells Fargo 1,300,000 60,450,000
===========================================================================================
351,362,500
2.96 BEVERAGES
Anheuser-Busch Cos 1,171,000 87,605,437
Coca-Cola Co 847,000 57,013,688
===========================================================================================
144,619,125
1.03 BROADCASTING
AT&T Corp-Liberty Media Group Class A Shrs(a) 1,200,000 50,175,000
===========================================================================================
0.88 CABLE
Charter Communications Class A Shrs(a) 1,857,000 43,059,188
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.31 CHEMICALS
Lyondell Chemical 1,090,000 $ 15,260,000
===========================================================================================
2.49 COMPUTER RELATED
Computer Associates International 450,000 29,250,000
Galileo International 1,029,000 32,928,000
Microsoft Corp(a) 650,000 59,180,469
===========================================================================================
121,358,469
1.04 ELECTRIC UTILITIES
Duke Energy 450,000 22,809,375
PG&E Corp 700,000 15,662,500
Scottish Power PLC Sponsored ADR Representing
4 Ord Shrs 348,000 12,158,250
===========================================================================================
50,630,125
3.20 ELECTRICAL EQUIPMENT
General Electric 1,200,000 156,000,000
===========================================================================================
3.31 ELECTRONICS -- SEMICONDUCTOR
Intel Corp 1,000,000 76,687,500
Maxim Integrated Products(a) 400,000 32,125,000
Texas Instruments 550,000 52,834,375
===========================================================================================
161,646,875
1.47 FINANCIAL
Citigroup Inc 1,331,400 71,729,175
===========================================================================================
4.61 FOODS
General Mills 2,000,000 75,375,000
Heinz (H J) Co 1,192,000 49,915,000
Kellogg Co 1,600,000 54,200,000
Quaker Oats 700,000 45,675,000
===========================================================================================
225,165,000
0.71 GAMING
Park Place Entertainment(a) 2,700,000 34,762,500
===========================================================================================
0.27 GOLD & PRECIOUS METALS MINING
Newmont Mining 550,000 13,028,125
===========================================================================================
9.39 HEALTH CARE DRUGS -- PHARMACEUTICALS
American Home Products 1,000,000 52,000,000
Bristol-Myers Squibb 1,050,000 76,715,625
Merck & Co 1,400,000 109,900,000
Pfizer Inc 500,000 18,093,750
Pharmacia & Upjohn 750,000 41,015,625
SmithKline Beecham PLC Sponsored ADR
Representing 5 Ord Shrs 800,000 53,200,000
Warner-Lambert Co 1,200,000 107,625,000
===========================================================================================
458,550,000
1.27 HEALTH CARE RELATED
Medtronic Inc 1,600,000 62,200,000
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
2.23 HOUSEHOLD PRODUCTS
Colgate-Palmolive Co 1,100,000 $ 60,362,500
Procter & Gamble 450,000 48,600,000
===========================================================================================
108,962,500
1.48 INSURANCE
Allmerica Financial 1,306,818 72,120,018
===========================================================================================
1.11 INVESTMENT BANK/BROKER FIRM
Morgan Stanley Dean Witter & Co 450,000 54,281,250
===========================================================================================
0.94 LODGING -- HOTELS
Hilton Hotels 2,525,000 25,407,812
Marriott International Class A Shrs 625,000 20,351,563
===========================================================================================
45,759,375
3.35 MANUFACTURING
AlliedSignal Inc 1,900,000 113,643,750
Textron Inc 700,000 49,743,750
===========================================================================================
163,387,500
0.19 NATURAL GAS
Kinder Morgan 450,000 9,140,625
===========================================================================================
7.49 OIL & GAS RELATED
Apache Corp 1,000,000 35,812,500
Atlantic Richfield 800,000 77,100,000
Exxon Corp 1,200,000 95,175,000
Royal Dutch Petroleum New York Registry 1.25
Gldr Shrs 1,000,000 58,000,000
Schlumberger Ltd 1,100,000 66,068,750
Unocal Corp 1,000,000 33,187,500
===========================================================================================
365,343,750
1.79 PAPER & FOREST PRODUCTS
Champion International 650,000 36,034,375
Weyerhaeuser Co 840,500 51,480,625
===========================================================================================
87,515,000
3.82 RAILROADS
Kansas City Southern Industries 2,700,000 160,818,750
Norfolk Southern 1,200,000 25,650,000
===========================================================================================
186,468,750
0.33 REAL ESTATE INVESTMENT TRUST
Health Care Property Investors 420,000 10,893,750
Healthcare Realty Trust 300,000 4,968,750
===========================================================================================
15,862,500
1.25 RESTAURANTS
McDonald's Corp 1,357,900 61,105,500
===========================================================================================
7.38 RETAIL
Circuit City Stores-Circuit City Group 1,000,000 48,500,000
Dayton Hudson 1,400,000 98,787,500
Penney (JC) Co 1,000,000 22,312,500
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
Tandy Corp 1,720,200 $ 131,810,325
Wal-Mart Stores 1,023,600 58,984,950
===========================================================================================
360,395,275
0.83 SAVINGS & LOAN
Charter One Financial 1,863,423 40,412,986
===========================================================================================
0.60 SERVICES
America Online(a) 400,000 29,075,000
===========================================================================================
1.02 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Nextel Communications Class A Shrs(a) 500,000 49,562,500
===========================================================================================
1.63 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 1,000,000 55,875,000
Cable & Wireless PLC Sponsored ADR Representing
3 Ord Shrs 600,000 23,850,000
===========================================================================================
79,725,000
6.39 TELEPHONE
Bell Atlantic 1,300,000 82,306,250
GTE Corp 600,000 43,800,000
SBC Communications 1,429,700 74,255,044
US WEST 1,800,000 111,712,500
===========================================================================================
312,073,794
0.43 TOBACCO
Philip Morris 800,000 21,050,000
===========================================================================================
TOTAL COMMON STOCKS (Cost $2,632,102,363) 4,163,698,405
===========================================================================================
10.47 FIXED INCOME SECURITIES
0.20 US GOVERNMENT OBLIGATIONS
US Treasury Notes, 6.000%, 8/15/2009
(Amortized Cost $9,940,737) $ 10,000,000 9,875,000
===========================================================================================
10.27 CORPORATE BONDS
0.45 BUILDING MATERIALS
USG Corp, Sr Notes, 8.500%, 8/1/2005 $ 21,093,000 21,774,177
===========================================================================================
0.30 CABLE
Comcast Cable Partners Ltd, Sr Discount
Step-Up Deb, Zero Coupon(c), 11/15/2007 $ 5,850,000 5,484,375
TeleWest PLC, Sr Discount Step-Up Deb
Zero Coupon(c), 10/1/2007 $ 10,000,000 9,237,500
===========================================================================================
14,721,875
0.11 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Worldwide Fiber, Sr Notes, 12.500%, 12/15/2005 $ 5,000,000 5,200,000
===========================================================================================
0.10 COMPUTER RELATED
PSINet Inc, Sr Notes(d),10.500%, 12/1/2006 $ 5,000,000 5,043,750
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
4.05 ELECTRIC UTILITIES
Cleveland Electric Illuminating
1st Mortgage, Series B, 9.500%, 5/15/2005 $ 16,000,000 $ 16,694,720
1st Mortgage, Series E, 9.000%, 7/1/2023 $ 2,150,000 2,211,808
Sr Secured Notes, Series D
7.880%, 11/1/2017 $ 9,245,000 8,883,003
7.430%, 11/1/2009 $ 9,500,000 9,116,627
Connecticut Light & Power, 1st Refunding Mortgage
Series C, 8.500%, 6/1/2024 $ 7,250,000 7,336,761
Consumers Energy, 1st Refunding Mortgage
7.375%, 9/15/2023 $ 10,700,000 9,766,318
Detroit Edison
1st Mortgage Medium-Term Notes, Series C
8.240%, 1/13/2023 $ 5,600,000 5,622,932
Secured Medium-Term Notes
Series C, 8.300%, 1/13/2023 $ 5,000,000 5,022,585
Series D, 8.310%, 8/1/2022 $ 3,000,000 3,022,542
DQU-II Funding, Collateral Lease, 8.700%,
6/1/2016 $288,000 300,410
Duquesne Light, Medium-Term Notes
Series B, 8.200%, 11/15/2022 $ 8,000,000 7,951,264
El Paso Electric, 1st Mortgage
Series C, 8.250%, 2/1/2003 $ 5,000,000 5,103,465
