SEMIANNUAL REPORT
January 31, 1995
INVESCO SPECIALTY FUNDS, INC.
Smart choices for seeking capital
appreciation around the globe
INVESCO FUNDS
Market Overview March 1995
Are the world's securities markets truly global in nature? Judging from the
repercussions of U.S. interest rate increases in 1994, the answer would have
to be an unqualified "yes."
Many of the major and smaller markets declined over the course of the last 12
months. In local currency terms, Hong Kong lost over 30%, France over 17%,
Britain over 10%, Germany over 7%. Italy and South Korea did turn in positive
performances, as did Japan. However, the Nikkei Dow's gains came during the
first half of the year; over the last six months of 1994, the index actually
lost about 15%.
On the whole, there were more negatives than positives throughout the
international markets. The year, of course, finished off with the nosedive of
the Mexican peso, which carried the bolsa along with it -- in U.S. dollar terms,
Mexico's stocks lost over 40% in value.
Why the losses? One might have expected at least moderate gains across many
regions, given improving economic conditions. The U.K. enjoyed economic growth
of about 3.8% in 1994. Germany's inflation rate is now running at 2.7%, and is
expected to drop even lower in 1995. And yet, the Morgan Stanley Capital Index
for Europe, Australia, and the Far East lost 5.51% during the six months ended
1/31/95. (The MSCI-EAFE is a weighted average of international stock markets.)
The sudden jumps in short-term U.S. interest rates played a major role. Much
of the activity on London's market, for instance, comes from American investors.
The continued weakness of the U.S. dollar was another factor. For instance,
Hong Kong's currency is closely tied to our own. Interest rates went up and the
dollar went down; consequently, there were few positives to offset that market's
problems with plunging real estate values and fears about rampant inflation in
China.
For 1995, though, there is reason to be cautiously optimistic. Corrections in
several key markets last year mean valuations have become more reasonable for
carefully selected stocks. For example, both Thailand and Malaysia had
double-digit losses in 1994, which followed triple-digit gains the preceding
year. There's room again to grow, although not at the furious pace seen two
years ago, and perhaps not immediately.
In Japan, the horrors of the January earthquake will gradually give way to the
need to rebuild. A vital industrial and transportation hub, Kobe is likely to be
the recipient of massive government programs for years to come. And overall,
analysts expect 1995 to be a year of growing corporate earnings for Japanese
companies, another plus sign for stocks.
Further, we do not anticipate another series of interest rate hikes in the
U.S. Estimates of economic growth show a moderating trend, slightly higher
unemployment, slower productivity gains, and easing industrial production -- all
of these factors decrease inflationary pressure. We may see one or two mild
increases in short-term rates, but increasing stability may be looked for in the
securities markets.
Investment Expertise
From The Top Down
INVESCO Vice President Jerry Mill manages Worldwide Capital Goods Fund. He is
a Chartered Financial Analyst, and holds an MBA from the University of Denver,
as well as a BA from the University of California, Berkeley. Mr. Mill began his
investment career in 1985 as a research analyst for INVESCO Trust Company.
Previously, he enjoyed a long relationship with NASA, where he specialized in
on-board computers and flight training.
Worldwide Communications Fund is managed by INVESCO Trust Company vice
president Brian Kelly. A Certified Public Accountant, Mr. Kelly earned an MBA
and JD from the University of Iowa; he holds a BA from the University of Notre
Dame. Before joining INVESCO in 1993, he served as a financial analyst with the
$7 billion pension and profit-sharing department of Sears, Roebuck.
Worldwide Communications Fund
Cummulative Total Return
as of 01/31/95*
Since inception (8/94) 5.02%
Graph:
This line graph represents a comparison of the value of a $10,000
investment in INVESCO Worldwide Communications Fund to the value of a $10,000
investment in the MSCI-EAFE index, assuming in each case, reinvestment of all
dividends and capital gain distributions, for the period from inception
(8/94) through 1/31/95.
Worldwide Communications Fund
The line graph above illustrates the value of a $10,000 investment in INVESCO
Worldwide Communications Fund, plus reinvested dividends and capital gain
distributions, for the period from inception through 1/31/95.*
The chart and other total return figures cited reflect the fund's operating
expenses, but the index does not have expenses, which would, of course, have
lowered its performance.
Since inception, the fund has outperformed the overall international stock
index. The last two months have been bumpier, however, due to our Mexican and
South American holdings. We have significantly reduced our exposure here over
recent weeks. Taking advantage of the lessening volatility among U.S. stocks,
more than 80% of fund holdings are domestic equities and short-term investments.
The fund is well-diversified among many industries, of course. Currently, we
have holdings in such distinct areas as publishing (1.49% of fund holdings),
printing & electronics (0.52%), and electrical equipment (3.96%).
At present, investments are focused on two industries, telecommunications and
telephone utilities, representing 18.53% and 14.11% of fund holdings,
respectively. Telecommunications stocks retain their appeal. Several of these
were potent contributors to the fund's outperformance of the MSCI-EAFE, such as
TESSCO Technologies, Newbridge Networks, and Satellite Technology
Management.
