KNOWLEDGE o DISCIPLINE o SERVICE o CHOICE
--------------------------------------------------------------------------------
YOU SHOULD KNOW WHAT INVESCO KNOWS (R)
--------------------------------------------------------------------------------
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
BALANCED FUND
EQUITY INCOME FUND
TOTAL RETURN FUND
ANNUAL
ANNUAL REPORT | May 31, 2000 [INVESCO ICON] INVESCO FUNDS
<PAGE>
"RATE INCREASES, IF THEY ARE TEMPORARY, DO LITTLE TO ALTER THE FUNDAMENTAL
PROCESSES AT WORK IN THE ECONOMY" (PAGE 3)
Graph: Balanced Fund - Investor Class since inception (12/93) 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 - Investor Class 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 (12/93) through 5/31/00.
Graph: Equity Income Fund - Investor Class 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 - Investor Class 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 5/31/00.
Graph: Total Return Fund - Investor Class 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 - Investor Class 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 5/31/00.
<TABLE>
<CAPTION>
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
TOTAL RETURN-INVESTOR CLASS
PERIODS ENDED 5/31/00(1)
10 YEARS* MANAGER'S
CUMULATIVE OR SINCE REPORT
FUND (INCEPTION) 6 MONTHS 1 YEAR 5 YEARS* INCEPTION PAGE NUMBER
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balanced (12/93) 0.42% 7.47% 18.21% 16.86%+ 3
-----------------------------------------------------------------------------------------------------------
Equity Income 2.56% 8.46% 16.79% 14.69% 5
-----------------------------------------------------------------------------------------------------------
Total Return (1.92%) (8.29%) 11.59% 11.90% 7
-----------------------------------------------------------------------------------------------------------
* AVERAGE ANNUALIZED
+ FOR FUNDS INTRODUCED MORE RECENTLY
</TABLE>
The line graphs illustrate the value of a $10,000 investment, plus reinvested
dividends and capital gain distributions, for the 10-year period or from
inception through 5/31/00. The chart 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 not a guarantee of future results.)(1),(2) Because the inception
of Class C shares for INVESCO Combination Stock & Bonds funds took place shortly
before the reporting period, we are not including performance figures for this
class of shares. Future reports will include separate performance figures for
Class C shares.
<PAGE>
BALANCED FUND
YOUR FUND'S PERFORMANCE: A REPORT FROM THE MANAGERS
--------------------------------------------------------------------------------
Dear Shareholder:
History has shown that both the equity and bond markets often struggle when
interest rates are on the rise, and this past fiscal year has been no exception.
The Federal Reserve Board began raising official short-term rates soon after our
reporting period began; as of this writing, it appears that the current round of
tightening has not come to an end. This environment has restrained our fund's
gains, especially compared to those we have recorded over the last few years.
For the one-year period ended May 31, 2000, the value of Investor Class shares
rose 7.47%. This can be compared to both the S&P 500 Index, which rose 10.47%
during the same period, and the Lehman Government/Corporate Bond Index, which
rose 1.91%. (Of course, past performance is no guarantee of future
results.)(1),(2)
Rate increases, if they are temporary, do little to alter the fundamental
processes at work in the economy. Of late, perhaps the most fundamental of all
such processes has been the adoption of sophisticated digital technologies by
both businesses and households. Through February, investors kept this fact in
mind, focusing assets on those companies at the epicenter of technological
change -- computer and chip makers, biotechnology companies, and leading-edge
communications firms. In their enthusiasm, investors bid up the prices of many
such companies to levels that were hard to justify on the basis of current -- or
even future -- earnings. Thus, many analysts were not surprised when most of
these stocks tumbled lower in the spring.
It is questionable whether the true value of companies using new technologies --
rather than creating them -- has yet been realized in the markets. A whole range
of "traditional" firms, from consumer products companies to energy producers,
are adopting or improving information technology to speed production and
marketing. Lately, the consumer products firms Colgate-Palmolive Co and Gillette
Co, for example, have aggressively integrated business software created by SAP
AG, all companies currently in our portfolio.
--------------------------------------------------------------------------------
FUND MANAGERS
CHARLES P. MAYER (EQUITY)
SENIOR VICE PRESIDENT, 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 1996.
DONOVAN J. (JERRY) PAUL, CFA, CPA (FIXED-INCOME)
SENIOR VICE PRESIDENT, 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. BA, COLORADO STATE UNIVERSITY; MBA, REGIS
UNIVERSITY. JOINED INVESCO IN 1994. BEGAN INVESTMENT CAREER IN 1992. HAS MANAGED
THIS FUND SINCE 1998.
<PAGE>
Another industry making "second-line" use of technology is retailing.
Electronics retailers, such as Circuit City Stores-Circuit City Group and
RadioShack Corp, are seeing sales explode as consumers upgrade to digital
appliances, including cell phones and DVD players. Should consumer spending
slow, we remain optimistic that these firms will continue to fare well. Buyers
appreciate that consumer electronics are actually becoming cheaper with time;
thus, these products seem likely to continue to offer value even as inflation
heats up or as household budgets become tighter. This same reasoning has
recently driven our investments in Target Corp and Kohl's Corp. Both stores
offer quality to value-conscious customers, an ideal approach when consumers are
tightening their belts.
Aside from changing the dynamics of the equity markets, rising interest rates
and the threat of an economic slowdown take their toll on the fixed-income
markets as well. Over the past year, our bond allocation has moved within a
tight range, hovering between 29% to 33%. The return on these holdings has been
slightly negative, as rising rates caused government bond prices to fall, and
corporate bonds have been bid even lower as demand slackened. As a result,
corporate bonds now appear to us to be attractively priced, both on an
historical basis and relative to credit quality. Still, we see little evidence
of a catalyst for the bond market to recover as long as the economic and
interest rate outlook remains clouded.
As we move forward in this somewhat murky economic environment, we are
strengthening our investments in more defensive growth industries. The
pharmaceutical industry, for example, often receives flows from more volatile
sectors, such as technology, when an economic slowdown threatens. The financial
services sector also appears to offer good opportunities. While investors have
been preoccupied with rising interest rates, which typically harm the bottom
line for banks, many institutions have seen impressive earnings from fee-based
businesses.
In summary, we believe there remain many attractive opportunities for investors
willing to wait out the current period of interest rate increases. The
fundamental drivers behind the incredible economic expansion of the 1990s --
technological change and productivity growth -- have not changed. Our plan is to
position the fund to seize these opportunities once conditions become more
stable. (Of course, there is no guarantee the fund will meet its investment
objectives.)
/s/ Charles P. Mayer /s/ Donovan J. Paul /s/ Peter M. Lovell
-------------------- ------------------- -------------------
Charles P. Mayer Donovan J. (Jerry) Paul Peter M. Lovell
Senior Vice President Senior Vice President Vice President
<PAGE>
EQUITY INCOME FUND
YOUR FUND'S PERFORMANCE: A REPORT FROM THE MANAGERS
--------------------------------------------------------------------------------
Dear Shareholder:
The fiscal year ended May 31, 2000, was a moderately successful one for our
fund, although our returns did not match those characteristic of our longer-term
average performance. Business conditions remained extremely strong for most of
the companies in our portfolio, as the economy steamed ahead at the fastest rate
in years. But securities markets are inherently forward-looking, and a sense
that the good times would soon come to an end permeated the investment climate
-- depressing the prices of many stocks. At the very end of our reporting
period, data began to come in suggesting that the expansion was slowing. Still,
looking further ahead, this apparently negative news may be just what the
markets need to establish a more positive vision of the future.
For the one-year period ended May 31, 2000, the value of Investor Class shares
rose 8.46%. This can be compared to both the 10.47% rise of the S&P 500 Index,
and the Lehman Government/Corporate Bond Index, which rose 1.91%. (Of course,
past performance is no guarantee of future results.)(1),(2)
Contributions to our performance have come from a variety of sectors. The rise
in oil and natural gas prices led to strong returns for many of our energy
holdings, especially Apache Corp and the oil services firm Schlumberger Ltd. Our
financial services holdings were also strong, as investors began to weigh
beaten-down share prices against solid profits. This was especially true of
companies such as Bank of New York that rely on fee-based transactions rather
than lending operations. General Electric, an increasingly important player in
financial services, also fared well. Additionally, the life insurance industry
offered some powerful returns. MetLife Inc, which only recently became a
publicly traded company, has performed very well, as has John Hancock Financial
Services. The health care firms Medtronic Inc and Warner-Lambert Co also helped
our performance considerably. (Holdings and compostition of holdings are subject
to change.)
At the same time, some of the dominant competitors in the economy have not fared
so well in recent months. Most people are aware of Microsoft Corp's antitrust
problems. Worries that Microsoft will be broken up -- which seems increasingly
likely given the recent ruling on the case -- have taken a severe toll on the
software maker's stock. As some point out, however, if shareholders are given
holdings in two or more pieces of Microsoft, they may well fare better than if
nothing had changed. Ironically, one of the strongest contributors to our
performance over the past year was US WEST, a piece of the former AT&T Corp.
monopoly.
--------------------------------------------------------------------------------
FUND MANAGERS
CHARLES P. MAYER (EQUITY)
SENIOR VICE PRESIDENT, 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 1996.
DONOVAN J. (JERRY) PAUL, CFA, CPA (FIXED-INCOME)
SENIOR VICE PRESIDENT, 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>
Our fund remained heavily weighted in equities, in line with our recent efforts
to more aggressively pursue capital growth opportunities. This proved a fruitful
strategy, given the recent bond environment. Of course, rising interest rates
are never good for bond prices, and the corporate bonds in which we invest were
especially hard-hit this past year. With stocks offering stellar returns over
the last several years, interest in bonds has slackened, driving down demand and
prices. Additionally, high-profile defaults have taken a toll. Although we have
done a better job than many high-yield bond investors in avoiding such defaults,
they have a ripple effect throughout the entire bond market.
The flip side of this difficult period, however, is that corporate bonds are now
quite attractively priced relative to government bonds -- and to their
underlying security structures. With much of the bad news already built into
bond prices, it appears unlikely that they will drift significantly lower -- and
in the meantime, they will continue to provide the fund with attractive yields.
We expect that many of the questions preoccupying the markets will be answered
in the next few months. Above all, investors should soon learn whether the
Federal Reserve's efforts to slow the expansion have worked -- or, in fact, have
worked too well by throwing the economy into recession. It is important to keep
in mind that, even in a mild recession, some companies and sectors can continue
to thrive, and we have taken steps to include many such firms in the portfolio.
In particular, we have renewed our focus on companies enjoying solid unit
growth, combined with renewed pricing power.
Our continued broad goal will be to allow shareholders to participate in the
market's upward movements, while also providing downside protection. It is too
early to determine whether the markets are on the edge of a significant retreat
or are poised to resume climbing once the direction of monetary policy becomes
clear. We are satisfied that the current fund composition includes stocks that
may perform well in either situation. (Of course, there is no guarantee the fund
will meet its investment objectives.)
/s/ Charles P. Mayer /s/ Donovan J. Paul
-------------------- -------------------
Charles P. Mayer Donovan J. (Jerry) Paul
Senior Vice President Senior Vice President
<PAGE>
TOTAL RETURN FUND
YOUR FUND'S PERFORMANCE: A REPORT FROM THE MANAGERS
--------------------------------------------------------------------------------
Dear Shareholder:
The past year has been challenging for the fund, due to the dominance of growth
stocks for most of the period. In the second half of 1999 and the first few
months of 2000, investors exhibited what appeared to be an insatiable appetite
for New Economy stocks, particularly in the areas of technology and
telecommunications, while overlooking many attractively-priced and high-quality
shares in more traditional industries, such as financial services, basic
materials and industrial products.
This trend reversed itself in late March, however, when investors sold off their
higher valuation New Economy stocks and rotated back into value stocks trading
at attractive prices. The result was a rally in value shares that extended into
late May.
The recent resurgence in value stocks benefited the fund's performance during
the last three months of the period. However, these gains were not enough to
offset the tremendous lead established by our peers and by the S&P 500 Index --
all of which are biased toward growth stocks. Consequently, for the 12-month
period ended May 31, 2000, the value of Investor Class shares declined 8.29%,
compared to a 10.47% gain in the S&P 500 Index and a 1.91% increase in the
Lehman Government/Corporate Bond Index. Nonetheless, from mid-March through the
end of May, the fund's equity holdings fared much better than the benchmark and
the peer universe. (Of course, past performance is no guarantee of future
results)(1),(2)
Without a doubt, the largest negative for our performance during the overall
period was our underexposure to technology stocks, which fueled broader market
gains in 1999 and early 2000. We were also penalized by our selection of
specific stocks within the technology sector, as the lower-valuation holdings we
favored failed to capture investor attention. Nonetheless, our underexposure to
high-priced technology stocks worked to our advantage during the last three
months of the period, when these shares came under heavy selling by investors
concerned about valuations.
Our performance over the entire period was also hindered by our overweight
position in basic material and consumer durable stocks, which were among the
weakest performing sectors over the past year. Nonethe- less, many of these
holdings made a comeback in recent months as investors perceived their value.
One standout was Ford Motor, the world's most profitable automaker. With its
recent acquisitions of Volvo and Land Rover, Ford Motor continues its efforts to
overhaul its design process, while improving its luxury car line. It is also
spinning off low-margin businesses -- such as its auto parts operation Visteon
-- while looking for ways to leverage new technology. For example, it is teaming
up with Microsoft Corp's MSN CarPoint Web site to launch a "build to order"
service enabling consumers to customize their vehicles.
--------------------------------------------------------------------------------
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. GRIFFIN, CFA, AND MARGARET DURKES, CFA.
<PAGE>
The recent sell-off not only supported our attention to valuations, but it also
created some opportunities for us to add select technology names which we now
believe are fairly valued. For example, we took advantage of the volatility to
add a new position in Tellabs Inc, a maker of networking equipment which serves
the satellite, wireless and wireline markets. Since the funds are actively
managed, holdings will change over time.