Series D, 8.900%, 2/1/2006 $ 14,600,000 15,247,729
Gulf States Utilities, 1st Mortgage, 8.700%,
4/1/2024 $ 5,700,000 5,693,810
Jersey Central Power & Light
1st Mortgage, 7.500%, 5/1/2023 $ 10,000,000 9,473,200
Sr Secured Medium-Term Notes
Series C, 7.980%, 2/16/2023 $ 10,000,000 9,696,230
Metropolitan Edison, Secured Medium-Term Notes
Series B, 8.150%, 1/30/2023 $ 19,950,000 19,550,681
New York State Electric & Gas, 1st Mortgage
8.300%, 12/15/2022 $ 8,250,000 8,115,500
Niagara Mohawk Power,
1st Mortgage, 8.500%, 7/1/2023 $ 12,500,000 12,328,875
Sr Notes, Series G, 7.750%, 10/1/2008 $ 6,600,000 6,673,577
Pennsylvania Power, 1st Mortgage, 8.500%,
7/15/2022 $ 2,000,000 1,960,084
Potomac Edison, 1st Mortgage, 8.000%, 6/1/2024 $ 7,250,000 7,223,646
Public Service of New Mexico, Sr Notes
Series A, 7.100%, 8/1/2005 $ 11,125,000 10,788,246
Southwestern Public Service, 1st Mortgage
8.200%, 12/1/2022 $ 3,000,000 3,008,601
Texas Utilities, 1st Mortgage, 7.375%, 10/1/2025 $ 2,500,000 2,275,325
Union Electric, 1st Mortgage, 8.750%, 12/1/2021 $ 4,600,000 4,725,713
===========================================================================================
197,793,652
0.09 ELECTRICAL EQUIPMENT
Alpine Group, Sr Secured Notes, Series B
12.250%, 7/15/2003 $ 4,249,000 4,376,470
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.12 ENTERTAINMENT
Paramount Communications, Sr Deb
8.250%, 8/1/2022 $ 5,800,000 $ 5,819,256
===========================================================================================
0.13 HEALTH CARE RELATED
FHP International, Sr Notes
7.000%, 9/15/2003 $ 6,450,000 6,242,310
===========================================================================================
0.05 HOUSEHOLD PRODUCTS
Home Products International, Sr Sub Notes
9.625%, 5/15/2008 $ 2,500,000 2,250,000
===========================================================================================
0.52 INSURANCE
Equitable Cos, Sr Notes, 9.000%, 12/15/2004 $ 23,610,000 25,239,727
===========================================================================================
0.16 IRON & STEEL
National Steel, 1st Mortgage, 8.375%, 8/1/2006 $ 8,000,000 8,080,000
===========================================================================================
0.22 LODGING -- HOTELS
Hilton Hotels, Sr Notes, 7.200%, 12/15/2009 $ 12,270,000 10,805,993
===========================================================================================
0.09 NATURAL GAS
NorAm Energy, Conv Sub Deb, 6.000%, 3/15/2012 $ 4,637,000 4,266,040
===========================================================================================
2.08 OIL & GAS RELATED
Atlantic Richfield, Deb
10.875%, 7/15/2005 $ 9,030,000 10,627,389
9.125%, 8/1/2031 $ 2,757,000 3,283,471
9.000%, 4/1/2021 $ 22,460,000 26,045,447
9.000%, 5/1/2031 $ 2,353,000 2,750,281
8.750%, 3/1/2032 $ 2,326,000 2,665,736
Canadian Forest Oil Ltd, Gtd Sr Sub Notes
8.750%, 9/15/2007 $ 8,660,000 8,335,250
Cliffs Drilling, Sr Notes
Series B, 10.250%, 5/15/2003 $ 4,000,000 4,020,000
Series D, 10.250%, 5/15/2003 $ 1,060,000 1,065,300
Coda Energy, Gtd Sr Sub Notes, Series B
10.500%, 4/1/2006 $ 5,000,000 5,125,000
Gulf Canada Resources Ltd, Sr Notes
8.350%, 8/1/2006 $ 3,750,000 3,712,500
8.250%, 3/15/2017 $ 5,000,000 4,395,900
Mobil Corp, Deb, 8.625%, 8/15/2021 $ 8,000,000 9,053,880
Ocean Energy, Gtd Sr Sub Notes, 9.750%, 10/1/2006 $ 13,716,000 15,053,310
Panhandle Eastern Pipe Line, Sr Notes
7.000%, 7/15/2029 $ 6,000,000 5,319,546
===========================================================================================
101,453,010
0.17 POLLUTION CONTROL
Allied Waste North America, Sr Sub Notes(d)
10.000%, 8/1/2009 $ 8,950,000 8,133,313
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.13 SAVINGS & LOAN
Sovereign Bancorp, Medium-Term Notes
8.000%, 3/15/2003 $ 6,500,000 $ 6,577,799
===========================================================================================
0.02 SERVICES
NationsRent Inc, Sr Sub Notes
10.375%, 12/15/2008 $ 1,250,000 1,225,000
===========================================================================================
0.11 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Cencall Communications, Sr Discount Step-Up Notes
10.125%(c), 1/15/2004 $ 5,250,000 5,433,750
===========================================================================================
0.37 TELECOMMUNICATIONS -- LONG DISTANCE
GlobeNet Communications Group, Sr Notes(d)
13.000%, 7/15/2007 $ 1,000,000 1,012,500
IXC Communications, Sr Sub Notes
9.000%, 4/15/2008 $ 2,000,000 2,020,000
Level 3 Communications, Sr Discount Step-Up Notes
Zero Coupon(c), 12/1/2008 $ 17,400,000 10,527,000
Qwest Communications International, Sr Discount
Step-Up Notes, Series B, Zero Coupon(c),
10/15/2007 $ 5,340,000 4,312,050
===========================================================================================
17,871,550
1.00 TELEPHONE
Centel Capital, Deb, 9.000%, 10/15/2019 $ 5,000,000 5,437,355
Citizens Utilities, Deb, 7.000%, 11/1/2025 $ 4,950,000 4,390,551
GTE Corp, Deb, 7.900%, 2/1/2027 $ 3,000,000 2,930,853
McLeodUSA Inc, Sr Notes, 8.125%, 2/15/2009 $ 4,250,000 3,963,125
MetroNet Communications, Sr Discount Step-Up Notes
Zero Coupon(c), 11/1/2007 $ 8,250,000 6,806,250
Zero Coupon(c), 6/15/2008 $ 12,750,000 9,929,062
NEXTLINK Communications, Sr Notes
9.625%, 10/1/2007 $ 5,425,000 5,262,250
NEXTLINK Communications LLC/NEXTLINK Capital
Sr Notes, 12.500%, 4/15/2006 $ 4,750,000 5,094,375
RCN Corp, Sr Discount Step-Up Notes
Series B, Zero Coupon(c), 2/15/2008 $ 7,600,000 4,902,000
===========================================================================================
48,715,821
TOTAL CORPORATE BONDS (Amortized Cost $527,087,717) 501,023,493
===========================================================================================
TOTAL FIXED INCOME SECURITIES (Amortized Cost $537,028,454) 510,898,493
===========================================================================================
4.22 SHORT-TERM INVESTMENTS
4.20 COMMERCIAL PAPER
1.54 CONSUMER FINANCE
American Express Credit, 5.700%, 12/3/1999 $ 40,000,000 40,000,000
General Motors Acceptance, 5.580%, 12/3/1999 $ 5,000,000 5,000,000
Sears Roebuck Acceptance, 5.530%, 12/2/1999 $ 30,000,000 30,000,000
===========================================================================================
75,000,000
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
2.66 FINANCIAL
American General, 5.680%, 12/1/1999 $ 30,000,000 $ 30,000,000
Deere & Co, 5.570%, 12/2/1999 $ 25,000,000 25,000,000
Ford Motor Credit, 5.580%, 12/7/1999 $ 35,000,000 35,000,000
Heller Financial, 5.730%, 12/6/1999 $ 40,000,000 40,000,000
===========================================================================================
130,000,000
TOTAL COMMERCIAL PAPER (Cost $205,000,000) 205,000,000
===========================================================================================
0.02 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated
11/30/1999 due 12/1/1999 at 5.550%, repurchased
at $1,275,197 (Collateralized by US Treasury
Inflationary Index Notes due 1/15/2008 at
3.625%, value $1,304,239) (Cost $1,275,000) $ 1,275,000 1,275,000
===========================================================================================
TOTAL SHORT-TERM INVESTMENTS (Cost $206,275,000) 206,275,000
===========================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $3,375,405,817)
(Cost for Income Tax Purposes $3,375,436,784) $ 4,880,871,898
===========================================================================================
Total Return Fund
67.96 COMMON STOCKS
1.57 AEROSPACE & DEFENSE
Boeing Co 413,100 $ 16,859,644
Lockheed Martin 642,600 12,771,675
Raytheon Co Class B Shrs 367,200 11,268,450
United Technologies 100,000 5,650,000
===========================================================================================
46,549,769
0.45 AIRLINES
Southwest Airlines 826,200 13,477,387
===========================================================================================
1.56 AUTO PARTS
Cooper Tire & Rubber 826,200 12,393,000
Genuine Parts 734,400 18,910,800
Johnson Controls 275,000 14,987,500
===========================================================================================
46,291,300
0.86 AUTOMOBILES
Ford Motor 504,900 25,497,450
===========================================================================================
4.31 BANKS
Bank of America 504,900 29,536,650
Bank One 688,500 24,269,625
First Union 688,500 26,636,344
FleetBoston Financial 300,000 11,343,750
National City 1,156,700 28,845,206
Wachovia Corp 91,800 7,108,763
===========================================================================================
127,740,338
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.58 BEVERAGES
Anheuser-Busch Cos 229,500 $ 17,169,469
===========================================================================================
1.28 BUILDING MATERIALS
Lowe's Cos 367,200 18,291,150