As the year progresses, we expect to slightly decrease our exposure to U.S.
regional phone services. These have performed well, especially BellSouth Corp
and Bell Atlantic, but the group's returns may be peaking.
Concurrently, we expect to increase the fund's holdings in computer software.
Many computer-related stocks have done very well since their initial purchases.
Standouts include cisco Systems, LEGENT Corp, Standard Microsystems, and
Comverse Technology.
In our opinion, the Asian telecommunications market offers superior earnings
growth potential over the long-term. We have delayed building up our positions
in this geographic area, however, in favor of a more defensive tilt towards the
U.S. As the markets stabilize, however, Far Eastern stocks will receive more of
our attention.
Worldwide Capital Goods Fund
The line graph on page 3 illustrates the value of a $10,000 investment in
INVESCO Worldwide Capital Goods Fund, plus reinvested dividends and capital gain
distributions, for the period from inception through 1/31/95.*
The chart and other total return figures cited reflect the fund's operating
expenses, but the index does not have expenses, which would, of course, have
lowered its performance.
Capital goods stocks tend to perform well during periods of economic
resilience, coupled with strong corporate earnings. There is a caveat to this
maxim, however: In the minds of investors, interest rate increases may outweigh
positive fundamentals.
Worldwide Capital Goods Fund began investment operations in August 1994, just
as inflation fears began to overtake many of the world's stock markets. The
climate of impending interest rate increases resulted in a shift towards
non-cyclical consumer stocks. So summer's moderate market declines were followed
by a rout that culminated in the panic over the Mexican currency crisis.
Panic over the Mexican situation, in particular, resulted from exaggerated
perceptions, rather than rational investment analysis of underlying economic
conditions. Given the monetary assistance agreement just reached between
Washington and Mexico City, we may expect these fears to ease greatly.
Worldwide Capital Goods Fund
Cummulative Total Return
as of 01/31/95*
Since inception (8/94) -15.70%
Graph:
This line graph represents a comparison of the value of a $10,000
investment in INVESCO Worldwide Capital Goods Fund to the value of a $10,000
investment in the MSCI-EAFE index, assuming in each case, reinvestment of all
dividends and capital gain distributions, for the period from inception
(8/94) through 1/31/95.
But in our opinion, there is still a strong case to be made for cyclical
stocks. Growth in earnings per share usually does not come at the beginning of
an economic recovery; instead, cyclical stocks increase earnings momentum later
as firms enjoy accelerated sales which lead to "pricing power." It should come
as no surprise, then, that a high percentage of U.S. firms reported unexpectedly
strong earnings growth for fourth quarter 1994. And many European and Far
Eastern countries are still in the early stages of their economic cycles.
Therefore, the fund remains overweighted in such cyclical industries as
industrial commodities, especially cement and steel. Opportunities also exist
among stocks which are fundamentally sound, but which were caught up in the
overall decline. Areas of particular interest include building and construction
products, construction companies, and machinery.
Over the past few months, we have sought to increase the fund's geographic
diversification. Since inception, fund holdings had been overweighted in Mexican
equities, whose prices have gone down across the board. Last December,
approximately 8% of fund holdings were Mexican; since then, this figure has been
decreased to about 3%. With the strong potential for further advances, U.S.
stocks now represent our largest focus. Other larger concentrations include
Italy and Germany, where inflationary pressures are decreasing, as well as
Thailand, where economic growth remains robust.
*Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. The MSCI-EAFE is an
unmanaged, weighted average of stock performance in Europe, Australia, and the
Far East.
INVESCO FUNDS
To receive general information and
prospectuses of any of INVESCO's funds
or retirement plans, or to obtain current account or
price information.
Call toll-free: 1-800-525-8085
To reach PAL, your 24-hour Personal Account
Line, call: 1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied by a current prospectus.
<PAGE>
INVESCO Specialty Funds, Inc.
Ten Largest Common Stock Holdings
January 31, 1995
Description Value
WORLDWIDE CAPITAL GOODS Fund
Philips Electronics NV $ 89,775
Krupp (Fried) AG Hoesch-Krupp
Bearer Shrs 77,578
Sino-Thai Engineering & Construction 77,110
Nokia AB Oy Series K Shrs 72,966
Cementos Paz Del Rio SA
Sponsored ADR 72,540
Case Corp 72,400
CIA Naviera Perez Companc SA
Series B Shrs 71,750
Cummins Engine 68,600
Sahaviriya Steel Industry 67,890
Unicem SpA 65,391
WORLDWIDE COMMUNICATIONS Fund
U S WEST $ 845,100
AT&T Corp 523,688
Television Broadcasts Ltd 404,615
Madge NV 393,750
Vertex Communications 325,000
Carlton Communications PLC Ord Shrs 272,737
Granada Group PLC 260,334
TESSCO Technologies 255,000
NTN Communications 245,000
Sprint Corp 228,000
<PAGE>
INVESCO Specialty Funds, Inc.