Going forward, we remain optimistic that value stocks are making a comeback. At
the same time, we acknowledge that there remain extreme valuation differences
between growth and value stocks. This suggests more room for improvement in
value shares. Over the long run, we are confident that investors will reward the
kind of companies in which we invest -- fundamentally strong businesses trading
at reasonable valuations. We are also encouraged by recent economic developments
suggesting interest rates have peaked, which bodes well for our fixed-income
holdings and some of our more cyclically sensitive equity positions.
/s/ Edward C. Mitchell, Jr. /s/ James O. Baker
--------------------------- ------------------
Edward C. Mitchell, Jr. James O. Baker
Chairman & Portfolio Manager Portfolio Manager
EFFECTIVE JULY 1, 2000, DAVID S. GRIFFIN, CFA, WILL ASSUME MANAGEMENT
RESPONSIBILITY FOR INVESCO TOTAL RETURN FUND. MR. GRIFFIN WAS FORMERLY THE
FUND'S ASSISTANT PORTFOLIO MANAGER AND JOINED INVESCO IN 1986. MR. GRIFFIN
RECEIVED HIS BACHELOR'S DEGREE FROM OHIO WESLEYAN UNIVERSITY AND HIS MBA FROM
WILLIAM AND MARY COLLEGE. HE BEGAN HIS INVESTMENT CAREER IN 1982.
--------------------------------------------------------------------------------
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 AND LEHMAN GOVERNMENT/CORPORATE BOND INDEX ARE UNMANAGED INDEXES
OF SECURITIES CONSIDERED REPRESENTATIVE OF THE BROAD DOMESTIC EQUITY AND
DOMESTIC FIXED-INCOME MARKETS, RESPECTIVELY.
<PAGE>
INVESCO FUNDS | ANNUAL REPORT | MAY 31, 2000
MOVING FORWARD
--------------------------------------------------------------------------------
MARKET HEADLINES:
DECEMBER 1999 TO MAY 2000
For most of the past year, the major story in the financial markets has been the
tremendous disparity between the performance of New Economy growth stocks --
particularly technology, telecommunications, and media companies -- and lagging
Old Economy shares in sectors such as financial services, industrial products
and basic materials. Against this backdrop, the technology-intensive Nasdaq
Composite far outpaced the more Old Economy-based S&P 500 Index and Dow Jones
Industrial Average. This dichotomy persisted through the first two months of
2000, despite the fact that many New Economy shares were trading at lofty
valuations that appeared harder to justify in an environment of rising interest
rates.
At the same time, there were signs that the "virtuous economy" -- neither too
hot nor too cold -- was finally starting to heat up. Labor markets remained
tight and wage pressures were simmering, while consumers were studying the
impressive balances on their investment statements and spending like never
before. Meanwhile, economies in Europe and Asia picked up steam, and oil prices
surged to new highs. With the global economy firing on all cylinders, inflation
became the dominant concern. The Federal Reserve Board responded to these
pressures by tightening credit conditions. Between June of 1999 and May of 2000,
the central bank raised short-term interest rates six times -- for a total of
1.75% -- the latest a 0.50% rate increase in May.
The threat of higher interest rates kept financial markets volatile, and put
upward pressure on short and intermediate bond rates. At the same time,
technical factors and the government's efforts to pay down long-term debt sent
long-term Treasury bond yields lower. The result was an inverted yield curve (an
unusual situation where short-term rates are higher than longer-term rates.)
Market pessimists pointed to this development as another sign that the expansion
was on its last legs, since inverted yield curves have historically foretold a
number of recessions, some of which actually occurred.
For a time, it appeared that growth stocks really did enjoy a Teflon(TM)
coating, as valuations on many technology, telecommunication and biotechnology
stocks surged to new highs despite rising interest rates and heightened economic
uncertainty. Yet the New Economy onslaught hit a wall in late March, as interest
rate fears and rumblings out of Washington triggered a sell-off in biotechnology
stocks that quickly spread to other New Economy stalwarts, sending the Nasdaq
Composite into a tailspin.
Between March 10 and May 24, 2000, the Nasdaq endured a sell-off of historic
proportions, as investors rotated out of growth stocks to revisit many defensive
and value-oriented issues. Meanwhile, investors continued to weigh the risks of
further interest rate increases against overwhelmingly positive news on
earnings, while bargain hunters revisited many promising shares oversold in the
correction.
<PAGE>
INVESCO FUNDS | ANNUAL REPORT | MAY 31, 2000
MOVING FORWARD (CONTINUED)
--------------------------------------------------------------------------------
The market shook off its malaise in late May, invigorated by signs that the
economy was starting to cool. For one thing, job growth has slowed dramatically,
with non-farm payrolls losing 126,000 jobs in May (excluding census workers).
Vehicle and home sales also fell sharply in May, while chain store receipts came
in weaker than expected. More importantly, wage pressures have remained subdued,
as hourly wages crept up at their slowest pace in the last four years. Hopes
that the Fed might halt its interest rate campaign triggered a strong
post-Memorial Day rally that sent the Nasdaq to its biggest percentage increase
ever. The Dow Jones Industrial Average, Standard & Poor's 500 Composite Stock
Index and Russell 2000 Index also turned in solid gains.*
While the recent market rebound has been encouraging, uncertainty over interest
rates will likely persist. The economic expansion appears to be transitioning
into a new phase of more moderate growth and somewhat higher inflation. While
the Federal Reserve has no desire to trigger a recession, it will remain
vigilant as long as inflation remains a risk. Consequently, we caution that
financial markets are likely to remain volatile, and that it will be difficult
for equities to record the kind of gains we saw last year. Nonetheless, we are
confident that this type of environment will provide opportunities for
investors, such as ourselves, who rely on bottom-up research to identify solid
companies that may perform well in any kind of market environment.
* THE STANDARD & POOR'S 500 COMPOSITE STOCK INDEX IS AN UNMANAGED INDEX OF
COMMON STOCKS CONSIDERED REPRESENTATIVE OF THE BROAD U.S. STOCK MARKET; THE DOW
JONES INDUSTRIAL AVERAGE REPRESENTS 30 LARGE INDUSTRIAL COMPANIES ON THE NEW
YORK STOCK EXCHANGE AND NASDAQ; AND THE RUSSELL 2000 INDEX IS AN UNMANAGED INDEX
OF COMMON STOCKS CONSIDERED REPRESENTATIVE OF THE SMALL-CAPITALIZATION STOCK
MARKET.
<PAGE>
TEN LARGEST STOCK HOLDINGS
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
MAY 31, 2000
DESCRIPTION VALUE
--------------------------------------------------------------------------------
BALANCED FUND
Merck & Co $ 9,999,750
General Motors Class H Shrs 9,597,656
Citigroup Inc 9,595,531
Clear Channel Communications 9,351,887
Allmerica Financial 9,299,225
Exxon Mobil 9,222,694
Morgan (J P) & Co 8,652,000
Unocal Corp 8,494,687
Textron Inc 8,477,525
Maxim Integrated Products 8,335,687
EQUITY INCOME FUND
Bank of New York $187,750,000
General Electric 142,087,500
Kansas City Southern Industries 127,775,000
Merck & Co 104,475,000
Exxon Mobil 91,643,750
Honeywell International 86,132,812
Warner-Lambert Co 85,487,500
Citigroup Inc 82,796,437
Schlumberger Ltd 80,918,750
Allmerica Financial 80,578,938
TOTAL RETURN FUND
Bank of America $ 47,894,875
Sprint Corp 44,467,500
Merck & Co 37,312,500
Exxon Mobil 32,491,875
AT&T Corp 31,739,063
Intel Corp 31,654,750
Ford Motor 29,375,456
Repsol SA Sponsored ADR Representing Ord Shrs 29,011,488
Morgan Stanley Dean Witter & Co 28,775,000
Computer Associates International 27,552,500
Composition of holdings is subject to change.
<PAGE>
STATEMENT OF INVESTMENT SECURITIES
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
MAY 31, 2000
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
--------------------------------------------------------------------------------
BALANCED FUND
62.54 COMMON STOCKS
1.18 AEROSPACE & DEFENSE
Honeywell International 142,800 $ 7,809,375
================================================================================
5.96 BANKS
Bank of America 126,100 7,006,431
Bank of New York 174,200 8,176,512
Chase Manhattan 102,700 7,670,406
Morgan (J P) & Co 67,200 8,652,000
Wells Fargo & Co 172,000 7,783,000
================================================================================
39,288,349
0.82 BEVERAGES
Anheuser-Busch Cos 69,700 5,401,750
================================================================================
1.01 BIOTECHNOLOGY-- HEALTH CARE
Genentech Inc(a) 61,900 6,646,513
================================================================================
3.54 BROADCASTING
Clear Channel Communications(a) 124,900 9,351,887
EchoStar Communications Class A Shrs(a) 109,200 4,361,175
General Motors Class H Shrs(a) 97,500 9,597,656
================================================================================
23,310,718
2.11 CABLE
AT&T Corp-Liberty Media Group Class A Shrs(a) 145,000 6,425,313
CableVision Systems Class A Shrs(a) 119,600 7,489,950
================================================================================
13,915,263
1.20 COMMUNICATIONS-- EQUIPMENT & MANUFACTURING
Nortel Networks 145,400 7,897,038
================================================================================
4.40 COMPUTER RELATED
Cisco Systems(a) 131,800 7,512,600
Computer Associates International 133,800 6,890,700
EMC Corp(a) 64,200 7,467,262
Sun Microsystems(a) 92,900 7,118,462
================================================================================
28,989,024
0.72 CONTAINERS
Temple-Inland Inc 96,100 4,774,969
================================================================================
0.75 ELECTRIC UTILITIES
Unicom Corp 118,900 4,956,644
================================================================================
1.26 ELECTRICAL EQUIPMENT
General Electric 157,700 8,298,962
================================================================================
3.57 ELECTRONICS--SEMICONDUCTOR
Intel Corp 62,100 7,739,212
Maxim Integrated Products(a) 131,400 8,335,687
Texas Instruments 102,800 7,427,300
================================================================================
23,502,199
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
--------------------------------------------------------------------------------
0.92 ENTERTAINMENT
Gemstar International Group Ltd(a) 143,000 $ 6,068,563
================================================================================
1.46 FINANCIAL
Citigroup Inc 154,300 9,595,531
================================================================================
1.07 GAMING
Harrah's Entertainment(a) 357,100 7,052,725
================================================================================
7.10 HEALTH CARE DRUGS--PHARMACEUTICALS
American Home Products 138,600 7,467,075
Forest Laboratories(a) 79,000 6,991,500
Johnson & Johnson 81,200 7,267,400
Merck & Co 134,000 9,999,750
Pharmacia Corp 131,600 6,834,975
Warner-Lambert Co 67,200 8,206,800
================================================================================
46,767,500
0.95 HOUSEHOLD PRODUCTS
Colgate-Palmolive Co 118,700 6,246,588
================================================================================
1.41 INSURANCE
Allmerica Financial 161,200 9,299,225
================================================================================
0.97 INVESTMENT BANK/BROKER FIRM
Morgan Stanley Dean Witter & Co 88,800 6,388,050
================================================================================
1.29 MANUFACTURING
Textron Inc 135,100 8,477,525
================================================================================
0.72 NATURAL GAS
Coastal Corp 77,500 4,756,563
================================================================================
4.70 OIL & GAS RELATED
Apache Corp 130,100 7,919,837
Exxon Mobil 110,700 9,222,694
Schlumberger Ltd 72,900 5,362,706
Unocal Corp 221,000 8,494,687
================================================================================
30,999,924
1.00 PERSONAL CARE
Gillette Co 198,000 6,608,250
================================================================================
0.86 RAILROADS
Kansas City Southern Industries 84,500 5,682,625
================================================================================
4.19 RETAIL
Circuit City Stores-Circuit City Group 151,700 7,556,556
Kohl's Corp(a) 129,200 6,686,100
RadioShack Corp 181,100 7,685,431
Target Corp 91,300 5,723,369
================================================================================
27,651,456
2.25 SERVICES
America Online(a) 129,300 6,852,900
Omnicom Group 94,900 7,965,669
================================================================================
14,818,569
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
--------------------------------------------------------------------------------
1.71 TELECOMMUNICATIONS-- CELLULAR & WIRELESS
Crown Castle International(a) 168,000 $ 4,399,500
Nextel Communications Class A Shrs(a) 73,900 6,844,988
================================================================================
11,244,488
2.28 TELECOMMUNICATIONS-- LONG DISTANCE
Cable & Wireless PLC Sponsored ADR
Representing 3 Ord Shrs 161,100 7,994,588
Qwest Communications International(a) 166,600 7,049,263
================================================================================
15,043,851
3.14 TELEPHONE
Amdocs Ltd(a) 52,200 3,233,138
BellSouth Corp 149,500 6,979,781
McLeodUSA Inc(a) 342,100 6,842,000
SBC Communications 84,000 3,669,750
================================================================================
20,724,669
TOTAL COMMON STOCKS (Cost $355,768,979) 412,216,906
================================================================================
0.84 PREFERRED STOCKS
0.84 COMPUTER RELATED
SAP AG Sponsored ADR Representing 1/12 Pfd Shr
(Cost $5,147,286) 128,900 5,526,588
================================================================================
30.14 FIXED INCOME SECURITIES
7.67 US GOVERNMENT OBLIGATIONS
US Treasury Notes
6.625%, 5/31/2002 $ 6,500,000 6,491,875
6.000%, 8/15/2004 $ 5,000,000 4,892,190
6.000%, 8/15/2009 $ 7,500,000 7,303,125
5.875%, 11/15/2004 $ 10,000,000 9,725,000
5.625%, 5/15/2008 $ 16,355,000 15,521,925
5.500%, 5/15/2009 $ 3,000,000 2,819,064
5.250%, 5/15/2004 $ 4,000,000 3,812,500
================================================================================
TOTAL US GOVERNMENT OBLIGATIONS
(Amortized Cost $52,020,160) 50,565,679
================================================================================
4.29 US GOVERNMENT AGENCY OBLIGATIONS
Freddie Mac, Gold, Participation Certificates
6.500%, 6/1/2011 $ 5,655,598 5,395,800
6.500%, 9/1/2011 $ 5,467,194 5,216,051
6.500%, 2/1/2030 $ 4,985,199 4,617,735
Resolution Funding, Generic Interest Strip,
Zero Coupon, 4/15/2009 $ 24,000,000 13,014,456
================================================================================
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Amortized Cost $28,982,412) 28,244,042