Sherwin-Williams Co 688,500 14,759,719
Vulcan Materials 125,000 5,031,250
===========================================================================================
38,082,119
1.34 CHEMICALS
Dow Chemical 183,600 21,504,150
Great Lakes Chemical 550,800 18,279,675
===========================================================================================
39,783,825
5.33 COMPUTER RELATED
Cadence Design Systems(a) 989,600 17,565,400
Compaq Computer 1,101,600 26,920,350
Computer Associates International 459,000 29,835,000
Compuware Corp(a) 459,000 15,519,937
Hewlett-Packard Co 321,300 30,483,337
International Business Machines 367,200 37,844,550
===========================================================================================
158,168,574
1.95 CONGLOMERATES
Fortune Brands 275,400 9,415,237
Hanson PLC Sponsored ADR Representing 5 Ord Shrs 520,000 21,515,000
National Service Industries 459,000 13,569,187
Unilever NV New York Registered Shrs 245,857 13,383,840
===========================================================================================
57,883,264
0.32 CONTAINERS
Crown Cork & Seal 459,000 9,352,125
===========================================================================================
0.75 DISTRIBUTION
Supervalu Inc 1,147,500 22,304,531
===========================================================================================
3.67 ELECTRIC UTILITIES
DTE Energy 642,600 21,245,962
Edison International 550,800 14,596,200
Entergy Corp 918,000 25,302,375
GPU Inc 780,300 24,969,600
TECO Energy 550,800 11,016,000
Unicom Corp 367,200 11,727,450
===========================================================================================
108,857,587
2.50 ELECTRICAL EQUIPMENT
Emerson Electric 150,000 8,550,000
General Electric 183,600 23,868,000
Grainger (W W) Inc 459,000 21,630,375
Rockwell International 403,900 20,043,537
===========================================================================================
74,091,912
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.45 ELECTRONICS -- SEMICONDUCTOR
Intel Corp 175,000 $ 13,420,312
===========================================================================================
0.70 FINANCIAL
Citigroup Inc 200,000 10,775,000
Fannie Mae 150,000 9,993,750
===========================================================================================
20,768,750
1.00 FOODS
Archer-Daniels-Midland Co 860,225 10,699,048
Heinz (HJ) Co 183,600 7,688,250
Sara Lee 459,000 11,130,750
===========================================================================================
29,518,048
0.56 HARDWARE & TOOLS
Snap-On Inc 550,800 16,661,700
===========================================================================================
5.01 HEALTH CARE DRUGS -- PHARMACEUTICALS
Abbott Laboratories 367,200 13,953,600
American Home Products 367,200 19,094,400
Bristol-Myers Squibb 367,200 26,828,550
Lilly (Eli) & Co 275,400 19,759,950
Merck & Co 550,000 43,175,000
Mylan Laboratories 100,000 2,356,250
Schering-Plough Corp 455,400 23,282,325
===========================================================================================
148,450,075
1.65 HEALTH CARE RELATED
Biomet Inc 100,000 3,168,750
Columbia/HCA Healthcare 1,193,400 32,520,150
Quintiles Transnational(a) 596,700 13,164,694
===========================================================================================
48,853,594
0.85 HOUSEHOLD FURNITURE & APPLIANCES
Shaw Industries 367,200 5,760,450
Whirlpool Corp 321,300 19,599,300
===========================================================================================
25,359,750
5.91 INSURANCE
Allstate Corp 918,000 24,040,125
American General 367,200 26,920,350
Lincoln National 367,200 15,307,650
Loews Corp 367,200 23,500,800
MGIC Investment 450,000 25,425,000
Ohio Casualty 1,193,400 18,385,834
Old Republic International 642,600 8,032,500
SAFECO Corp 459,000 10,872,563
St Paul Cos 596,700 18,012,881
Torchmark Corp 150,000 4,762,500
===========================================================================================
175,260,203
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.80 INSURANCE BROKERS
Marsh & McLennan 302,900 $ 23,815,512
===========================================================================================
1.02 INVESTMENT BANKER/BROKER FIRM
Morgan Stanley Dean Witter & Co 250,000 30,156,250
===========================================================================================
1.40 IRON & STEEL
Nucor Corp 826,200 41,671,462
===========================================================================================
1.99 MACHINERY
Caterpillar Inc 459,000 21,286,125
Deere & Co 459,000 19,708,312
Dover Corp 413,100 17,918,212
===========================================================================================
58,912,649
2.49 MANUFACTURING
Federal Signal 688,500 11,661,469
Illinois Tool Works 321,300 20,804,175
Minnesota Mining & Manufacturing 124,000 11,849,750
Precision Castparts 416,900 11,334,469
Textron Inc 110,100 7,823,981
York International 459,000 10,241,438
===========================================================================================
73,715,282
0.48 METALS MINING
Phelps Dodge 275,400 14,320,800
===========================================================================================
0.76 OFFICE EQUIPMENT & SUPPLIES
Ikon Office Solutions 1,101,600 7,366,950
Office Depot(a) 250,000 2,781,250
Xerox Corp 459,000 12,421,688
===========================================================================================
22,569,888
3.46 OIL & GAS RELATED
Exxon Corp 335,100 26,577,619
Norsk Hydro A/SA Sponsored ADR Representing Ord Shrs 530,000 20,868,750
Phillips Petroleum 400,000 19,125,000
Repsol SA Sponsored ADR Representing Ord Shrs 1,652,400 35,939,700
===========================================================================================
102,511,069
0.92 PAPER & FOREST PRODUCTS
Kimberly-Clark Corp 275,400 17,591,175
Westvaco Corp 321,300 9,699,244
===========================================================================================
27,290,419
0.53 POLLUTION CONTROL
Waste Management 963,900 15,663,375
===========================================================================================
0.91 PUBLISHING
American Greetings Class A Shrs 367,200 8,652,150
Gannett Co 257,000 18,391,562
===========================================================================================
27,043,712
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
0.66 RAILROADS
CSX Corp 550,800 $ 19,587,825
===========================================================================================
1.97 RETAIL
Albertson's Inc 500,000 15,968,750
Dillard's Inc Class A Shrs 771,120 14,554,890
K mart Corp(a) 550,800 5,473,575
Penney (JC) Co 596,700 13,313,869
Rite Aid 1,193,400 9,025,087
===========================================================================================
58,336,171
1.62 SERVICES
Deluxe Corp 596,700 15,626,081
Dun & Bradstreet 688,500 18,589,500
Electronic Data Systems 136,000 8,746,500
First Data 116,500 5,038,625
===========================================================================================
48,000,706
1.47 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 780,300 43,599,262
===========================================================================================
2.39 TELEPHONE
Bell Atlantic 350,000 22,159,375
SBC Communications 400,000 20,775,000
Telefonos de Mexico SA de CV Sponsored ADR
Representing 20 Series L Shrs 200,000 18,512,500
US WEST 150,000 9,309,375
===========================================================================================
70,756,250
1.64 TEXTILE -- APPAREL MANUFACTURING
Liz Claiborne 459,000 17,183,813
Unifi Inc(a) 918,000 12,163,500
VF Corp 642,600 19,197,675
===========================================================================================
48,544,988
0.71 TOBACCO
Philip Morris 803,200 21,134,200
===========================================================================================
0.14 TOYS
Mattel Inc 300,000 4,293,750
===========================================================================================
TOTAL COMMON STOCKS (Cost $1,669,052,877) 2,015,465,652
===========================================================================================
28.66 FIXED INCOME SECURITIES
9.50 US Government Obligations
US Treasury Bonds
9.375%, 2/15/2006 $ 15,550,000 18,003,992
9.250%, 2/15/2016 $ 19,100,000 23,982,438
8.125%, 8/15/2019 $ 37,450,000 43,582,438
7.625%, 2/15/2025 $ 46,000,000 52,195,648
7.250%, 8/15/2022 $ 24,600,000 26,544,950
US Treasury Notes
8.000%, 5/15/2001 $ 18,900,000 19,431,563
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
6.375%, 8/15/2002 $ 21,750,000 $ 21,919,933
6.250%, 10/31/2001 $ 16,300,000 16,366,227
6.250%, 2/15/2003 $ 39,800,000 39,949,250
5.750%, 8/15/2003 $ 20,100,000 19,861,313
===========================================================================================