Statement of Investment Securities
January 31, 1995
UNAUDITED
Shares or
Industry Principal
Description Code Amount Value
WORLDWIDE CAPITAL GOODS Fund
COMMON STOCKS 93.01%
ARGENTINA 4.54%
CIA Naviera Perez Companc SA
Series B Shrs* DV 17,500 $ 71,750
Mirgor SACIFIA
Sponsored ADR Representing
Class C Shrs# AM 5,750 23,000
Siderca SA* MM 85,000 52,275
----------
147,025
----------
AUSTRALIA 0.69%
Broken Hill Proprietary
Sponsored ADR MM 400 22,300
----------
BELGIUM 1.54%
Solvay SA CH 100 49,898
----------
BRAZIL 2.21%
Aracruz Celulose SA ADR PP 3,000 39,000
Usinas Siderurgicas de Minas
Gerais SA Sponsored ADR*# MM 2,400 32,515
----------
71,515
----------
CANADA 3.37%
Avenor Inc* PP 2,700 51,341
Fletcher Challenge Canada Ltd
Class A* PP 4,500 57,708
----------
109,049
----------
CHILE 0.86%
Maderas y Sinteticos SA ADR PP 1,400 27,825
----------
CHINA 0.95%
Shanghai Petrochemical Ltd
H Shrs OG 124,000 30,615
----------
COLUMBIA 2.24%
Cementos Paz Del Rio SA
Sponsored ADR*# CR 3,000 72,540
----------
<PAGE>
FINLAND 4.95%
Benefon Oy Vappa* IB 200 63,832
Nokia AB Oy Series K Shrs EL 500 72,966
Rautaruuki Oy* MM 3,000 23,244
----------
160,042
----------
GERMANY 5.96%
Krupp (Fried) AG Hoesch-Krupp
Bearer Shrs* DV 530 77,578
Thyssen AG* MM 320 61,332
Veba AG DV 160 53,834
----------
192,744
----------
HONG KONG 5.01%
Chen Hsong Holdings MY 100,000 50,737
Chevalier International EG 250,000 34,579
Hopewell Holdings RE 50,000 35,871
Johnson Electric Holdings Ltd EE 20,000 40,977
----------
162,164
----------
INDONESIA 2.69%
Indah Kiat Pulp & Paper
Foreign Shrs PP 37,800 45,603
Kabelmetal Indonesia EE 20,000 25,256
Tjiwi Kimia PP 9,000 16,033
----------
86,892
----------
ITALY 9.21%
Ansaldo Trasporti EE 15,000 52,723
Italcementi SpA CR 8,000 62,100
Olivetti (Ing C) & C SpA* OE 47,000 60,417
Sasib SpA MY 5,000 26,113
Stet-Societa Financiaria
Telefonica TC 10,000 31,298
Unicem SpA CR 9,000 65,391
----------
298,042
----------
JAPAN 0.57%
Toshiba Corp DV 3,000 18,521
----------
MALAYSIA 4.26%
Cement Industries of Malaysia
Berhad CR 12,000 31,888
Ekran Berhad DV 11,000 29,445
Ho Hup Construction
Berhad CR 11,000 38,472
Kuala Lumpur Kepong
Berhad AG 16,000 38,140
----------
<PAGE>
137,945
----------
MEXICO 3.19%
CEMEX SA Class B ADR CR 3,500 24,032
Grupo Industrial Alfa SA
de CV ADR DV 4,000 31,870
Hylsamex SA de CV ADR*# MM 3,500 47,292
----------
103,194
----------
NETHERLANDS 3.60%
Koninklijke Hoogovens NV* MM 600 26,846
Philips Electronics NV EE 2,850 89,775
----------
116,621
----------
SINGAPORE 2.73%
Jurong Engineering Ltd CR 3,750 24,372
Osprey Maritime Ltd* TR 20,000 44,200
Singapore Shipbuilding &
Engineering Ltd SH 10,000 19,670
----------
88,242
----------
SWEDEN 2.11%
ASEA Class B Free Shrs UT 550 40,407
SKF AB B Free Shrs* MM 1,600 27,947
----------
68,354
----------
THAILAND 7.60%
Sahaviriya Steel Industry* MM 27,000 67,890
Siam Cement Ltd CR 1,100 55,757
Siam Chemicals Ltd* CH 26,000 45,140
Sino-Thai Engineering &
Construction CR 7,000 77,110
----------
245,897
----------
UNITED KINGDOM 1.36%
Hanson PLC Sponsored ADR DV 2,400 44,100
----------
UNITED STATES 23.37%
Albany International Class A PP 2,800 50,050
ASARCO Inc MM 1,200 31,650
Borg-Warner Automotive AM 2,500 56,563
Capco Automotive* AM 5,500 56,375
Case Corp MY 3,200 72,400
Caterpillar Inc MY 1,000 51,500
Cummins Engine AM 1,600 68,600
Deere & Co MY 400 28,500
Harnischfeger Industries MY 1,500 39,938
Harris (Del) Corp EL 800 33,000
International Paper PP 900 64,013
<PAGE>
Louisiana-Pacific Corp CR 1,700 44,838
Methanex Corp* CH 2,600 32,175
National Steel Class B* MM 3,500 52,500
Silicon Graphics* CO 900 28,125
Union Carbide Holding CH 1,800 45,900
----------
756,127
----------