================================================================================
18.18 CORPORATE BONDS
0.24 AIRLINES
Delta Air Lines, Deb, 10.375%, 12/15/2022 $ 1,500,000 1,577,516
================================================================================
0.23 BUILDING MATERIALS
USG Corp, Sr Notes, 8.500%, 8/1/2005 $ 1,500,000 1,506,414
================================================================================
0.48 CABLE
TCI Communications,Sr Deb,7.875%, 2/15/2026 $ 1,000,000 960,050
<PAGE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Tele-Communications Inc, Sr Deb, 9.800%, 2/1/2012 $ 2,000,000 $ 2,232,166
=====================================================================================================
3,192,216
0.12 CHEMICALS
Equistar Chemicals LP, Deb, 7.550%, 2/15/2026 $ 1,000,000 785,503
=====================================================================================================
10.21 ELECTRIC UTILITIES
Appalachian Power, 1st Mortgage
Medium-Term Notes, 8.000%, 6/1/2025 $ 2,000,000 1,910,678
Arizona Public Service,
1st Mortgage, 8.000%, 2/1/2025 $ 1,500,000 1,380,345
Central Power & Light, 1st Mortgage,
Series II, 7.500%, 4/1/2023 $ 2,500,000 2,223,937
Commonwealth Edison, 1st Mortgage
Series 76, 8.250%, 10/1/2006 $ 1,000,000 1,013,088
Series 88, 8.375%, 2/15/2023 $ 4,000,000 3,857,476
Series 93, 7.000%, 7/1/2005 $ 2,000,000 1,937,146
Consumers Energy, 1st & Refunding Mortgage
7.375%, 9/15/2023 $ 2,500,000 2,179,283
Detroit Edison, Medium-Term Notes, Series C, 8.300%, 1/13/2023 $ 1,000,000 971,949
Duquesne Light
1st Collateral Trust, 7.550%, 6/15/2025 $ 4,000,000 3,586,764
Medium-Term Notes, Series B, 8.200%, 11/15/2022 $ 1,000,000 982,585
El Paso Electric, 1st Mortgage, Series D, 8.900%, 2/1/2006 $ 4,000,000 4,038,188
Gulf Power, 1st Mortgage, 6.875%, 1/1/2026 $ 3,000,000 2,504,976
Gulf States Utilities, 1st Mortgage, 8.700%, 4/1/2024 $ 1,000,000 966,240
Indiana Michigan Power, 1st Mortgage
Medium-Term Notes, 8.500%, 12/15/2022 $ 3,000,000 2,955,273
Jersey Central Power & Light
1st Mortgage, 7.500%, 5/1/2023 $ 2,000,000 1,827,970
Sr 1st Mortgage Medium-Term Notes, Series C
7.980%, 2/16/2023 $ 2,000,000 1,879,822
Kentucky Utilities, 1st Mortgage, Series R, 7.550%, 6/1/2025 $ 2,000,000 1,807,956
Metropolitan Edison, 1st Mortgage Medium-Term
Notes, Series B, 8.150%, 1/30/2023 $ 2,000,000 1,924,410
New York State Electric & Gas, 1st Mortgage, 8.300%, 12/15/2022 $ 1,500,000 1,426,776
Niagara Mohawk Power, 1st Mortgage
8.750%, 4/1/2022 $ 2,000,000 1,991,854
7.750%, 5/15/2006 $ 4,000,000 3,903,156
Pennsylvania Power, 1st Mortgage, 8.500%, 7/15/2022 $ 2,500,000 2,390,037
Potomac Edison, 1st Mortgage, 7.750%, 5/1/2025 $ 4,000,000 3,678,088
Potomac Electric Power, 1st Mortgage, 8.500%, 5/15/2027 $ 2,000,000 1,985,382
Public Service Electric & Gas, 1st Mortgage, 6.375%, 5/1/2023 $ 1,400,000 1,284,245
Public Service of Colorado, 1st Mortgage, 9.875%, 7/1/2020 $ 1,500,000 1,557,284
Texas Utilities
1st Mortgage & Collateral Trust, 8.500%, 8/1/2024 $ 4,000,000 3,807,464
1st Mortgage, 7.375%, 10/1/2025 $ 2,000,000 1,714,428
Union Electric, 1st Mortgage
8.750%, 12/1/2021 $ 3,250,000 3,171,880
8.250%, 10/15/2022 $ 500,000 481,142
Wisconsin Electric Power, 1st Mortgage, 8.375%, 12/1/2026 $ 2,000,000 1,949,596
=====================================================================================================
67,289,418
0.49 ENTERTAINMENT
Paramount Communications, Sr Deb, 8.250%, 8/1/2022 $ 3,400,000 3,252,811
=====================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
0.29 FINANCIAL
Associates Corp of North America, Sr Euro
Medium-Term Notes, Series 8, 7.375%, 6/11/2007 $ 2,000,000 $ 1,934,622
=====================================================================================================
0.33 GAMING
Mirage Resorts, Notes, 6.750%, 8/1/2007 $ 2,500,000 2,160,285
=====================================================================================================
0.68 INSURANCE
Equitable Cos, Sr Notes, 9.000%, 12/15/2004 $ 2,500,000 2,594,355
Progressive Corp, Sr Notes, 6.625%, 3/1/2029 $ 2,500,000 1,890,312
=====================================================================================================
4,484,667
0.13 LODGING-- HOTELS
Hilton Hotels, Sr Notes, 7.200%, 12/15/2009 $ 1,000,000 829,606
=====================================================================================================
0.10 NATURAL GAS
NorAm Energy, Conv Sub Deb, 6.000%, 3/15/2012 $ 750,000 627,188
=====================================================================================================
0.55 OIL & GAS RELATED
Atlantic Richfield, Deb, 10.875%, 7/15/2005 $ 1,500,000 1,704,487
Panhandle Eastern Pipe Line, Sr Notes, 6.500%, 7/15/2009 $ 1,000,000 870,307
Sun Inc, Deb, 9.375%, 6/1/2016 $ 1,000,000 1,025,380
=====================================================================================================
3,600,174
0.79 PAPER & FOREST PRODUCTS
Bowater Inc, Deb, 9.000%, 8/1/2009 $ 2,000,000 2,028,218
Chesapeake Corp, Deb, 7.200%, 3/15/2005 $ 3,500,000 3,192,948
=====================================================================================================
5,221,166
0.91 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Esat Holdings Ltd, Sr Deferred Step-Up Notes, Series B
Zero Coupon(b), 2/1/2007 $ 2,000,000 1,810,000
Rogers Cantel, Sr Deb, 9.750%, 6/1/2016 $ 4,000,000 4,220,000
=====================================================================================================
6,030,000
0.51 TELECOMMUNICATIONS-- LONG DISTANCE
AT&T Corp, Notes, 6.000%, 3/15/2009 $ 1,500,000 1,307,805
GTE Corp, Deb, 7.900%, 2/1/2027 $ 2,250,000 2,077,443
=====================================================================================================
3,385,248
2.12 TELEPHONE
Centel Capital, Deb, 9.000%, 10/15/2019 $ 2,500,000 2,680,825
MetroNet Communications, Sr Discount Step-Up Notes
Zero Coupon(b), 6/15/2008 $ 12,850,000 10,344,109
US WEST Communications, Notes, 5.650%, 11/1/2004 $ 1,000,000 926,192
=====================================================================================================
13,951,126
TOTAL CORPORATE BONDS (Amortized Cost $130,265,514) 119,827,960
=====================================================================================================
TOTAL FIXED INCOME SECURITIES (Amortized Cost $211,268,086) 198,637,681
=====================================================================================================
6.48 SHORT-TERM INVESTMENTS
0.08 US GOVERNMENT AGENCY OBLIGATIONS
Sallie Mae, Notes, Series CQ, 6.240%(c), 3/7/2001 (Cost $500,000) $ 500,000 499,352
=====================================================================================================
4.55 COMMERCIAL PAPER
1.52 CONSUMER FINANCE
American Express Credit, 6.520%, 6/2/2000 $ 10,000,000 10,000,000
=====================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
3.03 FINANCIAL
General Electric Capital, 6.780%, 6/1/2000 $ 20,000,000 $ 20,000,000
=====================================================================================================
TOTAL COMMERCIAL PAPER (Cost $30,000,000) 30,000,000
=====================================================================================================
1.52 INVESTMENT COMPANIES
INVESCO Treasurer's Series Money Market Reserve Fund
6.390% (Cost $10,040,589) 10,040,589 10,040,589
=====================================================================================================
0.33 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 5/31/2000
due 6/1/2000 at 6.300%, repurchased at $2,157,377
(Collateralized by US Treasury Inflationary Index Bonds,
due 4/15/2028 at 3.625%, value $2,335,235)
(Cost $2,157,000) $ 2,157,000 2,157,000
=====================================================================================================
TOTAL SHORT-TERM INVESTMENTS (Amortized Cost $42,697,589) 42,696,941
=====================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $614,881,940)
(Cost for Income Tax Purposes $615,012,642) $ 659,078,116
=====================================================================================================
EQUITY INCOME FUND
82.97 COMMON STOCKS
3.19 AEROSPACE & DEFENSE
Boeing Co 598,000 $ 23,359,375
Honeywell International 1,575,000 86,132,812
Northrop Grumman 400,000 30,650,000
=====================================================================================================
140,142,187
0.89 AUTOMOBILES
Ford Motor 800,000 38,850,000
=====================================================================================================
9.67 BANKS
Bank of America 900,000 50,006,250
Bank of New York 4,000,000 187,750,000
Chase Manhattan 850,000 63,484,375
Morgan (J P) & Co 500,000 64,375,000
Wells Fargo & Co 1,300,000 58,825,000
=====================================================================================================
424,440,625
1.41 BEVERAGES
Anheuser-Busch Cos 800,000 62,000,000
=====================================================================================================
0.98 BIOTECHNOLOGY-- HEALTH CARE
Genentech Inc(a) 400,000 42,950,000
=====================================================================================================
3.17 BROADCASTING
Clear Channel Communications(a) 500,000 37,437,500
EchoStar Communications Class A Shrs(a) 800,000 31,950,000
General Motors Class H Shrs(a) 550,000 54,140,625
Univision Communications Class A Shrs(a) 150,000 15,450,000
=====================================================================================================
138,978,125
1.78 CABLE
AT&T Corp-Liberty Media Group Class A Shrs(a) 1,200,000 53,175,000
Cox Communications Class A Shrs(a) 568,100 25,067,412
=====================================================================================================
78,242,412
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
0.42 CHEMICALS
Lyondell Chemical 1,100,000 $ 18,356,250
=====================================================================================================
1.05 COMMUNICATIONS-- EQUIPMENT & MANUFACTURING
Nortel Networks 850,000 46,165,625
=====================================================================================================
2.17 COMPUTER RELATED
Cisco Systems(a) 900,000 51,300,000
Computer Associates International 850,000 43,775,000
=====================================================================================================
95,075,000
0.21 CONTAINERS
Temple-Inland Inc 188,000 9,341,250
=====================================================================================================
1.51 ELECTRIC UTILITIES
Duke Energy 550,000 32,037,500
PG&E Corp 700,000 18,156,250
Scottish Power PLC Sponsored ADR Representing 4 Ord Shrs 500,000 16,031,250
=====================================================================================================
66,225,000
3.24 ELECTRICAL EQUIPMENT
General Electric 2,700,000 142,087,500
=====================================================================================================
4.49 ELECTRONICS-- SEMICONDUCTOR
Intel Corp 550,000 68,543,750
Maxim Integrated Products(a) 1,000,000 63,437,500
Texas Instruments 900,000 65,025,000
=====================================================================================================
197,006,250
1.89 FINANCIAL
Citigroup Inc 1,331,400 82,796,437
=====================================================================================================
4.40 FOODS
General Mills 1,925,000 76,398,437
Heinz (H J) Co 650,000 25,471,875
Kellogg Co 1,300,000 39,487,500
Quaker Oats 700,000 51,493,750
=====================================================================================================
192,851,562
0.92 GAMING
Harrah's Entertainment(a) 900,000 17,775,000
Park Place Entertainment(a) 1,800,000 22,725,000
=====================================================================================================
40,500,000
0.07 GOLD & PRECIOUS METALS MINING
Newmont Mining 125,000 2,882,813
=====================================================================================================
6.99 HEALTH CARE DRUGS-- PHARMACEUTICALS
American Home Products 1,200,000 64,650,000
Merck & Co 1,400,000 104,475,000
Pharmacia Corp 1,000,000 51,937,500
Warner-Lambert Co 700,000 85,487,500
=====================================================================================================
306,550,000
1.14 HOUSEHOLD PRODUCTS
Colgate-Palmolive Co 950,000 49,993,750
=====================================================================================================
4.01 INSURANCE
Allmerica Financial 1,396,818 80,578,938
John Hancock Financial Services(a) 2,200,000 49,087,500
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
MetLife Inc(a) 2,261,000 $ 46,350,500
=====================================================================================================
176,016,938
1.07 INVESTMENT BANK/BROKER FIRM
Morgan Stanley Dean Witter & Co 650,000 46,759,375
=====================================================================================================
1.66 MANUFACTURING
Illinois Tool Works 500,000 29,031,250
Textron Inc 700,000 43,925,000
=====================================================================================================
72,956,250
0.75 NATURAL GAS
Enron Corp 450,000 32,793,750
=====================================================================================================
9.12 OIL & GAS RELATED
Apache Corp 1,000,000 60,875,000
BP Amoco PLC Sponsored ADR Representing 6 Ord Shrs 1,000,000 54,375,000
Exxon Mobil 1,100,000 91,643,750
Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 1,000,000 62,437,500
Schlumberger Ltd 1,100,000 80,918,750
Unocal Corp 1,300,000 49,968,750
=====================================================================================================
400,218,750
1.08 PAPER & FOREST PRODUCTS
Bowater Inc 248,000 12,818,500
Weyerhaeuser Co 700,000 34,737,500
=====================================================================================================
47,556,000
0.69 PERSONAL CARE
Gillette Co 900,000 30,037,500
=====================================================================================================
3.48 RAILROADS
Kansas City Southern Industries 1,900,000 127,775,000
Norfolk Southern 1,400,000 24,937,500
=====================================================================================================
152,712,500
4.16 RETAIL
Circuit City Stores-Circuit City Group 960,000 47,820,000
RadioShack Corp 1,400,000 59,412,500
Target Corp 1,200,000 75,225,000
=====================================================================================================
182,457,500
1.07 SAVINGS & LOAN
Charter One Financial 2,063,423 46,942,873
=====================================================================================================
0.57 SERVICES
Omnicom Group 300,000 25,181,250
=====================================================================================================
0.33 TELECOMMUNICATIONS-- CELLULAR & WIRELESS
Crown Castle International(a) 555,800 14,555,012
=====================================================================================================
1.75 TELECOMMUNICATIONS-- LONG DISTANCE
AT&T Corp 1,000,000 34,687,500