TOTAL US GOVERNMENT OBLIGATIONS
(Amortized Cost $282,134,989) 281,837,752
===========================================================================================
4.49 US GOVERNMENT AGENCY OBLIGATIONS
Fannie Mae
Benchmark Notes, 5.125%, 2/13/2004 $ 19,454,000 18,423,502
Gtd Mortgage Pass-Through Certificates
8.500%, 3/1/2010 $ 2,260,657 2,344,558
8.000%, 7/1/2024 $ 2,879,438 2,919,970
7.500%, 8/1/2007 $ 638,903 647,694
7.500%, 7/1/2024 $ 5,777,504 5,773,752
7.500%, 8/1/2029 $ 22,324,046 22,272,085
7.000%, 9/1/2027 $ 10,753,186 10,509,734
7.000%, 12/1/2027 $ 6,202,188 6,066,186
6.500%, 5/1/2026 $ 4,833,027 4,640,276
6.000%, 5/1/2009 $ 5,403,235 5,238,583
Freddie Mac, Gold, Participation Certificates
8.000%, 10/1/2010 $ 1,652,406 1,691,531
8.000%, 5/1/2024 $ 2,637,842 2,677,559
7.500%, 12/1/2026 $ 4,385,336 4,382,197
7.000%, 4/1/2028 $ 8,296,720 8,115,192
6.500%, 7/1/2001 $ 2,191,188 2,180,572
6.500%, 1/1/2029 $ 13,084,144 12,491,383
Government National Mortgage Association I
Pass-Through Certificates
7.500%, 3/15/2026 $ 2,672,917 2,669,029
7.000%, 10/15/2008 $ 480,264 481,831
7.000%, 12/15/2022 $ 142,707 140,338
7.000%, 12/15/2025 $ 5,844,652 5,717,334
6.500%, 10/15/2008 $ 538,224 531,200
6.500%, 12/15/2028 $ 13,291,123 12,640,430
6.000%, 11/15/2008 $ 651,331 631,456
===========================================================================================
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Amortized Cost $136,492,775) 133,186,392
===========================================================================================
1.00 ASSET-BACKED SECURITIES
1.00 CONSUMER FINANCE
Chase Manhattan Credit Card Master Trust
Series 1996-3, Class A, 7.040%, 2/15/2005 $ 16,524,000 16,630,084
Discover Card Master Trust I, Series 1998-7
Class A, 5.600%, 5/16/2006 $ 13,770,000 13,172,382
===========================================================================================
TOTAL ASSET-BACKED SECURITIES (Amortized Cost $30,964,598) 29,802,466
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
12.71 CORPORATE BONDS
0.58 AUTO PARTS
Dana Corp, Notes, 6.250%, 3/1/2004 $ 18,000,000 $ 17,325,072
===========================================================================================
0.89 AUTOMOBILES
Ford Motor, Bonds, 6.500%, 8/1/2018 $ 13,700,000 12,338,782
General Motors Acceptance
Global Bonds, 5.500%, 1/14/2002 $ 9,200,000 8,974,922
Notes, 6.125%, 1/22/2008 $ 5,500,000 5,102,812
===========================================================================================
26,416,516
3.24 BANKS
ABN Amro Bank NV, Sub Notes
7.550%, 6/28/2006 $ 13,750,000 13,893,096
6.625%, 10/31/2001 $ 4,600,000 4,576,393
Bank One, Notes, 6.875%, 8/1/2006 $ 18,000,000 17,705,106
BankAmerica Corp, Sub Notes, 6.875%, 6/1/2003 $ 3,700,000 3,681,334
NationsBank Corp, Sub Notes, 6.500%, 8/15/2003 $ 13,700,000 13,553,150
Norwest Financial, Sr Notes, 5.625%, 2/3/2009 $ 14,700,000 13,003,473
SunTrust Banks, Sr Notes, 6.250%, 6/1/2008 $ 15,850,000 14,802,204
Wachovia Bank, Euro Medium-Term Notes, Series 3
7.000%, 10/17/2008(b) $ 6,400,000 6,304,890
Wachovia Corp, Sub Notes, 6.250%, 8/4/2008 $ 9,200,000 8,607,575
===========================================================================================
96,127,221
1.04 BEVERAGES
Anheuser-Busch Cos, Notes, 5.375%, 9/15/2008 $18,400,000 16,446,306
Diageo Capital PLC, Notes, 6.625%, 6/24/2004 $14,700,000 14,542,372
===========================================================================================
30,988,678
0.80 BUILDING MATERIALS
Masco Corp, Deb, 7.750%, 8/1/2029 $ 11,000,000 11,061,347
Vulcan Materials, Notes, 6.000%, 4/1/2009 $ 13,700,000 12,597,904
===========================================================================================
23,659,251
0.64 CHEMICALS
Eastman Chemical, Notes, 6.375%, 1/15/2004 $ 5,500,000 5,283,504
PPG Industries, Notes, 6.750%, 8/15/2004 $ 13,700,000 13,622,677
===========================================================================================
18,906,181
0.44 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Motorola Inc, Notes, 6.500%, 3/1/2008 $ 13,700,000 13,099,570
===========================================================================================
0.61 CONSUMER FINANCE
Household Finance, Notes, 7.200%, 7/15/2006 $ 18,000,000 18,006,300
===========================================================================================
0.29 ELECTRIC UTILITIES
National Rural Utilities, Secured Collateral Trust
6.550%, 11/1/2018 $ 9,600,000 8,724,998
===========================================================================================
0.59 FINANCIAL
Associates Corp of North America, Sr Notes
6.375%, 10/15/2002 $ 4,600,000 4,551,277
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
5.500%, 2/15/2004 $ 13,800,000 $ 13,066,295
===========================================================================================
17,617,572
0.45 FOODS
CPC International, Medium-Term Notes
Series C, 6.150%, 1/15/2006 $ 13,800,000 13,199,079
===========================================================================================
0.29 HEALTH CARE RELATED
Guidant Corp, Notes, 6.150%, 2/15/2006 $ 9,200,000 8,591,448
===========================================================================================
0.43 INSURANCE BROKERS
Marsh & McLennan, Sr Notes, 6.625%, 6/15/2004 $ 12,850,000 12,633,465
===========================================================================================
0.35 LEISURE TIME
Carnival Corp, Notes, 6.150%, 4/15/2008 $ 11,000,000 10,256,521
===========================================================================================
0.33 MANUFACTURING
Tyco International Group SA, Gtd Notes
6.125%, 1/15/2009 $ 11,000,000 9,855,670
===========================================================================================
0.27 NATURAL GAS
Enron Corp, Notes, 6.625%, 11/15/2005 $ 8,300,000 7,930,169
===========================================================================================
0.56 RAILROADS
Norfolk Southern, Notes, 6.200%, 4/15/2009 $ 18,400,000 16,733,346
===========================================================================================
0.16 RETAIL
Wal-Mart Stores, Notes, 8.625%, 4/1/2001 $ 4,600,000 4,726,436
===========================================================================================
0.31 SERVICES
Electronic Data Systems, Notes, 6.850%,
10/15/2004 $ 9,200,000 9,149,676
===========================================================================================
0.44 TELEPHONE
Ameritech Capital Funding, Notes, 6.150%,
1/15/2008 $ 13,800,000 12,948,333
===========================================================================================
TOTAL CORPORATE BONDS (Amortized Cost $396,793,251) 376,895,502
===========================================================================================
0.96 FOREIGN GOVERNMENT OBLIGATIONS
Province of Manitoba, Unsecured Deb, 5.500%,
10/1/2008 $ 16,050,000 14,540,016
Province of Saskatchewan, Global Notes, 7.375%,
7/15/2013 $ 13,800,000 13,825,944
===========================================================================================
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Amortized Cost $31,386,660) 28,365,960
===========================================================================================
TOTAL FIXED INCOME SECURITIES (Amortized Cost $877,772,273) 850,088,072
===========================================================================================
3.38 SHORT-TERM INVESTMENTS
1.40 US GOVERNMENT AGENCY OBLIGATIONS
Federal Home Loan Bank, Global Bonds
5.500%, 7/14/2000 (Amortized Cost $41,613,392) $ 41,600,000 41,469,917
===========================================================================================
0.24 CORPORATE BONDS
0.11 PUBLISHING
Gannett Co, Notes, 5.850%, 5/1/2000 $ 3,200,000 3,195,638
===========================================================================================
0.13 TOYS
Mattel Inc, Notes, 6.750%, 5/15/2000 $ 3,700,000 3,698,087
===========================================================================================
TOTAL CORPORATE BONDS (Amortized Cost $6,896,630) 6,893,725
===========================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
1.74 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated
11/30/1999 due 12/1/1999 at 5.550%,
repurchased at $51,727,974 (Collateralized
by US Treasury Notes, due 11/15/2001
at 7.500%, value $52,831,800)
(Cost $51,720,000) $ 51,720,000 $ 51,720,000
===========================================================================================
TOTAL SHORT-TERM INVESTMENTS
(Amortized Cost $100,230,022) 100,083,642
===========================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $2,647,055,172)
(Cost for Income Tax Purposes $2,650,941,211) $2,965,637,366
===========================================================================================
</TABLE>
(a) Security is non-income producing.