TOTAL COMMON STOCKS
(Cost $3,405,005) 3,009,652
----------
PREFERRED STOCKS 0.82%
BRAZIL 0.82%
Iochpe Maxion SA Sponsored ADR
Representing Pfd Shrs
(Cost $30,525) MY 1,900 26,532
----------
SHORT-TERM INVESTMENTS 6.17%
UNITED STATES 6.17%
Federal Farm Credit Bank
5.900%, 2/9/1995 GA $100,000 99,869
5.500%, 2/6/1995 GA $50,000 49,962
Federal Home Loan Mortgage
5.900%, 2/6/1995 GA $50,000 49,959
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $199,790) 199,790
----------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $3,635,320)
(Cost for Income Tax Purposes
$3,651,320) $ 3,235,974
==========
WORLDWIDE COMMUNICATIONS Fund
COMMON STOCKS 57.55%
ARGENTINA 0.45%
Telefonica de Argentina SA
Sponsored ADR
Representing Ord B Shrs UT 1,500 $ 76,500
----------
CANADA 3.08%
BC Telecom UT 4,700 $ 78,979
Call-Net Enterprises Class B* TC 1,500 7,125
Newbridge Networks* TC 4,000 147,500
Rogers Cantel Mobile
Communications Class B* TC 5,000 134,375
SR Telecom TC 8,000 72,876
TELUS Corp TC 7,000 78,006
----------
518,861
----------
<PAGE>
DENMARK 0.15%
Tele Danmark A/S
Sponsored ADR
Representing Class B Shrs* UT 1,000 25,000
----------
HONG KONG 3.10%
Golden Harvest Entertainment* BR 500,000 87,255
Oriental Press Group PR 32,000 14,478
Sing Tao Holdings Ltd PR 26,000 16,048
Television Broadcasts Ltd BR 113,000 404,615
----------
522,396
----------
ISRAEL 0.41%
ECI Telecom Ltd TC 3,000 42,188
Gilat Satellite Networks* TC 2,000 26,250
----------
68,438
----------
ITALY 0.33%
Telecom Italia SpA Shrs UT 25,000 55,502
----------
NETHERLANDS 2.34%
Madge NV* CO 30,000 393,750
----------
SPAIN 0.28%
Telefonica de Espana SA
Sponsored ADR UT 1,300 47,938
----------
SWEDEN 0.32%
Ericsson (L M) Telephone ADR
Representing Class B Shrs TC 1,000 53,875
----------
UNITED KINGDOM 4.43%
Cable & Wireless PLC
Sponsored ADR TC 5,000 87,500
Carlton Communications PLC
Ord Shrs BR 20,000 272,737
Comcast UK Cable
Partners Ltd* CB 6,500 102,375
Granada Group PLC AV 34,000 260,334
Pearson PLC PR 2,500 22,504
----------
745,450
----------
UNITED STATES 42.66%
AT&T Corp TC 10,500 523,688
AirTouch Communications* TC 1,000 27,500
American Media Class A PR 1,000 7,000
American Paging* TC 15,500 122,062
Ameritech Corp UT 3,000 131,625
Apertus Technologies* CO 11,500 117,875
BCE Inc TC 2,000 60,000
Bell Atlantic UT 1,200 65,100
<PAGE>
BellSouth Corp UT 1,800 106,650
Boston Technology* TC 6,000 78,000
California Amplifier* EE 15,000 90,000
Cellular Communications
Series A* TC 4,000 201,000
Centennial Cellular Class A* TC 8,000 134,000
Centigram Communications* TC 2,000 27,750
Century Telephone Enterprises UT 3,000 94,500
Cincinnati Bell UT 3,000 58,125
cisco Systems* CO 2,400 80,100
Comcast Corp Class A CB 4,000 58,500
Communication Cable TC 1,000 8,250
Computer Network Technology* CO 10,000 65,000
Comsat Corp Series 1 TC 5,000 98,750
Comverse Technology* CO 4,000 49,500
DSP Group* TC 500 9,625
DSP Technology* CI 20,000 107,500
Datum Inc* EE 5,000 45,625
Digi International* CO 5,000 107,500
Digital Microwave* EL 1,600 25,100
Dow Jones & Co PR 2,800 91,700
EIS International* TC 4,000 63,750
Electro Scientific Industries* EL 2,000 38,500
Electromagnetic Sciences* EE 5,000 58,750
GTE Corp UT 2,000 67,750
General Communication
Class A* TC 6,000 24,750
General Instrument* TC 2,800 76,300
General Motors Class H AE 1,500 50,625
General Signal EL 700 24,325
Greenstar Telecommunications* TC 7,000 25,375
Individual Investor Group* PR 18,000 81,000
Interface Systems CO 10,000 70,000
International Family
Entertainment Class B* CB 9,300 126,712
King World Productions* BR 5,000 171,875
Kuhlman Corp EE 5,000 64,375
LEGENT Corp* CO 1,000 29,750
Lincoln Telecommunications TC 7,000 106,750