Cable & Wireless PLC Sponsored ADR Representing 3 Ord Shrs 850,000 42,181,250
=====================================================================================================
76,868,750
3.64 TELEPHONE
Bell Atlantic 750,000 39,656,250
SBC Communications 1,429,700 62,460,019
US WEST 800,000 57,600,000
=====================================================================================================
159,716,269
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $2,301,476,665) $ 3,640,207,503
=====================================================================================================
0.70 PREFERRED STOCKS
0.49 COMPUTER RELATED
SAP AG Sponsored ADR Representing 1/12 Pfd Shr 500,000 21,437,500
=====================================================================================================
0.21 TELECOMMUNICATIONS-- LONG DISTANCE
IXC Communications, Jr Exchangeable Pfd Shrs
Series B, 12.500%(e) 9,000 9,270,000
=====================================================================================================
TOTAL PREFERRED STOCKS (Cost $34,308,074) 30,707,500
=====================================================================================================
11.48 FIXED INCOME SECURITIES
0.30 US GOVERNMENT OBLIGATIONS
US Treasury Notes
6.000%, 8/15/2009 $ 10,000,000 9,737,500
5.875%, 11/15/2004 $ 3,650,000 3,549,625
=====================================================================================================
TOTAL US GOVERNMENT OBLIGATIONS
(Amortized Cost $13,467,199) 13,287,125
=====================================================================================================
0.42 US GOVERNMENT AGENCY OBLIGATIONS
Resolution Funding, Generic Interest Strip
Zero Coupon, 4/15/2009 (Amortized Cost $18,884,623) $ 33,611,000 18,226,203
=====================================================================================================
10.76 CORPORATE BONDS
0.22 BROADCASTING
Chancellor Media of Los Angeles, Sr Sub Notes, Series B
8.125%, 12/15/2007 $ 9,440,000 9,440,000
=====================================================================================================
0.48 BUILDING MATERIALS
USG Corp, Sr Notes, 8.500%, 8/1/2005 $ 21,093,000 21,183,194
=====================================================================================================
0.38 CABLE
Comcast Cable Partners Ltd, Sr Discount Step-Up Deb
Zero Coupon(b), 11/15/2007 $ 10,600,000 9,990,500
TeleWest PLC, Sr Discount Step-Up Deb
Zero Coupon(b), 10/1/2007 $ 7,000,000 6,580,000
=====================================================================================================
16,570,500
0.49 COMPUTER RELATED
Juniper Networks, Conv Deb, 4.750%, 3/15/2007 $ 26,660,000 21,761,225
=====================================================================================================
4.29 ELECTRIC UTILITIES
Appalachian Power, 1st Mortgage Medium-Term Notes
8.000%, 6/1/2025 $ 3,000,000 2,866,017
Cleveland Electric Illuminating
1st Mortgage, Series B, 9.500%, 5/15/2005 $ 16,000,000 16,171,072
1st Mortgage, Series E, 9.000%, 7/1/2023 $ 2,150,000 2,101,666
Sr Notes, Series D
7.880%, 11/1/2017 $ 9,245,000 8,392,768
7.430%, 11/1/2009 $ 9,500,000 8,711,605
Commonwealth Edison, 1st Mortgage
Series 81, 8.625%, 2/1/2022 $ 15,000,000 14,740,770
Series 88, 8.375%, 2/15/2023 $ 1,425,000 1,374,226
Consumers Energy, 1st & Refunding Mortgage
7.375%, 9/15/2023 $ 10,700,000 9,327,329
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
Detroit Edison
1st Mortgage Medium-Term Notes, Series C
8.240%, 1/13/2023 $ 5,600,000 $ 5,440,170
Medium-Term Notes
Series C, 8.300%, 1/13/2023 $ 5,000,000 4,859,745
Series D, 8.310%, 8/1/2022 $ 3,000,000 2,927,079
Duquesne Light
1st Collateral Trust, 7.550%, 6/15/2025 $ 4,100,000 3,676,433
Medium-Term Notes, Series B, 8.200%, 11/15/2022 $ 4,000,000 3,930,340
El Paso Electric, 1st Mortgage
Series C, 8.250%, 2/1/2003 $ 4,500,000 4,478,846
Series D, 8.900%, 2/1/2006 $ 9,600,000 9,691,651
Gulf States Utilities, 1st Mortgage, 8.700%, 4/1/2024 $ 5,700,000 5,507,568
Indiana Michigan Power, 1st Mortgage
Medium-Term Notes, 8.500%, 12/15/2022 $ 3,400,000 3,349,309
Jersey Central Power & Light
1st Mortgage, 7.500%, 5/01/2023 $ 10,000,000 9,139,850
Sr 1st Mortgage Medium-Term Notes
Series C, 7.980%, 2/16/2023 $ 10,000,000 9,399,110
Metropolitan Edison, 1st Mortgage Medium-Term Notes
Series B, 8.150%, 1/30/2023 $ 11,950,000 11,498,350
New York State Electric & Gas, 1st Mortgage, 8.300%, 12/15/2022 $ 8,250,000 7,847,268
Niagara Mohawk Power, 1st Mortgage
8.750%, 4/1/2022 $ 1,500,000 1,493,891
8.500%, 7/1/2023 $ 5,201,000 5,129,819
Pennsylvania Power, 1st Mortgage, 8.500%, 7/15/2022 $ 2,000,000 1,912,030
Potomac Edison, 1st Mortgage
8.000%, 12/1/2022 $ 6,000,000 5,605,500
8.000%, 6/1/2024 $ 7,250,000 6,779,236
Public Service of New Mexico,Sr Notes, Series A,7.100%,8/1/2005 $ 11,125,000 10,553,998
Texas Utilities
1st Mortgage & Collateral Trust, 8.500%, 8/1/2024 $ 5,000,000 4,759,330
1st Mortgage, 7.375%, 10/01/2025 $ 2,500,000 2,143,035
Union Electric, 1st Mortgage, 8.750%, 12/1/2021 $ 4,600,000 4,489,430
=====================================================================================================
188,297,441
0.10 ELECTRICAL EQUIPMENT
Alpine Group, Gtd Secured Notes, Series B, 12.250%, 7/15/2003 $ 4,249,000 4,376,470
=====================================================================================================
0.13 ENTERTAINMENT
Paramount Communications, Sr Deb, 8.250%, 8/1/2022 $ 5,800,000 5,548,912
=====================================================================================================
0.14 HEALTH CARE RELATED
FHP International, Sr Notes, 7.000%, 9/15/2003 $ 6,450,000 6,084,472
=====================================================================================================
0.44 INSURANCE
Equitable Cos, Sr Notes, 9.000%, 12/15/2004 $ 18,610,000 19,312,379
=====================================================================================================
0.13 IRON & STEEL
National Steel, 1st Mortgage, 8.375%, 8/1/2006 $ 6,386,000 5,907,050
=====================================================================================================
0.23 LODGING-- HOTELS
Hilton Hotels, Sr Notes, 7.200%, 12/15/2009 $ 12,270,000 10,179,266
=====================================================================================================
0.09 NATURAL GAS
NorAm Energy, Conv Sub Deb, 6.000%, 3/15/2012 $ 4,637,000 3,877,691
=====================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
1.66 OIL & GAS RELATED
Atlantic Richfield, Deb
10.875%, 7/15/2005 $ 9,030,000 $ 10,261,015
9.125%, 8/1/2031 $ 2,757,000 3,182,733
9.000%, 4/1/2021 $ 22,460,000 25,338,586
9.000%, 5/1/2031 $ 2,353,000 2,681,284
8.750%, 3/1/2032 $ 2,326,000 2,580,564
Canadian Forest Oil Ltd, Gtd Sr Sub Notes, 8.750%, 9/15/2007 $ 6,160,000 5,759,600
Cliffs Drilling, Sr Notes
Series B, 10.250%, 5/15/2003 $ 4,000,000 4,030,000
Series D, 10.250%, 5/15/2003 $ 1,360,000 1,370,200
Coda Energy, Gtd Sr Sub Notes, Series B, 10.500%, 4/1/2006 $ 4,500,000 4,522,500
Gulf Canada Resources Ltd, Sr Notes
8.350%, 8/1/2006 $ 3,750,000 3,628,125
8.250%, 3/15/2017 $ 5,000,000 4,525,000
Panhandle Eastern Pipe Line Holding, Sr Notes, 7.000%, 7/15/2029 $ 6,000,000 4,847,904
=====================================================================================================
72,727,511
0.12 PAPER & FOREST PRODUCTS
Bowater Inc, Deb, 9.000%, 8/1/2009 $ 5,000,000 5,070,545
=====================================================================================================
0.14 SAVINGS & LOAN
Sovereign Bancorp, Medium-Term Notes, 8.000%, 3/15/2003 $ 6,500,000 6,115,233
=====================================================================================================
0.02 SERVICES
NationsRent Inc, Gtd Sr Sub Notes, 10.375%, 12/15/2008 $ 1,250,000 850,000
=====================================================================================================
0.19 TELECOMMUNICATIONS-- CELLULAR & WIRELESS
Rogers Cantel, Sr Deb, 9.750%, 6/1/2016 $ 8,000,000 8,440,000
=====================================================================================================
0.64 TELECOMMUNICATIONS-- LONG DISTANCE
Level 3 Communications
Sr Discount Step-Up Notes, Zero Coupon(b), 12/01/2008(d) $ 27,900,000 16,042,500
Sr Notes, 11.000%, 3/15/2008 $ 1,600,000 1,520,000
Qwest Communications International, Sr Discount
Step-Up Notes, Series B, Zero Coupon(b)
10/15/2007 $ 5,340,000 4,379,286
2/1/2008 $ 8,000,000 6,096,760
=====================================================================================================
28,038,546
0.87 TELEPHONE
Centel Capital, Deb, 9.000%, 10/15/2019 $ 5,000,000 5,361,650
GTE Corp, Deb, 7.900%, 2/1/2027 $ 3,000,000 2,769,924
MetroNet Communications, Sr Discount Step-Up Notes
Zero Coupon(b), 11/1/2007 $ 8,250,000 7,110,032
Zero Coupon(b), 6/15/2008 $ 16,750,000 13,483,566
NEXTLINK Communications, Sr Notes, 9.625%, 10/1/2007 $ 5,425,000 4,936,750
NEXTLINK Communications LLC/NEXTLINK Capital
Sr Notes, 12.500%, 4/15/2006 $ 4,750,000 4,821,250
=====================================================================================================
38,483,172
TOTAL CORPORATE BONDS (Amortized Cost $514,245,405) 472,263,607
=====================================================================================================
TOTAL FIXED INCOME SECURITIES (Amortized Cost $546,597,227) 503,776,935
=====================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
4.85 SHORT-TERM INVESTMENTS
2.96 COMMERCIAL PAPER
1.82 CONSUMER FINANCE
American Express Credit, 6.600%, 6/5/2000 $ 50,000,000 $ 50,000,000
Sears Roebuck Acceptance, 6.540%, 6/2/2000 $ 30,000,000 30,000,000
=====================================================================================================
80,000,000
1.14 FINANCIAL
General Electric Capital, 6.780%, 6/1/2000 $ 50,000,000 50,000,000
=====================================================================================================
TOTAL COMMERCIAL PAPER (Cost $130,000,000) 130,000,000
=====================================================================================================
1.72 INVESTMENT COMPANIES
INVESCO Treasurer's Series Money Market Reserve Fund
6.390% (Cost $75,555,478) 75,555,478 75,555,478
=====================================================================================================
0.17 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 5/31/2000
due 6/1/2000 at 6.300%, repurchased at $7,361,288
(Collateralized by US Treasury Inflationary Index Bonds,
due 4/15/2028 at 3.625%, value $7,957,968) (Cost $7,360,000) $ 7,360,000 7,360,000
=====================================================================================================
TOTAL SHORT-TERM INVESTMENTS (Cost $212,915,478) 212,915,478
=====================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $3,095,297,444)
(Cost for Income Tax Purposes $3,103,861,758) $4,387,607,416
=====================================================================================================
TOTAL RETURN FUND
66.63 COMMON STOCKS
1.72 AEROSPACE & DEFENSE
Boeing Co 269,400 $ 10,523,437
Lockheed Martin 124,200 3,042,900
Raytheon Co Class B Shrs 367,200 8,606,250
United Technologies 295,000 17,829,063
=====================================================================================================
40,001,650
0.38 AIRLINES
Southwest Airlines 459,200 8,810,900
=====================================================================================================
0.33 ALUMINUM
Alcoa Inc 130,000 7,596,875
=====================================================================================================
1.59 AUTO PARTS
Cooper Tire & Rubber 600,000 7,237,500
Genuine Parts 409,000 9,764,875
Johnson Controls 350,000 19,928,125
=====================================================================================================
36,930,500
1.26 AUTOMOBILES
Ford Motor 604,900 29,375,456
=====================================================================================================
5.89 BANKS
Bank of America 862,000 47,894,875
Chase Manhattan 205,000 15,310,937
First Union 550,600 19,374,237
FleetBoston Financial 550,000 20,796,875
National City 937,000 18,740,000
PNC Financial Services Group 190,000 9,571,250
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
Wells Fargo & Co 115,000 $ 5,203,750
=====================================================================================================
136,891,924
0.43 BEVERAGES
Anheuser-Busch Cos 127,500 9,881,250
=====================================================================================================
1.34 BUILDING MATERIALS
Lowe's Cos 325,000 15,132,812
Sherwin-Williams Co 688,500 16,007,625
=====================================================================================================
31,140,437
0.70 CABLE
Comcast Corp Class A Shrs(a) 305,000 11,551,875
MediaOne Group(a) 70,000 4,676,875
=====================================================================================================
16,228,750
0.99 CHEMICALS
Dow Chemical 90,000 9,635,625
Great Lakes Chemical 135,800 3,768,450
Praxair Inc 230,000 9,660,000
=====================================================================================================
23,064,075
0.90 COMMUNICATIONS-- EQUIPMENT & MANUFACTURING
Lucent Technologies 140,000 8,032,500
Tellabs Inc(a) 200,000 12,987,500
=====================================================================================================
21,020,000
5.56 COMPUTER RELATED
Adaptec Inc(a) 325,000 6,398,438
Cadence Design Systems(a) 263,400 4,214,400
Computer Associates International 535,000 27,552,500
Compuware Corp(a) 865,000 8,812,187
Hewlett-Packard Co 160,000 19,220,000
International Business Machines 245,000 26,291,562
Microsoft Corp(a) 370,000 23,148,125
Unisys Corp(a) 500,000 13,562,500
=====================================================================================================
129,199,712
1.84 CONGLOMERATES
Fortune Brands 275,400 7,332,525
Hanson PLC Sponsored ADR Representing 5 Ord Shrs 459,900 16,096,500
National Service Industries 314,600 6,842,550
Unilever NV New York Registered Shrs 245,857 12,492,609
=====================================================================================================
42,764,184
0.60 CONSUMER FINANCE
Household International 295,000 13,865,000
=====================================================================================================
0.07 CONTAINERS
Crown Cork & Seal 89,800 1,537,825
=====================================================================================================
0.88 DISTRIBUTION
SUPERVALU Inc 981,900 20,435,794
=====================================================================================================
1.44 ELECTRIC UTILITIES
DTE Energy 260,000 8,986,250
GPU Inc 450,000 12,712,500
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
TECO Energy 550,800 $ 11,807,775
=====================================================================================================
33,506,525
1.67 ELECTRICAL EQUIPMENT
Emerson Electric 225,000 13,275,000
General Electric 485,000 25,523,125
=====================================================================================================
38,798,125