(b) Security may be redenominated in euro, the currency of the European Economic
and Monetary Union (EMU).
(c) Step-up bonds are obligations which increase the interest payment rate at a
specified point in time. Rate shown reflects current rate which may step up
at a future date.
(d) Securities acquired pursuant to Rule 144A. The fund deems such securities to
be "liquid" because an institutional market exists.
(e) Rate is subject to change. Rate shown reflects current rate.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
INVESCO Combination Stock & Bond Funds, Inc.
NOVEMBER 30, 1999
UNAUDITED
EQUITY
BALANCED INCOME
FUND FUND
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment Securities:
At Cost(a) $ 402,407,523 $ 3,375,405,817
===========================================================================================
At Value(a) $ 462,837,201 $ 4,880,871,898
Cash 414 859
Receivables:
Investment Securities Sold 1,100 4,198,947
Fund Shares Sold 961,491 4,135,853
Dividends and Interest 2,822,930 15,626,544
Prepaid Expenses and Other Assets 69,573 497,887
===========================================================================================
TOTAL ASSETS 466,692,709 4,905,331,988
===========================================================================================
LIABILITIES
Payables:
Distributions to Shareholders 366,633 27,270,024
Investment Securities Purchased 2,825,819 21,225,912
Fund Shares Repurchased 1,135,426 23,801,722
Accrued Distribution Expenses 94,150 1,000,384
Accrued Expenses and Other Payables 37,273 1,173,195
===========================================================================================
TOTAL LIABILITIES 4,459,301 74,471,237
===========================================================================================
NET ASSETS AT VALUE $ 462,233,408 $ 4,830,860,751
===========================================================================================
NET ASSETS
Paid-in Capital(b) $ 398,257,484 $ 3,285,551,927
Accumulated Undistributed (Distributions in Excess of)
Net Investment Income 30,422 (148,301)
Accumulated Undistributed Net Realized Gain on Investment
Securities and Foreign Currency Transactions 3,515,824 39,991,044
Net Appreciation of Investment Securities and Foreign
Currency Transactions 60,429,678 1,505,466,081
===========================================================================================
NET ASSETS AT VALUE $ 462,233,408 $ 4,830,860,751
===========================================================================================
Shares Outstanding 26,764,026 318,477,704
NET ASSET VALUE, Offering and Redemption
Price per Share $ 17.27 $ 15.17
===========================================================================================
</TABLE>
(a) Investment securities at cost and value at November 30, 1999 include
repurchase agreements of $22,235,000 and $1,275,000 for Balanced and Equity
Income Funds, respectively.
(b) The Fund has 1,600,000,000 authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million and one billion have been
allocated to Balanced and Equity Income Funds, respectively.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
INVESCO Combination Stock & Bond Funds, Inc.
NOVEMBER 30, 1999
UNAUDITED
TOTAL RETURN
FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 2,647,055,172
================================================================================
At Value(a) $ 2,965,637,366
Cash 618
Receivables:
Investment Securities Sold 34,457,233
Fund Shares Sold 2,746,941
Dividends and Interest 19,408,855
Prepaid Expenses and Other Assets 204,443
================================================================================
TOTAL ASSETS 3,022,455,456
================================================================================
LIABILITIES
Payables:
Distributions to Shareholders 1,045,810
Fund Shares Repurchased 15,154,459
Accrued Distribution Expenses 490,211
Accrued Expenses and Other Payables 194,893
================================================================================
TOTAL LIABILITIES 16,885,373
================================================================================
NET ASSETS AT VALUE $ 3,005,570,083
================================================================================
NET ASSETS
Paid-in Capital(b) $ 2,616,366,488
Accumulated Undistributed Net Investment Income 5,245
Accumulated Undistributed Net Realized Gain on Investment
Securities and Foreign Currency Transactions 70,616,156
Net Appreciation of Investment Securities and Foreign Currency
Transactions 318,582,194
================================================================================
NET ASSETS AT VALUE $ 3,005,570,083
================================================================================
Shares Outstanding 104,677,378
NET ASSET VALUE, Offering and Redemption
Price per Share $28.71
================================================================================
(a) Investment securities at cost and value at November 30, 1999 includes a
repurchase agreement of $51,720,000 for Total Return Fund.
(b) The Fund has 1,600,000,000 authorized shares of common stock, par value of
$0.01 per share. Of such shares, 300 million have been allocated to Total
Return Fund.