Lotus Development* CO 3,000 133,875
MCI Communications TC 6,000 110,250
NTN Communications* BR 40,000 245,000
NetWorth Inc* CO 1,500 12,375
NYNEX Corp UT 5,700 225,150
Octel Communications* TC 6,500 136,500
Pacific Telesis Group UT 1,500 45,937
Pico Products* EE 5,200 12,350
QUALCOMM Inc* TC 1,600 42,400
Satellite Technology
Management Class A* TC 2,000 23,750
Southern New England
Telecommunications UT 2,900 96,425
Southwestern Bell UT 3,000 127,875
Sprint Corp UT 8,000 228,000
<PAGE>
Standard Microsystems* CO 2,000 56,000
Synopsys Inc* CO 500 22,625
Systems & Computer
Technology* CO 2,000 33,000
TCSI Corp* TC 8,000 90,000
T/SF Communications* PR 3,000 17,625
Technitrol Inc EE 5,000 71,875
Telescan Inc* CO 10,000 50,000
Telular Corp* TC 2,000 19,000
TESSCO Technologies* TC 15,000 255,000
U S WEST UT 21,600 845,100
USA Mobile Communications
Holdings* TC 13,000 156,000
United International Holdings
Class A* BR 1,000 14,250
United Television* BR 1,000 55,125
Vertex Communications* EE 25,000 325,000
Viewlogic Systems* CO 1,200 11,550
Vtel Corp* TC 5,000 51,875
----------
7,186,524
----------
TOTAL COMMON STOCKS
(Cost $9,605,736) 9,694,234
----------
SHORT-TERM INVESTMENTS 42.45%
UNITED STATES 42.45%
Federal Farm Credit Bank
5.800%, 2/1/1995 GA $4,000,000 4,000,000
Repurchase Agreement with State Street Bank & Trust dated 1/31/1995 due 2/1/1995
at 5.700%, repurchased at $3,150,499 (Collateralized by US Treasury Notes due
4/15/1998 at 7.875%,
value $3,219,299) RA $3,150,000 3,150,000
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $7,150,000) 7,150,000
----------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $16,755,736)
(Cost for Income Tax Purposes
$16,757,636) $16,844,234
============
* Security is non-income producing.
# The following are restricted securities at January 31, 1995:
Value as
Acquisition Acquisition % of
Description Date Cost Net Assets
<PAGE>
Worldwide Capital Goods Fund
Cementos Paz Del Rio
SA Sponsored ADR 9/21/94 $63,125 2.26%
Hylsamex SA de CV
ADR 10/27/94 65,750 1.47
Mirgor SACIFIA
Sponsored ADR
Representing Class
C Shares 10/21/94 51,750 0.72
Usinas Siderugicas de
Minar Gerais SA
Sponsored ADR 12/16/94 38,700 1.01
----------
5.46%
==========
<PAGE>
Summary of Investments by Industry
% of
Industry Investment
Industry Code Securities Value
Worldwide Capital Goods Fund
Agricultural AG 1.18% $ 38,140
Automobile Related AM 6.32 204,538
Chemicals CH 5.35 173,113
Computer Related CO 0.87 28,125
Construction Related CR 15.34 496,500
Diversified DV 10.11 327,098
Electrical Equipment EE 6.45 208,731
Electronics EL 3.27 105,966
Engineering EG 1.07 34,579
Investment Brokers IB 1.97 63,832
Machinery MY 9.14 295,720
Metals & Mining MM 13.77 445,791
Office Equipment OE 1.87 60,417
Oil & Gas Related OG 0.95 30,615
Paper & Paper Products PP 10.87 351,573
Real Estate Related RE 1.11 35,871
Ship Building SH 0.61 19,670
Telecommunications TC 0.97 31,298
Transportation TR 1.36 44,200
---------- ----------
US Government Agency
Obligations GA 6.17 199,790
Utilities UT 1.25 40,407
---------- ----------
100.00% $ 3,235,974
========== ==========
Worldwide Communications Fund
Aerospace & Defense AE 0.30% $ 50,625
Audio/Video AV 1.54 260,334
Broadcasting BR 7.43 1,250,857
Cable Television CB 1.71 287,587
Computer Related CO 7.32 1,232,900
Control Instruments CI 0.64 107,500
Electrical Equipment EE 3.96 667,975
Electronics EL 0.52 87,925
Printing & Publishing PR 1.49 250,355
Repurchase Agreements RA 18.70 3,150,000
Telecommunications TC 18.53 3,122,020
US Government Agency
Obligations GA 23.75 4,000,000
Utilities UT 14.11 2,376,156
---------- ----------
100.00% $ 16,844,234
========== ===========
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc.