1.36 ELECTRONICS-- SEMICONDUCTOR
Intel Corp 254,000 31,654,750
=====================================================================================================
2.32 FINANCIAL
Associates First Capital Class A Shrs 380,000 10,426,250
Citigroup Inc 339,600 21,118,875
Fannie Mae 370,000 22,246,250
=====================================================================================================
53,791,375
0.47 FOODS
Archer-Daniels-Midland Co 296,505 3,539,528
Heinz (HJ) Co 183,600 7,194,825
Sara Lee 4,000 72,000
=====================================================================================================
10,806,353
0.12 HARDWARE & TOOLS
Snap-On Inc 110,500 2,838,469
=====================================================================================================
5.65 HEALTH CARE DRUGS-- PHARMACEUTICALS
Abbott Laboratories 367,200 14,940,450
American Home Products 327,000 17,617,125
Bristol-Myers Squibb 367,200 20,218,950
Lilly (Eli) & Co 250,000 19,031,250
Merck & Co 500,000 37,312,500
Schering-Plough Corp 455,400 22,029,975
=====================================================================================================
131,150,250
0.93 HEALTH CARE RELATED
HCA-The Healthcare Corp 540,000 14,580,000
Quintiles Transnational(a) 475,000 7,006,250
=====================================================================================================
21,586,250
0.67 HOUSEHOLD FURNITURE & APPLIANCES
Whirlpool Corp 275,000 15,589,063
=====================================================================================================
0.57 HOUSEHOLD PRODUCTS
Procter & Gamble 200,000 13,300,000
=====================================================================================================
2.96 INSURANCE
Allstate Corp 435,900 11,551,350
American General 367,200 23,523,750
Lincoln National 115,700 4,483,375
MGIC Investment 450,000 22,303,125
Ohio Casualty 569,000 6,792,437
=====================================================================================================
68,654,037
1.18 INSURANCE BROKERS
Marsh & McLennan 250,000 27,515,625
=====================================================================================================
1.24 INVESTMENT BANK/BROKER FIRM
Morgan Stanley Dean Witter & Co 400,000 28,775,000
=====================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
0.38 IRON & STEEL
Nucor Corp 230,000 $ 8,941,250
=====================================================================================================
0.23 MACHINERY
Caterpillar Inc 142,600 5,454,450
Deere & Co 300 12,469
=====================================================================================================
5,466,919
2.85 MANUFACTURING
Federal Signal 640,400 12,367,725
Illinois Tool Works 300,000 17,418,750
Minnesota Mining & Manufacturing 110,000 9,432,500
Textron Inc 250,000 15,687,500
York International 430,000 11,233,750
=====================================================================================================
66,140,225
0.11 METALS MINING
Phelps Dodge 56,100 2,517,488
=====================================================================================================
1.16 OFFICE EQUIPMENT & SUPPLIES
IKON Office Solutions 473,200 2,366,000
Office Depot(a) 700,000 4,943,750
Xerox Corp 720,000 19,530,000
=====================================================================================================
26,839,750
4.38 OIL & GAS RELATED
BP Amoco PLC Sponsored ADR Representing 6 Ord Shrs 331,100 18,003,563
Chevron Corp 240,000 22,185,000
Exxon Mobil 390,000 32,491,875
Repsol SA Sponsored ADR Representing Ord Shrs 1,377,400 29,011,488
=====================================================================================================
101,691,926
1.29 PAPER & FOREST PRODUCTS
International Paper 235,000 8,180,937
Kimberly-Clark Corp 225,000 13,612,500
Westvaco Corp 275,000 8,284,375
=====================================================================================================
30,077,812
0.35 PHOTOGRAPHY & IMAGING
Eastman Kodak 135,000 8,066,250
=====================================================================================================
0.00 POLLUTION CONTROL
Waste Management 3,900 79,463
=====================================================================================================
0.50 PUBLISHING
Gannett Co 180,000 11,655,000
=====================================================================================================
0.40 RAILROADS
CSX Corp 36,300 789,525
Union Pacific 200,000 8,462,500
=====================================================================================================
9,252,025
0.09 RESTAURANTS
McDonald's Corp 59,700 2,138,006
=====================================================================================================
1.32 RETAIL
Albertson's Inc 500,000 18,312,500
Dillard's Inc Class A Shrs 555,820 8,302,561
Kmart Corp(a) 800 6,800
Penney (J C) Co 1,700 30,813
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
Target Corp 65,000 $ 4,074,688
=====================================================================================================
30,727,362
1.29 SERVICES
Deluxe Corp 122,700 3,029,156
First Data 479,600 26,887,575
=====================================================================================================
29,916,731
3.92 TELECOMMUNICATIONS-- LONG DISTANCE
AT&T Corp 915,000 31,739,063
GTE Corp 235,000 14,863,750
Sprint Corp 735,000 44,467,500
=====================================================================================================
91,070,313
1.48 TELEPHONE
ALLTEL Corp 125,000 8,179,687
SBC Communications 350,000 15,290,625
US WEST 150,000 10,800,000
=====================================================================================================
34,270,312
0.71 TEXTILE-- APPAREL MANUFACTURING
Liz Claiborne 155,000 6,093,437
VF Corp 358,800 10,293,075
=====================================================================================================
16,386,512
0.90 TOBACCO
Philip Morris 803,200 20,983,600
=====================================================================================================
0.21 TOYS
Mattel Inc 352,300 4,778,069
=====================================================================================================
TOTAL COMMON STOCKS (Cost $1,258,322,214) 1,547,709,167
=====================================================================================================
28.20 FIXED INCOME SECURITIES
8.05 US GOVERNMENT OBLIGATIONS
US Treasury Bonds
9.250%, 2/15/2016 $ 19,100,000 24,352,500
8.125%, 8/15/2019 $ 37,450,000 44,471,875
7.625%, 2/15/2025 $ 30,000,000 34,800,000
7.250%, 8/15/2022 $ 29,600,000 32,680,265
US Treasury Notes
6.250%, 10/31/2001 $ 16,300,000 16,198,125
6.250%, 2/15/2003 $ 34,800,000 34,408,500
=====================================================================================================
TOTAL US GOVERNMENT OBLIGATIONS
(Amortized Cost $184,420,588) 186,911,265
=====================================================================================================
5.14 US GOVERNMENT AGENCY OBLIGATIONS
Fannie Mae
Benchmark Notes, 5.125%, 2/13/2004 $ 19,454,000 18,028,742
Gtd Mortgage Pass-Through Certificates
8.500%, 3/1/2010 $ 2,001,722 2,034,003
8.000%, 7/1/2024 $ 2,674,949 2,659,602
7.500%, 8/1/2007 $ 568,485 562,621
7.500%, 7/1/2024 $ 5,378,649 5,254,709
7.500%, 8/1/2029 $ 21,227,452 20,632,553
7.000%, 9/1/2027 $ 10,255,210 9,732,410
7.000%, 12/1/2027 $ 5,905,055 5,614,481
Notes, 5.750%, 4/15/2003 $ 20,000,000 19,160,660
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
Freddie Mac
Gold, Participation Certificates
8.000%, 10/1/2010 $ 1,449,769 $ 1,459,166
8.000%, 5/1/2024 $ 2,450,708 2,441,281
7.500%, 12/1/2026 $ 4,011,152 3,918,551
6.500%, 7/1/2001 $ 1,946,104 1,921,996
Notes, 6.875%, 1/15/2005 $ 10,000,000 9,797,070
Government National Mortgage Association I
Pass-Through Certificates
7.500%, 3/15/2026 $ 2,472,950 2,432,727
7.000%, 10/15/2008 $ 458,616 449,345
7.000%, 12/15/2022 $ 137,259 132,438
6.500%, 10/15/2008 $ 482,876 466,836
6.500%, 12/15/2028 $ 12,977,852 12,146,138
6.000%, 11/15/2008 $ 588,399 557,920
=====================================================================================================
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Amortized Cost $124,133,883) 119,403,249
=====================================================================================================
2.05 ASSET-BACKED SECURITIES
2.05 CONSUMER FINANCE
American Express Credit Account Master Trust
Series 2000-1, Class A Shrs, 7.200%, 9/15/2007 $ 6,500,000 6,413,160
Chase Manhattan Credit Card Master Trust
Series 1996-3, Class A Shrs, 7.040%, 2/15/2005 $ 16,524,000 16,446,833
Discover Card Master Trust I, Series 1998-7
Class A Shrs, 5.600%, 5/16/2006 $ 13,770,000 12,956,193
MBNA Master Credit Card Trust II, Series 2000-A
Class A Shrs, 7.350%, 7/16/2007 $ 12,000,000 11,910,840
=====================================================================================================
TOTAL ASSET-BACKED SECURITIES (Amortized Cost $49,383,572) 47,727,026
=====================================================================================================
11.79 CORPORATE BONDS
0.48 AUTO PARTS
Dana Corp, Notes, 6.250%, 3/1/2004 $ 12,000,000 11,224,332
=====================================================================================================
0.50 AUTOMOBILES
Ford Motor, Bonds, 6.500%, 8/1/2018 $ 13,700,000 11,582,761
=====================================================================================================
2.67 BANKS
ABN Amro Bank NV, Sub Notes
7.550%, 6/28/2006 $ 8,750,000 8,536,544
6.625%, 10/31/2001 $ 4,600,000 4,534,625
BankAmerica Corp, Sub Notes, 6.875%, 6/1/2003 $ 3,700,000 3,603,852
NationsBank Corp, Sub Notes, 6.500%, 8/15/2003 $ 13,700,000 13,185,072
Norwest Financial, Sr Notes, 5.625%, 2/3/2009 $ 9,700,000 8,267,582
SunTrust Banks, Sr Notes, 6.250%, 6/1/2008 $ 10,850,000 9,688,714
Wachovia Bank, Euro Medium-Term Notes, Series 3
7.000%, 10/17/2008 $ 6,400,000 6,118,125
Wachovia Corp, Sub Notes, 6.250%, 8/4/2008 $ 9,200,000 8,184,338
=====================================================================================================
62,118,852
0.89 BEVERAGES
Anheuser-Busch Cos, Notes, 5.375%, 9/15/2008 $ 13,400,000 11,448,572
Diageo Capital PLC, Notes, 6.625%, 6/24/2004 $ 9,700,000 9,337,288
=====================================================================================================
20,785,860
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
0.95 BUILDING MATERIALS
Masco Corp, Deb, 7.750%, 8/1/2029 $ 11,000,000 $ 9,864,613
Vulcan Materials, Notes, 6.000%, 4/1/2009 $ 13,700,000 12,174,108
=====================================================================================================
22,038,721
0.57 CHEMICALS
PPG Industries, Notes, 6.750%, 8/15/2004 $ 13,700,000 13,295,877
=====================================================================================================
0.41 CONSUMER FINANCE
Household Finance, Notes, 7.200%, 7/15/2006 $ 10,000,000 9,487,930
=====================================================================================================
0.35 ELECTRIC UTILITIES
National Rural Utilities, Collateral Trust, 6.550%, 11/1/2018 $ 9,600,000 8,141,126
=====================================================================================================
0.55 ELECTRONICS-- SEMICONDUCTOR
Motorola Inc, Sr Notes, 6.500%, 3/1/2008 $ 13,700,000 12,698,557
=====================================================================================================
0.74 FINANCIAL
Associates Corp of North America, Sr Notes
6.375%, 10/15/2002 $ 4,600,000 4,467,883
5.500%, 2/15/2004 $ 13,800,000 12,728,347
=====================================================================================================
17,196,230
0.36 FOODS
CPC International, Medium-Term Notes, Series C, 6.150%, 1/15/2006 $ 8,800,000 8,232,039
=====================================================================================================
0.36 HEALTH CARE RELATED
Guidant Corp, Notes, 6.150%, 2/15/2006 $ 9,200,000 8,405,681
=====================================================================================================
0.53 INSURANCE BROKERS
Marsh & McLennan, Sr Notes, 6.625%, 6/15/2004 $ 12,850,000 12,321,441
=====================================================================================================
0.33 NATURAL GAS
Enron Corp, Notes, 6.625%, 11/15/2005 $ 8,300,000 7,732,944
=====================================================================================================
0.40 OIL & GAS RELATED
Keyspan Gas East, Medium-Term Notes, 7.875%, 2/1/2010 $ 9,600,000 9,318,384
=====================================================================================================
0.47 PAPER & FOREST PRODUCTS
Westvaco Corp, Notes, 6.850%, 11/15/2004 $ 11,500,000 10,878,678
=====================================================================================================
0.31 RAILROADS
Norfolk Southern, Sr Notes, 6.200%, 4/15/2009 $ 8,400,000 7,277,617
=====================================================================================================
0.39 SERVICES
Electronic Data Systems, Notes, 6.850%, 10/15/2004 $ 9,200,000 8,959,908
=====================================================================================================
0.53 TELEPHONE
Ameritech Capital Funding, Notes, 6.150%, 1/15/2008 $ 13,800,000 12,280,882
=====================================================================================================
TOTAL CORPORATE BONDS (Amortized Cost $298,285,760) 273,977,820
=====================================================================================================
1.17 FOREIGN GOVERNMENT OBLIGATIONS
Province of Manitoba, Deb, 5.500%, 10/1/2008 $ 16,050,000 13,957,674
Province of Saskatchewan, Global Notes, 7.375%, 7/15/2013 $ 13,800,000 13,112,056
=====================================================================================================
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Amortized Cost $31,349,437) 27,069,730
=====================================================================================================
TOTAL FIXED INCOME SECURITIES (Amortized Cost $687,573,240) 655,089,090
=====================================================================================================
5.17 SHORT-TERM INVESTMENTS
0.82 US GOVERNMENT OBLIGATIONS
US Treasury Notes, 8.000%, 5/15/2001 (Amortized Cost $19,233,525) $ 18,900,000 19,124,437
=====================================================================================================
<PAGE>
SHARES OR
PRINCIPAL
% DESCRIPTION AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
0.50 US GOVERNMENT AGENCY OBLIGATIONS
Federal Home Loan Bank, Global Bonds
5.500%, 7/14/2000 (Amortized Cost $11,599,325) $ 11,600,000 $ 11,583,714
=====================================================================================================
0.20 CORPORATE BONDS
0.20 RETAIL
Wal-Mart Stores, Notes, 8.625%, 4/1/2001
(Amortized Cost $4,669,899) $ 4,600,000 4,661,911
=====================================================================================================
2.85 INVESTMENT COMPANIES
INVESCO Treasurer's Series Money Market Reserve Fund