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Balanced Fund
SIX MONTHS PERIOD YEAR
ENDED ENDED ENDED
NOVEMBER 30 MAY 31 JULY 31
- -------------------------------------------------------------------------------------------
1999 1999 1998
UNAUDITED (Note 1)
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 1,317,786 $ 1,764,694 $ 1,386,453
Interest 4,793,680 4,915,416 4,951,420
Foreign Taxes Withheld (6,783) (11,444) (10,905)
===========================================================================================
TOTAL INCOME 6,104,683 6,668,666 6,326,968
===========================================================================================
EXPENSES
Investment Advisory Fees 1,154,535 1,282,647 1,115,082
Distribution Expenses 485,231 534,436 464,902
Transfer Agent Fees 386,227 474,150 447,515
Administrative Fees 92,341 45,489 37,877
Custodian Fees and Expenses 29,649 32,209 23,003
Directors' Fees and Expenses 12,428 15,369 17,666
Professional Fees and Expenses 21,064 22,782 25,188
Registration Fees and Expenses 63,531 53,309 64,433
Reports to Shareholders 107,831 100,017 65,197
Other Expenses 6,347 11,598 14,940
===========================================================================================
TOTAL EXPENSES 2,359,184 2,572,006 2,275,803
Fees and Expenses Paid Indirectly (20,248) (19,312) (11,494)
===========================================================================================
NET EXPENSES 2,338,936 2,552,694 2,264,309
===========================================================================================
NET INVESTMENT INCOME 3,765,747 4,115,972 4,062,659
===========================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 5,608,503 11,521,099 16,103,608
Foreign Currency Transactions 409 (36,322) (443,603)
===========================================================================================
Total Net Realized Gain 5,608,912 11,484,777 15,660,005
===========================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 19,043,938 17,694,385 1,850,574
Foreign Currency Transactions 0 (4,123) 502,422
===========================================================================================
Total Net Appreciation 19,043,938 17,690,262 2,352,996
===========================================================================================
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 24,652,850 29,175,039 18,013,001
===========================================================================================
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 28,418,597$ 33,291,011 $ 22,075,660
===========================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Equity Income Fund
SIX MONTHS PERIOD YEAR
ENDED ENDED ENDED
NOVEMBER 30 MAY 31 JUNE 30
- -------------------------------------------------------------------------------------------
1999 1999 1998
UNAUDITED (Note 1)
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 34,549,300 $ 64,351,574 $ 74,376,469
Interest 27,128,428 68,888,161 85,307,820
Foreign Taxes Withheld (143,747) (323,716) (412,846)
===========================================================================================
TOTAL INCOME 61,533,981 132,916,019 159,271,443
===========================================================================================
EXPENSES
Investment Advisory Fees 11,454,516 20,935,050 23,205,917
Distribution Expenses 6,057,510 11,062,360 12,301,096
Transfer Agent Fees 3,592,523 5,936,040 6,122,313
Administrative Fees 368,451 672,908 748,034
Custodian Fees and Expenses 248,421 472,521 587,418
Directors' Fees and Expenses 121,336 215,200 275,362
Professional Fees and Expenses 81,665 156,354 155,252
Registration Fees and Expenses 71,666 84,962 81,025
Reports to Shareholders 737,101 771,454 576,551
Other Expenses 56,734 163,433 246,709
===========================================================================================
TOTAL EXPENSES 22,789,923 40,470,282 44,299,677
Fees and Expenses Absorbed by Investment Adviser 0 (2,813) (10,930)
Fees and Expenses Paid Indirectly (248,314) (472,424) (440,841)
===========================================================================================
NET EXPENSES 22,541,609 39,995,045 43,847,906
===========================================================================================
NET INVESTMENT INCOME 38,992,372 92,920,974 115,423,537
===========================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 194,768,758 329,753,499 563,831,147
Foreign Currency Transactions (26,647) 13,913 6,583
===========================================================================================
Total Net Realized Gain 194,742,111 329,767,412 563,837,730
===========================================================================================
Change in Net Appreciation of
Investment Securities 34,515,078 45,742,780 232,218,236
===========================================================================================
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 229,257,189 375,510,192 796,055,966
===========================================================================================
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 268,249,561 $ 468,431,166 $ 911,479,503
===========================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Total Return Fund
SIX MONTHS PERIOD YEAR
ENDED ENDED ENDED
NOVEMBER 30 MAY 31 AUGUST 31
- -------------------------------------------------------------------------------------------
1999 1999 1998
UNAUDITED (Note 1)
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 22,918,212 $ 34,843,500 $ 35,209,430
Interest 36,745,908 45,227,801 51,559,742
Foreign Taxes Withheld (472,219) (521,884) (725,548)
===========================================================================================
TOTAL INCOME 59,191,901 79,549,417 86,043,624
===========================================================================================
EXPENSES
Investment Advisory Fees 9,285,777 13,059,957 13,926,522
Distribution Expenses 2,660,386 1,862,388 101,656
Transfer Agent Fees 3,252,032 3,425,993 3,767,444
Administrative Fees 264,526 355,556 367,796
Custodian Fees and Expenses 197,738 261,034 283,390
Directors' Fees and Expenses 82,179 100,103 83,603
Professional Fees and Expenses 54,060 75,008 251,231
Registration Fees and Expenses 191,072 225,035 173,135
Reports to Shareholders 120,791 131,727 114,919
Other Expenses 40,738 85,180 76,138
===========================================================================================
TOTAL EXPENSES 16,149,299 19,581,981 19,145,834
Fees and Expenses Absorbed by Investment Adviser 0 (374,435) (197,490)
Fees and Expenses Paid Indirectly (138,275) (281,869) (302,628)
===========================================================================================
NET EXPENSES 16,011,024 18,925,677 18,645,716
===========================================================================================
NET INVESTMENT INCOME 43,180,877 60,623,740 67,397,908
===========================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 168,590,328 26,815,297 86,019,724
Foreign Currency Transactions (1,334) 1,475 2,958
===========================================================================================
Total Net Realized Gain 168,588,994 26,816,772 86,022,682
===========================================================================================
Change in Net Appreciation (Depreciation) of
Investment Securities (449,624,847) 450,426,456 (79,067,445)
===========================================================================================
NET GAIN (LOSS) ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS (281,035,853) 477,243,228 6,955,237
===========================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ (237,854,976)$ 537,866,968 $ 74,353,145
===========================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Balanced Fund
SIX MONTHS PERIOD YEAR
ENDED ENDED ENDED
NOVEMBER 30 MAY 31 JULY 31
- -------------------------------------------------------------------------------------------
1999 1999 1998
UNAUDITED (Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 3,765,747 $ 4,115,972 $ 4,062,659
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 5,608,912 11,484,777 15,660,005
Change in Net Appreciation of Investment
Securities and Foreign Currency
Transactions 19,043,938 17,690,262 2,352,996
===========================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 28,418,597 33,291,011 22,075,660
===========================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (3,776,665) (4,105,886) (4,196,252)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (13,564,627) (10,135,428) (17,002,689)
===========================================================================================
TOTAL DISTRIBUTIONS (17,341,292) (14,241,314) (21,198,941)
===========================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 209,472,145 225,239,324 158,521,941
Reinvestment of Distributions 16,924,151 13,792,246 20,128,818
Net Assets Received from Acquisition of
Multi-Asset Allocation Fund (Note 3) 11,140,475 0 0
===========================================================================================
237,536,771 239,031,570 178,650,759
Amounts Paid for Repurchases of Shares (111,219,135) (149,866,318) (124,824,681)
===========================================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 126,317,636 89,165,252 53,826,078
===========================================================================================
TOTAL INCREASE IN NET ASSETS 137,394,941 108,214,949 54,702,797
NET ASSETS
Beginning of Period 324,838,467 216,623,518 161,920,721
===========================================================================================
End of Period (Including Accumulated
Undistributed Net Investment Income of
$30,422, $41,340 and $14,553, respectively) $462,233,408 $324,838,467 $ 216,623,518
===========================================================================================
---------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 12,256,336 14,063,692 10,124,221
Shares Issued from Reinvestment of Distributions 982,187 888,456 1,391,923
Shares Issued in Connection with Acquisition of
Multi-Asset Allocation Fund (Note 3) 669,846 0 0
===========================================================================================
13,908,369 14,952,148 11,516,144
Shares Repurchased (6,500,750) (9,382,609) (7,941,260)
===========================================================================================
NET INCREASE IN FUND SHARES 7,407,619 5,569,539 3,574,884
===========================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
Equity Income Fund
SIX MONTHS PERIOD YEAR
ENDED ENDED ENDED
NOVEMBER 30 MAY 31 JULY 31
- -------------------------------------------------------------------------------------------
1999 1999 1998
UNAUDITED (Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 38,992,372 $ 92,920,974 $ 115,423,537
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 194,742,111 329,767,412 563,837,730
Change in Net Appreciation of Investment
Securities and Foreign Currency
Transactions 34,515,078 45,742,780 232,218,236