Statement of Assets and Liabilities
January 31, 1995
UNAUDITED
Worldwide Worldwide
Capital Communi-
Goods cations
Fund Fund
ASSETS
Investment Securities:
At Cost $ 3,635,320 $ 13,605,736
========== ==========
At Value $ 3,235,974 $ 13,694,234
Repurchase Agreements at Value~ 0 3,150,000
Cash 25,300 49,711
Receivables:
Investment Securities Sold 85,665 676,604
Fund Shares Sold 6,777 64,186
Dividends and Interest 2,097 21,262
Prepaid Expenses and
Other Assets 46,420 23,890
---------- ----------
TOTAL ASSETS 3,402,233 17,679,887
---------- ----------
LIABILITIES
Payables:
Investment Securities Purchased 129,093 856,805
Fund Shares Repurchased 49,142 47,906
Accrued Distribution Expenses 718 3,454
Accrued Expenses and
Other Liabilities 6,749 7,021
---------- ----------
TOTAL LIABILITIES 185,702 915,186
---------- ----------
Net Assets at Value $ 3,216,531 $ 16,764,701
========== ===========
NET ASSETS
Paid-in Capital* $ 3,931,504 $ 16,754,802
Accumulated Undistributed
Net Investment Income (Loss) (7,421) 26,047
Accumulated Undistributed Net
Realized Loss on Investment
Securities (308,214) (104,584)
Net Appreciation (Depreciation)
of Investment Securities (399,338) 88,436
---------- ----------
Net Assets at Value $ 3,216,531 $ 16,764,701
========== ===========
Shares Outstanding 381,534 1,611,452
Net Asset Value, Offering and
Redemption Price per Share $ 8.43 $ 10.40
=========== ==========
<PAGE>
~ Also represents cost.
* The Fund has 500 million authorized shares of common stock, par value of $0.01
per share. Of such shares, 100 million have been allocated to each individual
Fund.
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc.
Statement of Operations
Six-Months Ended January 31, 1995
UNAUDITED
Worldwide Worldwide
Capital Communi-
Goods cations
Fund Fund
INVESTMENT INCOME
INCOME
Dividends $ 16,306 $ 41,017
Interest 10,136 160,736
Foreign Taxes Withheld (816) (807)
---------- ----------
TOTAL INCOME 25,626 200,946
---------- ----------
EXPENSES
Investment Advisory Fees 10,740 32,986
Distribution Expenses 4,131 12,687
Transfer Agent Fees 7,875 20,880
Administrative Fees 5,248 5,761
Custodian Fees and Expenses 2,192 1,588
Directors' Fees and Expenses 0 523
Professional Fees and Expenses 13,124 14,355
Registration Fees and Expenses 17,324 17,327
Reports to Shareholders 338 610
Other Expenses 828 930
---------- ----------
TOTAL EXPENSES 61,800 107,647
Fees and Expenses Absorbed by
Investment Adviser (28,753) (6,151)
---------- ----------
NET EXPENSES 33,047 101,496
---------- ----------
NET INVESTMENT INCOME (LOSS) (7,421) 99,450
---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Loss on Investment
Securities (308,214) (25,389)
Change in Net Appreciation (Depreciation)
of Investment Securities (399,338) 88,436
---------- ----------
NET GAIN (LOSS) ON INVESTMENT
SECURITIES (707,552) 63,047
---------- ----------
Net Increase (Decrease) in Net
Assets from Operations $ (714,973) $ 162,497
========== ===========
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc.
Statement of Changes in Net Assets
Six-Months Ended January 31, 1995 (Note 1)
UNAUDITED
Worldwide Worldwide
Capital Communi-
Goods cations
Fund Fund
OPERATIONS
Net Investment Income (Loss) $ (7,421) $ 99,450
Net Realized Loss on Investment
Securities (308,214) (25,389)
Change in Net Appreciation
(Depreciation) of Investment
Securities (399,338) 88,436
---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS (714,973) 162,497
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (73,403)
Net Realized Gain on
Investment Securities 0 (79,195)
---------- ----------
TOTAL DISTRIBUTIONS 0 (152,598)
---------- ----------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 7,906,049 21,428,647
Reinvestment of Distributions 0 150,797
---------- ----------
7,906,049 21,579,444
Amounts Paid for Repurchases
of Shares (4,024,545) (4,874,642)
---------- -----------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 3,881,504 16,704,802
---------- ----------
Total Increase in Net Assets 3,166,531 16,714,701
NET ASSETS
Initial Subscription (Note 1) 50,000 50,000
---------- ----------
End of Period $ 3,216,531 $ 16,764,701
========== ==========
Accumulated Undistributed Net
Investment Income (Loss)
Included in Net Assets
at End of Period $ (7,421) $ 26,047
<PAGE>
FUND SHARE TRANSACTIONS
Initial Subscription (Note 1) 5,000 5,000
Shares Sold 793,141 2,058,790
Shares Issued from Reinvestment
of Distributions 0 14,500
---------- ----------
798,141 2,078,290
Shares Repurchased (416,607) (466,838)
---------- ----------
Net Increase in Fund Shares 381,534 1,611,452
=========== ===========
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc.