6.390% (Cost $66,233,853) 66,233,853 66,233,853
=====================================================================================================
0.80 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 5/31/2000
due 6/1/2000 at 6.300%, repurchased at $18,513,239
(Collateralized by US Treasury Inflationary Index Bonds,
due 4/15/2028 at 3.625%, value $20,004,177)
(Cost $18,510,000) $ 18,510,000 18,510,000
=====================================================================================================
TOTAL SHORT-TERM INVESTMENTS (Amortized Cost $120,246,602) 120,113,915
=====================================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $2,066,142,056)
(Cost for Income Tax Purposes $2,068,417,532) $2,322,912,172
=====================================================================================================
</TABLE>
(a) Security is non-income producing.
(b) Step-up bonds are obligations which increase the interest payment rate at a
specific rate at a specified point in time. Rate shown reflects current
rate which may step up at a future date.
(c) Rate is subject to change. Rate shown reflects current rate.
(d) Securities aquired pursuant to Rule 144A. The fund deems such securities to
be "liquid" because an institutional market exists.
(e) Security is a payment-in-kind (PIK) security. PIK securities make interest
payments in additional securities.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
MAY 31, 2000
<TABLE>
<CAPTION>
EQUITY
BALANCED INCOME
FUND FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment Securities:
At Cost(a) $ 614,881,940 $ 3,095,297,444
===========================================================================================================
At Value(a) $ 659,078,116 $ 4,387,607,416
Cash 0 867
Receivables:
Investment Securities Sold 1,743,964 21,453,660
Fund Shares Sold 2,299,293 4,260,305
Dividends and Interest 3,634,540 15,320,112
Prepaid Expenses and Other Assets 25,464 319,993
===========================================================================================================
TOTAL ASSETS 666,781,377 4,428,962,353
===========================================================================================================
LIABILITIES
Payables:
Custodian 340,763 0
Distributions to Shareholders 69,157 1,077,826
Investment Securities Purchased 18,151,054 12,312,053
Fund Shares Repurchased 964,406 6,802,609
Accrued Distribution Expenses
Investor Class 133,585 932,591
Class C 1,656 976
Accrued Expenses and Other Payables 29,772 709,210
===========================================================================================================
TOTAL LIABILITIES 19,690,393 21,835,265
===========================================================================================================
NET ASSETS AT VALUE $ 647,090,984 $ 4,407,127,088
===========================================================================================================
NET ASSETS
Paid-in Capital(b) $ 590,905,408 $ 2,788,251,816
Accumulated Undistributed Net Investment Income 62,536 1,928,833
Accumulated Undistributed Net Realized Gain on
Investment Securities and Foreign Currency Transactions 11,926,864 324,636,467
Net Appreciation of Investment Securities and
Foreign Currency Transactions 44,196,176 1,292,309,972
===========================================================================================================
NET ASSETS AT VALUE, Applicable to Shares Outstanding $ 647,090,984 $ 4,407,127,088
===========================================================================================================
NET ASSETS AT VALUE:
Investor Class $ 644,956,936 $ 4,405,739,443
===========================================================================================================
Class C $ 2,134,048 $ 1,387,645
===========================================================================================================
Shares Outstanding
Investor Class 37,535,649 285,091,432
Class C 125,176 90,564
===========================================================================================================
NET ASSET VALUE, Offering and Redemption Price per Share
Investor Class $ 17.18 $ 15.45
Class C $ 17.05 $ 15.32
===========================================================================================================
</TABLE>
<PAGE>
(a) Investment securities at cost and value at May 31, 2000 include repurchase
agreements of $2,157,000 and $7,360,000 for Balanced and Equity Income
Funds, respectively.
(b) The Fund has four billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 300 million have been allocated to
Balanced Fund and 2 billion to Equity Income Fund: 200 million to Balanced
Fund - Investor Class, 100 million to Balanced Fund - Class C, 1 billion to
Equity Income Fund - Investor Class and 1 billion to Equity Income Fund -
Class C.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
MAY 31, 2000
TOTAL RETURN
FUND
--------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 2,066,142,056
================================================================================
At Value(a) $ 2,322,912,172
Cash 287,420
Receivables:
Investment Securities Sold 43,398,331
Fund Shares Sold 3,277,324
Dividends and Interest 15,111,524
Prepaid Expenses and Other Assets 75,058
================================================================================
TOTAL ASSETS 2,385,061,829
================================================================================
LIABILITIES
Payables:
Distributions to Shareholders 304,002
Investment Securities Purchased 37,502,594
Fund Shares Repurchased 19,644,414
Accrued Distribution Expenses
Investor Class 494,071
Class C 8
Accrued Expenses and Other Payables 207,740
================================================================================
TOTAL LIABILITIES 58,152,829
================================================================================
NET ASSETS AT VALUE $ 2,326,909,000
================================================================================
NET ASSETS
Paid-in Capital(b) $ 2,037,397,641
Accumulated Undistributed (Distributions in Excess of)
Net Investment Income 174,065
Accumulated Undistributed Net Realized Gain on
Investment Securities and Foreign Currency Transactions 32,567,178
Net Appreciation of Investment Securities 256,770,116
================================================================================
NET ASSETS AT VALUE, Applicable to Shares Outstanding $ 2,326,909,000
================================================================================
NET ASSETS AT VALUE:
Investor Class $ 2,326,898,727
================================================================================
Class C $ 10,273
================================================================================
Shares Outstanding
Investor Class 83,890,168
Class C 376
================================================================================
NET ASSET VALUE, Offering and Redemption Price per Share
Investor Class $ 27.74
Class C $ 27.30
================================================================================
(a)Investment securities at cost and value at May 31, 2000 includes a
repurchase agreement of $18,510,000 for Total Return Fund.
(b)The Fund has four billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 600 million have been allocated to Total
Return Fund: 300 million to Total Return Fund - Investor Class and 300
million to Total Return Fund - Class C.
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
YEAR ENDED MAY 31, 2000
<TABLE>
<CAPTION>
EQUITY
BALANCED INCOME
FUND FUND
------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 2,874,642 $ 62,582,066
Dividends from Affiliated Investment Companies 200,469 574,489
Interest 11,455,874 51,333,923
Foreign Taxes Withheld (11,413) (342,619)
======================================================================================================
TOTAL INCOME 14,519,572 114,147,859
======================================================================================================
EXPENSES
Investment Advisory Fees 2,739,194 22,182,765
Distribution Expenses
Investor Class 1,165,059 11,660,628
Class C 2,796 1,899
Transfer Agent Fees 827,748 6,683,938
Administrative Services Fees 219,836 709,666
Custodian Fees and Expenses 58,579 427,482
Directors' Fees and Expenses 26,280 235,233
Professional Fees and Expenses 37,056 135,623
Registration Fees and Expenses - Investor Class 103,005 160,597
Reports to Shareholders 158,666 1,163,271
Other Expenses 16,216 152,074
======================================================================================================
TOTAL EXPENSES 5,354,435 43,513,176
Fees and Expenses Paid Indirectly (47,750) (427,375)
======================================================================================================
NET EXPENSES 5,306,685 43,085,801
======================================================================================================
NET INVESTMENT INCOME 9,212,887 71,062,058
======================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 14,025,520 479,864,651
Foreign Currency Transactions 404 (26,647)
======================================================================================================
Total Net Realized Gain 14,025,924 479,838,004
======================================================================================================
Change in Net Appreciation (Depreciation) of Investment Securities 2,810,436 (178,641,031)
======================================================================================================
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 16,836,360 301,196,973
======================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 26,049,247 $ 372,259,031
======================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
YEAR ENDED MAY 31, 2000
TOTAL RETURN
FUND
--------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 44,466,304
Dividends from Affiliated Investment Companies 733,853
Interest 63,868,546
Foreign Taxes Withheld (597,317)
================================================================================
TOTAL INCOME 108,471,386
================================================================================
EXPENSES
Investment Advisory Fees 16,572,054
Distribution Expenses
Investor Class 5,755,139
Class C 10
Transfer Agent Fees 6,249,134
Administrative Services Fees 462,402
Custodian Fees and Expenses 323,272
Directors' Fees and Expenses 158,273
Interest Expenses 69,770
Professional Fees and Expenses 85,568
Registration Fees and Expenses - Investor Class 273,438
Reports to Shareholders 179,688
Other Expenses 92,782
================================================================================
TOTAL EXPENSES 30,221,530
Fees and Expenses Paid Indirectly (256,486)
================================================================================
NET EXPENSES 29,965,044
================================================================================
NET INVESTMENT INCOME 78,506,342
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 128,251,610
Foreign Currency Transactions (1,467)
================================================================================
Total Net Realized Gain 128,250,143
================================================================================
Change in Net Depreciation of Investment Securities (511,436,925)
================================================================================
NET LOSS ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS (383,186,782)
================================================================================
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (304,680,440)
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
BALANCED FUND
<TABLE>
<CAPTION>
YEAR PERIOD YEAR
ENDED ENDED ENDED
MAY 31 MAY 31 JULY 31
---------------------------------------------------------------------------------------------------------------
2000 1999 1998
(Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 9,212,887 $ 4,115,972 $ 4,062,659
Net Realized Gain on Investment Securities and
Foreign Currency Transactions 14,025,924 11,484,777 15,660,005
Change in Net Appreciation of Investment Securities
and Foreign Currency Transactions 2,810,436 17,690,262 2,352,996
===============================================================================================================
NET INCREASE IN NET ASSETS
FROM OPERATIONS 26,049,247 33,291,011 22,075,660
===============================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income
Investor Class (9,223,293) (4,105,886) (4,196,252)
Class C (14,874) -- --
Net Realized Gain on Investment Securities and
Foreign Currency Transactions - Investor Class (13,558,734) (10,135,428) (17,002,689)
===============================================================================================================
TOTAL DISTRIBUTIONS (22,796,901) (14,241,314) (21,198,941)
===============================================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares
Investor Class 564,568,608 225,239,324 158,521,941
Class C 2,190,288 -- --
Reinvestment of Distributions
Investor Class 22,238,962 13,792,246 20,128,818
Class C 13,470 -- --
Net Assets Received from Acquisition of
Multi-Asset Allocation Fund (Note 3) 11,140,475 -- --
===============================================================================================================
600,151,803 239,031,570 178,650,759
Amounts Paid for Repurchases of Shares
Investor Class (281,151,607) (149,866,318) (124,824,681)
Class C (25) -- --
===============================================================================================================
(281,151,632) (149,866,318) (124,824,681)
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 319,000,171 89,165,252 53,826,078
===============================================================================================================
TOTAL INCREASE IN NET ASSETS 322,252,517 108,214,949 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 $62,536, $41,340 and
$14,553, respectively) $ 647,090,984 $ 324,838,467 $ 216,623,518
===============================================================================================================
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
BALANCED FUND (CONTINUED)
YEAR PERIOD YEAR
ENDED ENDED ENDED
MAY 31 MAY 31 JULY 31
---------------------------------------------------------------------------------------------------------------
2000 1999 1998
(Note 1)
FUND SHARE TRANSACTIONS
Shares Sold
Investor Class 32,367,140 14,063,692 10,124,221
Class C 124,388 -- --
Shares Issued from Reinvestment of Distributions
Investor Class 1,289,713 888,456 1,391,923
Class C 790 -- --
Shares Issued in Connection with Acquisition of
Multi-Asset Allocation Fund (Note 3) 669,846 -- --
===============================================================================================================
34,451,877 14,952,148 11,516,144
Shares Repurchased
Investor Class (16,147,457) (9,382,609) (7,941,260)
Class C (2) -- --
===============================================================================================================
(16,147,459) (9,382,609) (7,941,260)
NET INCREASE IN FUND SHARES 18,304,418 5,569,539 3,574,884