===========================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 268,249,561 468,431,166 911,479,503
===========================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (39,309,863) (93,998,246) (115,239,239)
In Excess of Net Investment Income 0 0 (34,577)
Net Realized Gain on Investment Securities and
and Foreign Currency Transactions (425,212,988) (451,708,873) (487,553,284)
===========================================================================================
TOTAL DISTRIBUTIONS (464,522,851) (545,707,119) (602,827,100)
===========================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 258,612,487 543,178,456 796,227,427
Reinvestment of Distributions 435,353,165 512,402,591 566,171,643
===========================================================================================
693,965,652 1,055,581,047 1,362,399,070
Amounts Paid for Repurchases of Shares (511,867,920) (1,214,003,411) (1,164,991,454)
===========================================================================================
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 182,097,732 (158,422,364) 197,407,616
===========================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS (14,175,558) (235,698,317) 506,060,019
NET ASSETS
Beginning of Period 4,845,036,309 5,080,734,626 4,574,674,607
===========================================================================================
End of Period (Including Accumulated
Undistributed Net Investment Income
(Distributions in Excess) of ($148,301),
$169,190, and $1,232,549, respectively) $4,830,860,751 $ 4,845,036,309 $ 5,080,734,626
===========================================================================================
---------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 15,861,778 35,119,662 49,736,211
Shares Issued from Reinvestment of
Distributions 28,644,686 35,057,399 38,238,701
===========================================================================================
44,506,464 70,177,061 87,974,912
Shares Repurchased (31,636,058) (78,498,469) (72,818,140)
===========================================================================================
NET INCREASE (DECREASE) IN FUND SHARES 12,870,406 (8,321,408) 15,156,772
===========================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
Total Return Fund
SIX MONTHS PERIOD YEAR
ENDED ENDED ENDED
NOVEMBER 30 MAY 31 AUGUST 31
- -------------------------------------------------------------------------------------------
1999 1999 1998
UNAUDITED (Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 43,180,877 $ 60,623,740 $ 67,397,908
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 168,588,994 26,816,772 86,022,682
Change in Net Appreciation (Depreciation) of
Investment Securities (449,624,847) 450,426,456 (79,067,445)
============================================================================================
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS (237,854,976) 537,866,968 74,353,145
============================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (43,150,895) (60,756,140) (67,353,840)
In Excess of Net Investment Income 0 (18,228) 0
Net Realized Gain on Investment Securities and
Foreign Currency Transactions (116,478,475) (77,274,029) (34,772,560)
============================================================================================
TOTAL DISTRIBUTIONS (159,629,370) (138,048,397) (102,126,400)
============================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 748,924,729 1,164,725,715 1,412,738,595
Reinvestment of Distributions 158,404,586 136,764,996 100,609,294
============================================================================================
907,329,315 1,301,490,711 1,513,347,889
Amounts Paid for Repurchases of Shares (923,020,448) (843,579,726) (770,152,733)
============================================================================================
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (15,691,133) 457,910,985 743,195,156
============================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS (413,175,479) 857,729,556 715,421,901
NET ASSETS
Beginning of Period 3,418,745,562 2,561,016,006 1,845,594,105
============================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in Excess of)
Net Investment Income of $5,245,
($24,737) and $132,400, respectively) $ 3,005,570,083 $ 3,418,745,562 $2,561,016,006
============================================================================================
---------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 23,345,825 37,304,581 46,622,819
Shares Issued from Reinvestment of
Distributions 5,459,457 4,385,847 3,448,941
============================================================================================
28,805,282 41,690,428 50,071,760
Shares Repurchased (29,726,924) (27,040,483) (25,589,174)
============================================================================================
NET INCREASE (DECREASE) IN FUND SHARES (921,642) 14,649,945 24,482,586
============================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Notes to financial statements -- INVESCO Combina-
tion Stock & Bond
Funds, Inc.
UNAUDITED
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Combination
Stock & Bond Funds, Inc. is incorporated in Maryland and presently consists of
three separate Funds: Balanced Fund, Equity Income Fund and Total Return Fund
(individually the "Fund" and collectively, the "Funds"). Balanced, Equity Income
and Total Return Fund's fiscal year-ends were changed from July 31, June 30 and
August 31, respectively, to May 31.
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.
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.
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.
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
<PAGE>
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 investments in foreign issuers located
in a specific country. Such investments 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.
Investments in securities of governmental agencies may only be guaranteed by the
respective agency's limited authority to borrow from the U.S. Government and may
not be guaranteed by the full faith and credit of the U.S. Government.
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.
Balanced and Total Return Funds incurred and elected to defer post-October 31
currency losses of $33 and $15,770, respectively, to the year ended May 31,
2000. To the extent future capital gains and income are offset by capital loss
carryovers and 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.
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 mortgage-backed
securities, market discounts, amortized premiums, foreign currency transactions,
nontaxable dividends, net operating losses and expired capital loss
carryforwards.
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.
<PAGE>
G. EXPENSES -- Each Fund bears expenses incurred specifically on its behalf and,
in addition, each Fund bears a portion of general expenses, based on the
relative net assets of each Fund.
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
Equity Income Fund are reduced by credits earned 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.
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 is based on the annual
rate of each Fund's average net assets as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
$700 $2 $4 $6
$0 TO $350 TO MILLION BILLION BILLION BILLION OVER
$350 $700 TO $2 TO $4 $6 $8 $8
MILLION MILLION BILLION BILLION BILLION BILLION BILLION
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balanced Fund 0.60% 0.55% 0.50% 0.45% 0.40% 0.375% 0.35%
Equity Income Fund 0.60% 0.55% 0.50% 0.45% 0.40% 0.375% 0.35%
AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
$500 $1 $2 $4 $6
$0 TO MILLION BILLION BILLION BILLION BILLION OVER
$500 TO $1 TO $2 TO $4 TO $6 TO $8 $8
MILLION BILLION BILLION BILLION BILLION BILLION BILLION
- -------------------------------------------------------------------------------------------
Total Return Fund 0.75% 0.65% 0.50% 0.45% 0.40% 0.375% 0.35%
</TABLE>
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Capital
Management, Inc. ("ICM"), an affiliate of IFG, investment decisions of Total
Return Fund are made by ICM. Fees for such sub-advisory services are paid by
IFG.
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 six months
ended November 30, 1999, Balanced, Equity Income and Total Return Funds paid the
Distributor $456,723, $6,041,731 and $2,479,955 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 pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.045% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
NOTE 3 -- ACQUISITION OF INVESCO MULTIPLE ASSET FUNDS, INC. - MULTIPLE
ASSET-ALLOCATION FUND ("TARGET FUND"). On June 11, 1999, Balanced Fund acquired
all the net assets of Target Fund pursuant to an Agreement and Plan
Reorganization and Termination approved by Target Fund Shareholders on May 20,
1999. The acquisition was accomplished by a tax-free exchange of 669,846 shares
of Balanced Fund (valued at $11,140,475) for 989,018 shares outstanding of
<PAGE>
Target Fund on June 11, 1999. Target Fund's net assets at that date
($11,140,475) which included $866,856 of unrealized appreciation, were combined
with those of Balanced Fund. The aggregate net assets of Balanced Fund and
Target Fund immediately before the acquisition were $327,886,557 and $11,140,475
respectively. The net assets of Balanced Fund after the acquisition were
$339,027,032.
NOTE 4 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months ended
November 30, 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:
FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Balanced Fund $ 217,309,504 $ 135,391,326
Equity Income Fund 1,119,848,465 1,317,299,625
Total Return Fund 688,352,227 677,969,537
For the six months ended November 30, 1999, the aggregate cost of purchases and
proceeds from sales of U.S. Government securities were as follows:
FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Balanced Fund $ 20,154,454 $ 6,252,188
Equity Income Fund 9,940,630 0
Total Return Fund 180,052,155 290,106,705
NOTE 5 -- APPRECIATION AND DEPRECIATION. At November 30, 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 by Fund were as follows:
GROSS GROSS NET
FUND APPRECIATION DEPRECIATION APPRECIATION
- --------------------------------------------------------------------------------
Balanced Fund $ 69,716,234 $ 9,327,626 $ 60,388,608
Equity Income Fund 1,616,968,832 111,533,718 1,505,435,114
Total Return Fund 534,598,763 219,902,608 314,696,155
NOTE 6-- TRANSACTIONS WITH AFFILIATES. Certain of the Funds' officers and
directors are also officers and directors of IFG, IDI or ICM.
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 annual meeting attendance fees.
Pension expenses for the six months ended November 30, 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
- --------------------------------------------------------------------------------
Balanced Fund $ 2,024 $ 5,489 $ 16,644
Equity Income Fund 40,077 229,412 615,044
Total Return Fund 23,776 65,424 183,622
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.