Notes to Financial Statements
UNAUDITED
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES. INVESCO Specialty Funds, Inc. (the
"Fund"), a Maryland Corporation, was incorporated on April 12, 1994 and consists
of four separate Funds: Worldwide Capital Goods Fund and Worldwide
Communications Fund, both of which commenced investment operations on August 1,
1994 and European Small Company Fund and Latin American Growth Fund, both of
which will commence investment operations on February 15, 1995. European Small
Company Fund and Latin American Growth Fund are not presented herein. The Fund
is registered under the Investment Company Act of 1940 (the "Act") as a
diversified, open-end management investment company. The following is a summary
of significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
A. SECURITY VALUATION -- Equity securities traded on national
securities exchanges or in the over-the-counter market are valued at the
last sale price in the market where such securities are primarily traded.
If last sale prices are not available, securities are valued at the
highest closing bid price obtained from one or more dealers making a
market for such securities or by a pricing service approved by the Fund's
board of directors.
Values of foreign securities are determined as of the time that
trading of such securities is completed each day on the principal stock
exchange on which it is listed, generally at various times prior to the
close of the New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith
by the Fund's board of directors. Restricted securities are valued in
accordance with procedures established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which
approximates market value) if maturity is 60 days or less, or at market
value if maturity is greater than 60 days.
B. REPURCHASE AGREEMENTS -- Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Fund's custodian. The collateral is evaluated daily to
ensure its market value of the collateral exceeds the current market value
of the repurchase agreements including accrued interest.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME-- Security
transactions are accounted for on the trade date and dividend
income is recorded on the ex dividend date. Certain dividends
from foreign securities will be recorded as soon as the Fund
is informed of the ex dividend date. Interest income, which
may be comprised of stated coupon rate, market discount and
original issue discount is recorded on the accrual basis. Cost
is determined on the specific identification basis.
The Fund may have elements of risk due to concentrated investments
in foreign issuers located in a specific country.
<PAGE>
Such concentrations may subject the Fund to additional risks resulting
from future political or economic conditions and possible imposition of
adverse foreign governmental laws or currency exchange restrictions.
Restricted securities held by Worldwide Capital Goods Fund may not
be sold except in exempt transactions or in a public offering registered
under the Securities Act of 1933. The risk of investing in such securities
is generally greater than the risk of investing in the securities of
widely held, publicly traded companies. Lack of a secondary market and
resale restrictions may result in the inability of the Fund to sell a
security at a fair price and may substantially delay the sale of the
security which the Fund seeks to sell. In addition, these securities may
exhibit greater price volatility than securities for which secondary
markets exist.
D. FEDERAL AND STATE TAXES -- The Fund has complied with the provisions of
the Internal Revenue Code applicable to regulated investment companies
and, accordingly, has made or intends to make sufficient distributions of
net investment income and net realized capital gains, if any, to relieve
it from all federal and state income taxes and federal excise taxes.
Dividends paid by the Fund from net investment income and
distributions of net realized short-term capital gains are, for federal
income tax purposes, taxable as ordinary income to shareholders.
Investment income received by each Fund from foreign sources may be
subject to foreign withholding taxes. Dividend income is shown gross of
foreign withholding taxes in the accompanying financial statements.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS-- Dividends and
distributions to shareholders are recorded by the Fund on the
ex dividend/distribution date. The Fund distributes net
realized capital gains, if any, to its shareholders at least
annually, if not offset by capital loss carryovers. Income
distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences
are primarily due to differing treatments for foreign currency
transactions, nontaxable dividends, net operating losses,
expiring capital loss carryforwards and deferral of wash
sales.
F. EXPENSES -- Each of the Funds bears expenses incurred specifically on its
behalf and, in addition, each Fund bears a portion of general expenses,
based on the relative net assets of each Fund.
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Fund's investment adviser. As compensation for its
services to the Fund, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee for each Fund is based on
the annual rate of 0.65% on the first $500 million of average net assets;
reduced to 0.55% on the next $500 million of average net assets; and 0.45% of
average net assets in excess of $1 billion.
<PAGE>
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of each
Fund are made by ITC. Fees for such sub-advisory services are paid by IFG.
In accordance with an Administrative Agreement, each Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee at an annual rate of $14.00 per
shareholder account, or per participant in an omnibus account. IFG may pay such
fee for participants in omnibus accounts to affiliates or third parties. The fee
is paid monthly at one-twelfth of the annual fee and is based upon the actual
number of accounts in existence during each month.