===============================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
EQUITY INCOMED FUND
YEAR PERIOD YEAR
ENDED ENDED ENDED
MAY 31 MAY 31 JUNE 30
------------------------------------------------------------------------------------------------------------------
2000 1999 1998
(Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 71,062,058 $ 92,920,974 $ 115,423,537
Net Realized Gain on Investment Securities and
Foreign Currency Transactions 479,838,004 329,767,412 563,837,730
Change in Net Appreciation (Depreciation) of
Investment Securities and Foreign Currency Transactions (178,641,031) 45,742,780 232,218,236
==================================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 372,259,031 468,431,166 911,479,503
==================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income
Investor Class (69,779,090) (93,998,246) (115,239,239)
Class C (8,571) -- --
In Excess of Net Investment Income - Investor Class 0 0 (34,577)
Net Realized Gain on Investment Securities and
Foreign Currency Transactions - Investor Class (425,205,719) (451,708,873) (487,553,284)
==================================================================================================================
TOTAL DISTRIBUTIONS (494,993,380) (545,707,119) (602,827,100)
==================================================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares
Investor Class 630,034,525 543,178,456 796,227,427
Class C 1,405,044 -- --
Reinvestment of Distributions
Investor Class 463,515,827 512,402,591 566,171,643
Class C 6,177 -- --
==================================================================================================================
1,094,961,573 1,055,581,047 1,362,399,070
Amounts Paid for Repurchases of Shares
Investor Class (1,410,115,295) (1,214,003,411) (1,164,991,454)
Class C (21,150) -- --
==================================================================================================================
(1,410,136,445) (1,214,003,411) (1,164,991,454)
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (315,174,872) (158,422,364) 197,407,616
==================================================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS (437,909,221) (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 of $1,928,833, $169,190 and
$1,232,549, respectively) $ 4,407,127,088 $ 4,845,036,309 $ 5,080,734,626
==================================================================================================================
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
EQUITY INCOMED FUND (CONTINUED)
YEAR PERIOD YEAR
ENDED ENDED ENDED
MAY 31 MAY 31 JUNE 30
------------------------------------------------------------------------------------------------------------------
2000 1999 1998
(Note 1)
FUND SHARE TRANSACTIONS
Shares Sold
Investor Class 40,038,024 35,119,662 49,736,211
Class C 91,497 -- --
Shares Issued from Reinvestment of Distributions
Investor Class 30,526,410 35,057,399 38,238,701
Class C 404 -- --
==================================================================================================================
70,656,335 70,177,061 87,974,912
Shares Repurchased
Investor Class (91,080,301) (78,498,469) (72,818,140)
Class C (1,336) -- --
==================================================================================================================
(91,081,637) (78,498,469) (72,818,140)
NET INCREASE (DECREASE) IN FUND SHARES (20,425,302) (8,321,408) 15,156,772
==================================================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
TOTAL RETURN FUND
YEAR PERIOD YEAR
ENDED ENDED ENDED
MAY 31 MAY 31 AUGUST 31
------------------------------------------------------------------------------------------------------------------
2000 1999 1998
(Note 1)
OPERATIONS
Net Investment Income $ 78,506,342 $ 60,623,740 $ 67,397,908
Net Realized Gain on Investment Securities and
Foreign Currency Transactions 128,250,143 26,816,772 86,022,682
Change in Net Appreciation (Depreciation) of
Investment Securities (511,436,925) 450,426,456 (79,067,445)
==================================================================================================================
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS (304,680,440) 537,866,968 74,353,145
==================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income
Investor Class (78,481,486) (60,756,140) (67,353,840)
Class C (119) -- --
In Excess of Net Investment Income - Investor Class (166,486) (18,228) 0
Net Realized Gain on Investment Securities and
Foreign Currency Transactions - Investor Class (116,478,005) (77,274,029) (34,772,560)
==================================================================================================================
TOTAL DISTRIBUTIONS (195,126,096) (138,048,397) (102,126,400)
==================================================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares
Investor Class 1,117,994,660 1,164,725,715 1,412,738,595
Class C 10,025 -- --
Reinvestment of Distributions
Investor Class 193,345,833 136,764,996 100,609,294
Class C 119 -- --
==================================================================================================================
1,311,350,637 1,301,490,711 1,513,347,889
Amounts Paid for Repurchases of Shares - Investor Class (1,903,380,663) (843,579,726) (770,152,733)
==================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (592,030,026) 457,910,985 743,195,156
==================================================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,091,836,562) 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 $174,065, ($24,737) and $132,400, respectively) $ 2,326,909,000 $ 3,418,745,562 $ 2,561,016,006
==================================================================================================================
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
TOTAL RETURN FUND (CONTINUED)
YEAR PERIOD YEAR
ENDED ENDED ENDED
MAY 31 MAY 31 AUGUST 31
------------------------------------------------------------------------------------------------------------------
2000 1999 1998
(Note 1)
FUND SHARE TRANSACTIONS
Shares Sold
Investor Class 36,665,855 37,304,581 46,622,819
Class C 372 -- --
Shares Issued from Reinvestment of Distributions
Investor Class 6,755,466 4,385,847 3,448,941
Class C 4 -- --
==================================================================================================================
43,421,697 41,690,428 50,071,760
Shares Repurchased - Investor Class (65,130,173) (27,040,483) (25,589,174)
==================================================================================================================
NET INCREASE (DECREASE) IN FUND SHARES (21,708,476) 14,649,945 24,482,586
==================================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO NOTES TO FINANCIAL STATEMENTS -
INVESCO Combination Stock & Bond Funds, Inc.
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. INVESCO Combination Stock & Bond Funds, Inc.
is registered under the Investment Company Act of 1940 (the "Act") as a
diversified, open-end management investment company.
Effective February 15, 2000, each Fund began offering an additional class of
shares, referred to as Class C shares. Investor Class and Class C shares are
subject to an annual distribution fee of 0.25% and 1.00%, respectively, of the
Fund's annual average net assets attributable to each Class' shares. Income,
expenses (other than those attributable to a specific class) and gains and
losses are allocated daily to each class of shares based on the relative
proportion of net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against operations of that class.
On May 20, 1999, shareholders of the Balanced Fund approved Agreements and Plans
of Reorganization and Termination, in which Multi-Asset Allocation Fund ("Target
Fund") merged into Balanced Fund ("Surviving Fund"). Shareholders of the Target
Fund became shareholders of the Surviving Fund and received shares of the
Surviving Fund equal in dollar value to the then current value of their shares
in the Target Fund, effective at the close of business on June 11, 1999.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
Eastern 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 and obtained from one or more
dealers making a market for such securities or by a pricing service approved by
the Fund's board of directors.
Debt securities are valued at evaluated bid prices as determined by a pricing
service approved by the Fund's board of directors. If evaluated bid prices are
not available, debt securities are valued by averaging the bid prices obtained
from one or more dealers making a market for such securities.
Foreign securities are valued at the closing price on the principal stock
exchange on which they are traded. In the event that closing prices are not
available for foreign securities, prices will be obtained from the principal
stock exchange at or prior to the close of the New York Stock Exchange. Foreign
currency exchange rates are determined daily prior to the close of the New York
Stock Exchange.
<PAGE>
Investments in shares of investment companies are valued at the net asset value
of the respective mutual fund as calculated each day.
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
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.
Each Fund may invest in securities issued by other INVESCO Investment Companies
that invest in short-term debt securities and seek to maintain a net asset value
of one dollar per share to manage their daily cash positions.
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.
<PAGE>
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 Fund incurred and elected to defer post-October 31 currency losses of
$5 to the year ended May 31, 2001. 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. Of the ordinary income distributions
declared for the year ended May 31, 2000, 25.50% for Balanced Fund, 40.80% for
Equity Income Fund and 42.68% for Total Return Fund qualified for the dividends
received deduction available to the Fund's corporate 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 accounting principles generally accepted in
the United States. 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.
For the year ended May 31, 2000, the effects of such differences were as
follows:
ACCUMULATED
ACCUMULATED UNDISTRIBUTED
UNDISTRIBUTED NET REALIZED
NET GAIN ON
INVESTMENT INVESTMENT PAID-IN
FUND INCOME SECURITIES CAPITAL
--------------------------------------------------------------------------------
Balanced Fund $ 46,476 $ (11,865) $ (34,611)
Equity Income Fund 485,246 (457,739) (27,507)
Total Return Fund 340,551 2,289,403 (2,629,954)
Net investment income, net realized gains and net assets were not affected.
F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund enters into short-term forward
foreign currency contracts in connection with planned purchases or sales of
securities as a hedge against fluctuations in foreign exchange rates pending the
settlement of transactions in foreign securities. A forward foreign currency
contract is an agreement between contracting parties to exchange an amount of
currency at some future time at an agreed upon rate. These contracts are
marked-to-market daily and the related appreciation or depreciation of the
contracts is presented in the Statement of Assets and Liabilities. Any realized
gain or loss incurred by the Fund upon the sale of securities is included in the
Statement of Operations.
<PAGE>
G. EXPENSES -- Each Fund or Class bears expenses incurred specifically on its
behalf and, in addition, each Fund or Class bears a portion of general expenses,
based on the relative net assets of each Fund or Class.
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>
AVERAGE NET ASSETS
------------------------------------------------------------------------------------------------
$700 $2 $4 $6
$0 TO $350 TO MILLION BILLION BILLION BILLION OVER
$350 $700 TO $2 TO $4 TO $6 TO $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, of 0.25% of annual average net assets of Investor Class Shares. A master
distribution plan and agreement pursuant to Rule 12b-1 of the Act provides for
financing the distribution and shareholder servicing of Class C Shares of 1.00%
per annum of average daily net assets. Any unreimbursed expenses IDI incurs with
respect to Investor Class and Class C shares in any fiscal year can not be
recovered in subsequent years. For the year/ period ended May 31, 2000, amounts
paid to the Distributor were as follows:
INVESTOR CLASS
FUND CLASS C
--------------------------------------------------------------------------------
Balanced Fund $ 1,097,116 $ 1,139
Equity Income Fund 11,712,642 922
Total Return Fund 5,570,847 2
<PAGE>
IFG receives a transfer agent fee from each Class 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. Effective June 1, 2000, each Class will pay an annual rate of $22.50
per shareholder account, or, where applicable, per participant in an omnibus
account, per year.
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%, 0.015% and 0.015% for Balanced, Equity Income and Total Return Funds,
respectively, of average net assets to provide administrative, accounting and
clerical services. The fee is accrued daily and paid monthly. Effective June 1,
2000, Equity Income Fund will pay IFG an annual fee of $10,000, plus an
additional amount computed at an annual rate of 0.045% of average net assets.
NOTE 3 -- ACQUISITION OF INVESCO MULTIPLE ASSET FUNDS, INC. - MULTI-ASSET
ALLOCATION FUND ("TARGET FUND"). On June 11, 1999, Balanced Fund acquired all
the net assets of the Target Fund pursuant to an Agreement and Plan
Reorganization and Termination approved by the 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 989,950 shares outstanding
of the 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 year ended May
31, 2000, 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 $ 614,002,357 $ 376,201,956
Equity Income Fund 2,195,473,946 2,989,161,888
Total Return Fund 1,204,758,442 1,651,594,704
For the year ended May 31, 2000 the aggregate cost of purchases and proceeds
from sales of U.S. Government securities were as follows:
FUND PURCHASES SALES
--------------------------------------------------------------------------------
Balanced Fund $ 56,407,594 $ 13,757,186
Equity Income Fund 37,186,029 4,787,500
Total Return Fund 214,490,016 434,486,908
NOTE 5 -- APPRECIATION AND DEPRECIATION. At May 31, 2000, 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 $ 70,189,785 $ 26,124,311 $ 44,065,474
Equity Income Fund 1,432,161,128 148,415,470 1,283,745,658
Total Return Fund 394,041,579 139,546,939 254,494,640
<PAGE>
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 meeting attendance fees.
Pension expenses for the year ended May 31, 2000, 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 $ 7,476 $ 0 $ 16,215
Equity Income Fund 110,701 160,188 599,547
Total Return Fund 70,847 16,794 177,344
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 the INVESCO Funds. The
deferred amounts may be invested in the shares of any of the INVESCO Funds,
excluding the INVESCO Variable Investment Funds.