<PAGE>
NOTE 7 -- 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 5% of the Net Assets at Value for Equity Income Fund
and 10% of the Net Assets at Value for Balanced and Total Return Funds. 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 November 30,
1999, there were no such borrowings.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Balanced Fund
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS PERIOD PERIOD
ENDED ENDED ENDED
NOVEMBER 30 MAY 31 YEAR ENDED JULY 31 JULY 31
- -----------------------------------------------------------------------------------------------------
1999 1999(a) 1998 1997 1996 1995 1994(b)
UNAUDITED
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value --
Beginning of
Period $ 16.78 $ 15.71 $ 15.86 $ 13.36 $ 12.08 $ 10.30 $ 10.00
=====================================================================================================
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income 0.16 0.24 0.33 0.34 0.37 0.29 0.12
Net Gains on Securities
(Both Realized and
Unrealized) 1.01 1.73 1.50 3.37 2.12 2.03 0.30
=====================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS 1.17 1.97 1.83 3.71 2.49 2.32 0.42
=====================================================================================================
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.16 0.24 0.35 0.34 0.37 0.29 0.12
Distributions from
Capital Gains 0.52 0.66 1.63 0.87 0.84 0.25 0.00
=====================================================================================================
TOTAL DISTRIBUTIONS 0.68 0.90 1.98 1.21 1.21 0.54 0.12
=====================================================================================================
Net Asset Value --
End of Period $ 17.27 $ 16.78 $ 15.71 $ 15.86 $ 13.36 $ 12.08 $ 10.30
=====================================================================================================
TOTAL RETURN 7.02%(c) 13.12%(c) 12.90% 29.27% 20.93% 23.18% 4.16%(c)
RATIOS
Net Assets --
End of Period
($000 Omitted) $462,233 $324,838 $216,624 $161,921 $115,066 $ 37,224 $4,252
Ratio of Expenses
to Average Net
Assets(d) 0.61%(c)(f) 1.21%(e)(f) 1.22%(f) 1.29%(f) 1.29%(f) 1.25% 1.25%(e)
Ratio of Net
Investment Income
to Average Net
Assets(d) 0.97%(c) 1.94%(e) 2.18% 2.46% 3.03% 3.12% 2.87%(e)
Portfolio Turnover Rate 39%(c) 100%(c) 108% 155% 259% 255% 61%(c)
</TABLE>
(a) From August 1, 1998 to May 31, 1999, the Fund's current fiscal year end.
(b) From December 1, 1993, commencement of investment operations, to July 31,
1994.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended July 31, 1997, 1996 and 1995 and for the period ended July 31, 1994.
If such expenses had not been voluntarily absorbed, ratio of expenses to
average net assets would have been 1.34%, 1.29%, 1.59% and 4.37%
(annualized), respectively, and ratio of net investment income to average
net assets would have been 2.41%, 3.03%, 2.77% and (0.25%) (annualized),
respectively.
(e) Annualized
(f) 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
<TABLE>
<CAPTION>
Equity Income Fund
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS PERIOD
ENDED ENDED
NOVEMBER 30 MAY 31 YEAR ENDED JUNE 30
- ------------------------------------------------------------------------------------------------------------------
1999 1999(a) 1998 1997 1996 1995 1994
UNAUDITED
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value --
Beginning of
Period $ 15.85 $ 16.18 $ 15.31 $ 13.21 $ 11.92 $ 11.32 $ 11.53
==================================================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.13 0.30 0.38 0.35 0.41 0.42 0.36
Net Gains on Securities
(Both Realized and
Unrealized) 0.77 1.19 2.54 3.05 1.53 1.14 0.02
==================================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS 0.90 1.49 2.92 3.40 1.94 1.56 0.38
==================================================================================================================
LESS DISTRIBUTIONS
Dividends from Net
Investment Income(b) 0.13 0.31 0.38 0.35 0.41 0.42 0.36
In Excess of Net Investment
Income 0.00 0.00 0.00 0.00 0.00 0.00 0.11
Distributions from
Capital Gains 1.45 1.51 1.67 0.95 0.24 0.54 0.12
==================================================================================================================
TOTAL DISTRIBUTIONS 1.58 1.82 2.05 1.30 0.65 0.96 0.59
==================================================================================================================
Net Asset Value --
End of Period $ 15.17 $ 15.85 $ 16.18 $ 15.31 $ 13.21 $ 11.92 $ 11.32
==================================================================================================================
TOTAL RETURN 5.75%(c) 10.31%(c) 20.55% 27.33% 16.54% 14.79% 3.24%
RATIOS
Net Assets --
End of Period
($000 Omitted) $4,830,861 $4,845,036 $ 5,080,735 $ 4,574,675 $ 4,170,536 $ 4,009,609 $ 3,913,322
Ratio of Expenses
to Average Net
Assets(d) 0.47%(c)(e) 0.90%(e)(f) 0.90%(e) 0.95%(e) 0.93%(e) 0.94% 0.92%
Ratio of Net
Investment Income
to Average Net
Assets(d) 0.80%(c) 2.10%(f) 2.35% 2.54% 3.17% 3.61% 3.11%
Portfolio Turnover Rate 26%(c) 47%(c) 58% 47% 63% 54% 56%
</TABLE>
(a) From July 1, 1998 to May 31, 1999, the Fund's current fiscal year end.
(b) Distributions in excess of net investment income for the year ended June 30,
1998 aggregated less than $0.01 on a per share basis.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the period
ended May 31, 1999 and for the years ended June 30, 1998, 1997, 1996, 1995,
and 1994. If such expenses had not been voluntarily absorbed, ratio of
expenses to average net assest would have been 0.91%, (annualized) 0.98%,
0.96%, 0.97%, and 0.95%, respectively, and ratio of net investment income to
average net assets would have been 2.09% (annualized), 2.35%, 2.51%, 3.14%,
3.58% and 3.08%, respectively.
(e) Ratio is based on Total Expenses of the fund, less Expenses Absorbed by the
Investment Adviser, if applicable, which is before any expense offset
arrangements.
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Total Return Fund
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS PERIOD
ENDED ENDED
NOVEMBER 30 MAY 31 YEAR ENDED AUGUST 31
- ---------------------------------------------------------------------------------------------------------
1999 1999(a) 1998 1997 1996 1995 1994
UNAUDITED
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value --
Beginning of
Period $ 32.37 $ 28.16 $ 27.77 $ 22.60 $ 20.95 $ 18.54 $ 18.27
=========================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.41 0.60 0.83 0.77 0.73 0.72 0.69
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) (2.50) 5.03 0.87 5.26 1.78 2.46 0.60
=========================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS (2.09) 5.63 1.70 6.03 2.51 3.18 1.29
=========================================================================================================
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.41 0.60 0.83 0.77 0.73 0.72 0.60
In Excess of Net Investment
Income(b) 0.00 0.00 0.00 0.00 0.00 0.00 0.09
Distributions from
Capital Gains 1.16 0.82 0.48 0.09 0.13 0.05 0.17
In Excess of Capital Gains 0.00 0.00 0.00 0.00 0.00 0.00 0.16
=========================================================================================================
TOTAL DISTRIBUTIONS 1.57 1.42 1.31 0.86 0.86 0.77 1.02
=========================================================================================================
Net Asset Value --
End of Period $ 28.71 $ 32.37 $ 28.16 $ 27.77 $ 22.60 $ 20.95 $ 18.54
=========================================================================================================
TOTAL RETURN (6.49%)(c) 20.27%(c) 6.02% 27.01% 12.06% 17.54% 7.22%
RATIOS
Net Assets --
End of Period
($000 Omitted) $3,005,570 $3,418,746 $2,561,016 $1,845,594 $1,032,151 $563,468 $292,765
Ratio of Expenses
to Average Net
Assets(d) 0.47%(c)(e) 0.83%(e)(f) 0.79%(e) 0.86%(e) 0.89%(e) 0.95% 0.96%
Ratio of Net
Investment Income
to Average Net
Assets(d) 1.25%(c) 2.61%(f) 2.82% 3.11% 3.44% 3.97% 3.31%
Portfolio Turnover Rate 27%(c) 7%(c) 17% 4% 10% 30% 12%
</TABLE>
(a) From September 1, 1998 to May 31, 1999, the Fund's current fiscal year end.
(b) Distributions in excess of net investment income for the period ended May
31, 1999 and for the year ended August 31, 1995, aggregated less than $0.01
on a per share basis.
(c) Based on operations for the period shown, and accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG from September
1, 1998 to May 12, 1999 and for the the year ended August 31, 1998. If such
expenses had not been voluntarily absorbed, ratio of expenses to average net
assets would have been 0.84% (annualized) and 0.80%, respectively, and ratio
of net investment income to average net assets would have been 2.60%
(annualized) and 2.81%, respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Advisor, if applicable, which is before any expense offset
arrangements.
(f) Annualized
<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
Treasurer's Money Market Reserve 96 IMRXX INVESCOMMR
Treasurer's 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 OR VISIT OUR WEB SITE FOR A
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
<PAGE>
YOU
SHOULD
KNOW
WHAT
INVESCO
KNOWS (TM)
[INVESCO ICON] INVESCO(R)
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, Colorado 80217-3706
This information must be preceded or accompanied
by a current prospectus.