A plan of distribution pursuant to Rule 12b-1 of the Act provides for
reimbursement of marketing and advertising expenditures to IFG (the
"Distributor") to a maximum of 0.25% of average annual net assets. Amounts
accrued by the Fund are available to reimburse the Distributor for actual
expenditures incurred within a rolling twelve-month period. For the six-months
ended, January 31, 1995, Worldwide Capital Goods and Worldwide Communications
Funds paid the Distributor $3,413 and $9,233, respectively, for reimbursement of
expenses incurred.
IFG has voluntarily agreed, in some instances, to absorb certain fees and
expenses incurred by each Fund. NOTE 3 -- PURCHASES AND SALES OF INVESTMENT
SECURITIES. For the six-months ended January 31, 1995, the aggregate cost of
purchases and proceeds from sales of investment securities (excluding all U.S.
Government securities and short-term securities) were as follows:
Fund Purchases Sales
Worldwide Capital Goods Fund $ 5,163,500 $ 1,419,756
Worldwide Communications Fund 13,088,679 3,457,554
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At January 31, 1995, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation (depreciation) by Fund were as
follows:
Net
Gross Gross Appreciation
Fund Appreciation Depreciation (Depreciation)
Worldwide Capital
Goods Fund $66,458 $481,804 $(415,346)
Worldwide Communications
Fund 420,861 334,263 86,598
NOTE 5 -- TRANSACTIONS WITH AFFILIATES. Certain of the Fund's officers and
directors are also officers and directors of IFG or ITC.
<PAGE>
The Fund has adopted an unfunded noncontributory defined benefit pension
plan covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 25% of the retainer fee at
the time of retirement. Pension expenses for the six-months ended January 31,
1995 were insignificant.
<PAGE>
INVESCO Specialty Funds, Inc.
Financial Highlights
(For a Fund Share Outstanding throughout the Period) Six-Months Ended January
31, 1995 (Note 1)
UNAUDITED
Worldwide Worldwide
Capital Communi-
Goods cations
Fund Fund
PER SHARE DATA
Net Asset Value-- Beginning of Period $10.00 $10.00
---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.02) 0.06
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (1.55) 0.44
---------- ----------
Total from Investment Operations (1.57) 0.50
---------- ----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.05
Distributions from Capital Gains 0.00 0.05
---------- ----------
Total Distributions 0.00 0.10
---------- ----------
Net Asset Value-- End of Period $8.43 $10.40
========== ===========
TOTAL RETURN (15.70%)* 5.02%*
RATIOS
Net Assets -- End of Period
($000 Omitted) $3,217 $16,765
Ratio of Expenses to
Average Net Assets# 1.00%* 1.00%*
Ratio of Net Investment Income (Loss)
to Average Net Assets# (0.23%)* 0.99%
*
Portfolio Turnover Rate 44%* 81%*
* These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
# Various expenses of Worldwide Capital Goods and Worldwide Communications Funds
were voluntarily absorbed by IFG for the six months ended January 31, 1995. If
such expenses had not been voluntarily absorbed, unannualized ratio of expenses
to average net assets would have been 1.89% and 1.07%, respectively, and
unannualized ratio of net investment income (loss) to average net assets would
have been (1.11%) and 0.93%, respectively.
<PAGE>
FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
International
Latin American Growth 34 * *
European Small Company 37 * *
European 56 FEURX Europ
Pacific Basin 54 FPBSX PcBas
International Growth 49 FSIGX IntlGr
Sector
Energy 50 FSTEX Enrgy
Environmental Services 59 FSEVX Envirn
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Technology 55 FTCHX Tech
Worldwide Capital
Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
Growth
Emerging Growth 60 FIEGX Emgrth
Small Company 74 * *
Dynamics 20 FIDYX Dynm
Growth 10 FLRFX Grwth
Equity-Income
Industrial Income 15 FIIIX IndInc
Utilities 58 FSTUX Util
Multiple-Asset
Multi-Asset Allocation 70 IMAAX MulAstAl
Balanced 71 IMABX Bal
Bond
High Yield 31 FHYPX HiYld
Select Income 30 FBDSX SelInc
U.S. Government Securities 32 FBDGX USGvt
Short-Term Bond 33 INIBX ShTrBd
Tax-Exempt
Tax-Free Long-Term Bond 35 FTIFX TxFre
Tax-Free Intermediate Bond 36 * *
Money Market
Tax-Free Money Fund 40 FFRXX N/A
Cash Reserves 25 FDSXX N/A
U.S. Government Money Fund 44 FUGXX N/A
*This fund does not meet size requirements to be assigned a ticker symbol or
appear in newspaper listings.
For more information about any of the INVESCO Funds, including management fees
and expenses, please call us at 1-800-525-8085 for a prospectus. Read it
carefully before you invest or send money.