NOTE 7 -- INTERFUND BORROWING AND LENDING. Each Fund is party to an interfund
lending agreement between each Fund and other INVESCO sponsored mutual funds,
which permit it to borrow or lend cash, at rates beneficial to both the
borrowing and lending funds. Loans totaling 10% or more of a borrowing Fund's
total assets are collateralized at 102% of the value of the loan; loans of less
than 10% are unsecured. Pursuant to each Fund's prospectus, each Fund may borrow
up to 33 1/3% of its total assets for temporary or emergency purposes. During
the year ended May 31, 2000, Total Return Fund borrowed cash at a weighted
average rate of 5.88%. Equity Income Fund lent cash at a weighted average of
6.22%. There were no borrowings outstanding at May 31, 2000.
NOTE 8 -- 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 May 31, 2000,
there were no such borrowings.
NOTE 9 -- CONTINGENT DEFERRED SALES CHARGE ("CDSC"). A 1.00% CDSC is charged by
each Fund's Class C shares on redemptions or exchanges of shares held thirteen
months or less (other than shares acquired through reinvestment of dividends or
other distributions). The CDSC is paid by the redeeming shareholder and
therefore, it is not an expense of the Fund. For the period ended May 31, 2000,
the Distributor received an insignificant amount of CDSC from shareholder
redemptions for Balanced Fund - Class C, Equity Income Fund - Class C and Total
Return Fund - Class C.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
INVESCO Combination Stock & Bond Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO Balanced Fund, INVESCO
Equity Income Fund and INVESCO Total Return Fund (constituting INVESCO
Combination Stock & Bond Funds, Inc., hereafter referred to as the "Fund") at
May 31, 2000, the results of each of their operations for the year then ended,
the changes in each of their net assets for each of the periods indicated and
the financial highlights for each of the periods indicated, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at May 31,
2000 by correspondence with the custodian and transfer agent, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
June 23, 2000
<PAGE>
FINANCIAL HIGHLIGHTS
BALANCED FUND--INVESTOR CLASS
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
MAY 31 MAY 31 YEAR ENDED JULY 31
----------------------------------------------------------------------------------------------------------
2000 1999(a) 1998 1997 1996 1995
<S> <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
==========================================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.32 0.24 0.33 0.34 0.37 0.29
Net Gains on Securities
(Both Realized and Unrealized) 0.92 1.73 1.50 3.37 2.12 2.03
==========================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS 1.24 1.97 1.83 3.71 2.49 2.32
==========================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.32 0.24 0.35 0.34 0.37 0.29
Distributions from Capital Gains 0.52 0.66 1.63 0.87 0.84 0.25
==========================================================================================================
TOTAL DISTRIBUTIONS 0.84 0.90 1.98 1.21 1.21 0.54
==========================================================================================================
Net Asset Value--End of Period $ 17.18 $ 16.78 $ 15.71 $ 15.86 $ 13.36 $ 12.08
==========================================================================================================
TOTAL RETURN 7.47% 13.12%(b) 12.90% 29.27% 20.93% 23.18%
RATIOS
Net Assets--End of Period
($000 Omitted) $ 644,957 $ 324,838 $ 216,624 $ 161,921 $ 115,066 $ 37,224
Ratio of Expenses to Average
Net Assets(c) 1.15%(d) 1.21%(d)(e) 1.22%(d) 1.29%(d) 1.29%(d) 1.25%
Ratio of Net Investment Income
to Average Net Assets(c) 1.98% 1.94%(e) 2.18% 2.46% 3.03% 3.12%
Portfolio Turnover Rate 89% 100%(b) 108% 155% 259% 255%
</TABLE>
(a) From August 1, 1998 to May 31, 1999, the Fund's current fiscal year end.
(b) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(c) Various expenses of the Class were voluntarily absorbed by IFG for the
years ended July 31, 1997, 1996 and 1995. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have
been 1.34%, 1.29% and 1.59%, respectively, and ratio of net investment
income to average net assets would have been 2.41%, 3.03% and 2.77%,
respectively.
(d) Ratio is based on Total Expenses of the Class, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements (which
may include custodian, distribution and transfer agent fees).
(e) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
BALANCED FUND--CLASS C (For a Fund Share Outstanding Throughout Each Period)
PERIOD
ENDED
MAY 31
--------------------------------------------------------------------------------
2000(a)
PER SHARE DATA
Net Asset Value--Beginning of Period $ 17.38
================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.17
Net Losses on Securities
(Both Realized and Unrealized) (0.25)
================================================================================
TOTAL FROM INVESTMENT OPERATIONS (0.08)
================================================================================
LESS DISTRIBUTIONS
DIVIDENDS FROM NET INVESTMENT INCOME 0.25
================================================================================
Net Asset Value--End of Period $ 17.05
================================================================================
TOTAL RETURN(b) (0.46%)(c)
RATIOS
Net Assets--End of Period ($000 Omitted) $ 2,134
Ratio of Expenses to Average Net Assets(d) 1.77%(e)
Ratio of Net Investment Income to Average Net Assets 1.57%(e)
Portfolio Turnover Rate 89%(f)
(a) From February 15, 2000, since inception of Class C, to May 31, 2000.
(b) The applicable CDSC fees are not included in the Total Return calculation.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Ratio is based on Total Expenses of the Class, which is before any expense
offset arrangements (which may include custodian, distribution and transfer
agent fees).
(e) Annualized
(f) Portfolio Turnover is calculated at the Fund level, and therefore
represents the year ended May 31, 2000.
<PAGE>
FINANCIAL HIGHLIGHTS
EQUITY INCOME FUND--INVESTOR CLASS
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
MAY 31 MAY 31 YEAR ENDED JUNE 30
----------------------------------------------------------------------------------------------------------------------
2000 1999(a) 1998 1997 1996 1995
<S> <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
======================================================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.24 0.30 0.38 0.35 0.41 0.42
Net Gains on Securities
(Both Realized and Unrealized) 1.05 1.19 2.54 3.05 1.53 1.14
======================================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS 1.29 1.49 2.92 3.40 1.94 1.56
======================================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.24 0.31 0.38 0.35 0.41 0.42
In Excess of Net Investment Income(b) 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains 1.45 1.51 1.67 0.95 0.24 0.54
======================================================================================================================
TOTAL DISTRIBUTIONS 1.69 1.82 2.05 1.30 0.65 0.96
======================================================================================================================
Net Asset Value--End of Period $ 15.45 $ 15.85 $ 16.18 $ 15.31 $ 13.21 $ 11.92
======================================================================================================================
TOTAL RETURN 8.46% 10.31%(c) 20.55% 27.33% 16.54% 14.79%
RATIOS
Net Assets--End of Period
($000 Omitted) $ 4,405,739 $ 4,845,036 $ 5,080,735 $ 4,574,675 $ 4,170,536 $ 4,009,609
Ratio of Expenses to Average
Net Assets(d) 0.93%(e) 0.90%(e)(f) 0.90%(e) 0.95%(e) 0.93%(e) 0.94%
Ratio of Net Investment
Income to Average
Net Assets(d) 1.52% 2.10%(f) 2.35% 2.54% 3.17% 3.61%
Portfolio Turnover Rate 50% 47%(c) 58% 47% 63% 54%
</TABLE>
<PAGE>
(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 Class were voluntarily absorbed by IFG for the
period ended May 31, 1999 and for the years ended June 30, 1998, 1997, 1996
and 1995. If such expenses had not been voluntarily absorbed, ratio of
expenses to average net assets would have been 0.91% (annualized), 0.90%,
0.98%, 0.96% and 0.97%, respectively, and ratio of net investment income to
average net assets would have been 2.09% (annualized), 2.35%, 2.51%, 3.14%
and 3.58%, respectively.
(e) Ratio is based on Total Expenses of the Class, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements (which may include custodian, distribution and transfer agent
fees).
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
EQUITY INCOME FUND--CLASS C
(For a Fund Share Outstanding Throughout Each Period)
PERIOD
ENDED
MAY 31
--------------------------------------------------------------------------------
2000(a)
PER SHARE DATA
Net Asset Value--Beginning of Period $ 14.55
================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.12
Net Gains on Securities
(Both Realized and Unrealized) 0.84
================================================================================
TOTAL FROM INVESTMENT OPERATIONS 0.96
================================================================================
LESS DISTRIBUTIONS
DIVIDENDS FROM NET INVESTMENT INCOME 0.19
================================================================================
Net Asset Value--End of Period $ 15.32
================================================================================
TOTAL RETURN(b) 6.66%(c)
RATIOS
Net Assets--End of Period ($000 Omitted) $ 1,388
Ratio of Expenses to Average Net Assets(d) 1.67%(e)
Ratio of Net Investment Income to Average Net Assets 0.94%(e)
Portfolio Turnover Rate 50%(f)
(a) From February 15, 2000, since inception of Class C, to May 31, 2000.
(b) The applicable CDSC fees are not included in the Total Return calculation.
(c) Based on operations for the period shown and, accordingly, is not
representative of a full year.
(d) Ratio is based on Total Expenses of the Class, which is before any expense
offset arrangements (which may include custodian, distribution and transfer
agent fees).
(e) Annualized
(f) Portfolio Turnover is calculated at the Fund level, and therefore
represents the year ended May 31, 2000.
<PAGE>
FINANCIAL HIGHLIGHTS
TOTAL RETURN FUND--INVESTOR CLASS
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
MAY 31 MAY 31 YEAR ENDED AUGUST 31
----------------------------------------------------------------------------------------------------------------------
2000 1999(a) 1998 1997 1996 1995
<S> <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
======================================================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.81 0.60 0.83 0.77 0.73 0.72
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (3.47) 5.03 0.87 5.26 1.78 2.46
======================================================================================================================
TOTAL FROM INVESTMENT
OPERATIONS (2.66) 5.63 1.70 6.03 2.51 3.18
======================================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.81 0.60 0.83 0.77 0.73 0.72
In Excess of Net Investment Income(b) 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains 1.16 0.82 0.48 0.09 0.13 0.05
======================================================================================================================
TOTAL DISTRIBUTIONS 1.97 1.42 1.31 0.86 0.86 0.77
======================================================================================================================
Net Asset Value--End of Period $ 27.74 $ 32.37 $ 28.16 $ 27.77 $ 22.60 $ 20.95
======================================================================================================================
TOTAL RETURN (8.29%) 20.27%(c) 6.02% 27.01% 12.06% 17.54%
RATIOS
Net Assets--End of Period
($000 Omitted) $ 2,326,899 $ 3,418,746 $ 2,561,016 $ 1,845,594 $ 1,032,151 $ 563,468
Ratio of Expenses to Average
Net Assets(d) 1.00%(e) 0.83%(e)(f) 0.79%(e) 0.86%(e) 0.89%(e) 0.95%
Ratio of Net Investment
Income to Average
Net Assets(d) 2.60%(e) 2.61%(f) 2.82% 3.11% 3.44% 3.97%
Portfolio Turnover Rate 49% 7%(c) 17% 4% 10% 30%
</TABLE>
<PAGE>
(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 year ended May 31,
2000, 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 Class were voluntarily absorbed by IFG from
September 1, 1998 to May 12, 1999 and for 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 Adviser, if applicable, which is before any expense offset
arrangements (which may include custodian, distribution and transfer agent
fees).
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
TOTAL RETURN FUND--CLASS C (For a Fund Share Outstanding Throughout Each Period)
PERIOD
ENDED
MAY 31
--------------------------------------------------------------------------------
2000(a)
PER SHARE DATA
Net Asset Value--Beginning of Period $ 26.71
================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.29
Net Gains on Securities
(Both Realized and Unrealized) 0.87
================================================================================
TOTAL FROM INVESTMENT OPERATIONS 1.16
================================================================================
LESS DISTRIBUTIONS
DIVIDENDS FROM NET INVESTMENT INCOME 0.57
================================================================================
Net Asset Value--End of Period $ 27.30
================================================================================
TOTAL RETURN(b) 4.40%(c)
RATIOS
Net Assets-- End of Period ($000 Omitted) $ 10
Ratio of Expenses to Average Net Assets(d) 2.94%(e)
Ratio of Net Investment Income to Average Net Assets 1.46%(e)
Portfolio Turnover Rate 49%(f)
(a) From February 15, 2000, since inception of Class C, to May 31, 2000.
(b) The applicable CDSC fees are not included in the Total Return calculation.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Ratio is based on Total Expenses of the Class, which is before any expense
offset arrangements (which may include custodian, distribution and transfer
agent fees).
(e) Annualized
(f) Portfolio Turnover is calculated at the Fund level, and therefore
represents the year ended May 31, 2000.
<PAGE>
INVESCO FAMILY OF FUNDS
Investor Class 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 23 ISPIX S&P500
--------------------------------------------------------------------------------
BOND
U.S. Government Securities 32 FBDGX USGvt
Select Income 30 FBDSX SelInc
High Yield 31 FHYPX HiYld
Tax-Free Bond 35 FTIFX TxFreeBd
--------------------------------------------------------------------------------
COMBINATION STOCK & BOND
Equity Income 15 FIIIX EquityInc
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
Real Estate Opportunity 42 IVSRX Realty
Technology 55 FTCHX Tech
Telecommunications 39 ISWCX Telecom
Utilities 58 FSTUX Util
--------------------------------------------------------------------------------
INTERNATIONAL
International Blue Chip Value 09 IIBCX ItlBlChp
Pacific Basin 54 FPBSX PcBas
European 56 FEURX Europ
Latin American Growth 34 IVSLX LtnAmerGr
--------------------------------------------------------------------------------
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,
RISKS, AND EXPENSES, PLEASE VISIT OUR WEB SITE, CONSULT YOUR FINANCIAL ADVISOR,
OR CALL US AT 1-800-525-8085 FOR A PROSPECTUS. READ IT CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
<PAGE>
[INVESCO ICON] INVESCO FUNDS
YOU SHOULD
KNOW WHAT
INVESCO KNOWS(R)
We're easy to stay in touch with:
Investor Services: 1-800-525-8085
Your Personal Account Line: 1-800-424-8085
On the World Wide Web: invescofunds.com
INVESCO Distributors, Inc.,(SM) Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied
by a current prospectus.
AAW 9178 7/00
