ANNUAL REPORT
July 31, 1997
INVESCO
SPECIALTY
FUNDS,
INC.
Asian Growth Fund
European Small Company Fund
Latin American Growth Fund
Realty Fund
Worldwide Capital Goods Fund
Worldwide Communications Fund
INVESCO FUNDS
<PAGE>
MARKET OVERVIEW AUGUST 1997
The strength and longevity of the bull market for U.S. equities have
surprised even the staunchest market advocates. This phenomenal appreciation in
U.S. stocks has been closely tied to the American economy re-establishing itself
as the global leader. In the 1980s and early 1990s, many American companies went
through a period of transition where corporate restructuring, downsizing, and
investing in technology fundamentally changed corporate America. These changes
allowed U.S. companies to become more efficient and profitable - which has led
to above-average growth in corporate earnings and stock prices.
However, as great as the returns have been for U.S. equity investors over
the last year, there have been international markets (especially Latin America)
that have exceeded the returns posted by U.S. equities. Let's examine a few of
these regions:
LATIN AMERICA: All Latin American major stock markets (except Columbia) have
outperformed the U.S. market so far this year. Falling interest rates,
privatization of state-owned industries, and improving economic fundamentals
continue to drive these stock markets higher. This is especially true in Brazil
and Mexico.
In Brazil, President Cardoso's structural reform programs have made
privatization an undisputed success. His policies have brought strength and
stability to the local real (Brazil's currency), and have reduced inflation from
over 900% in 1994 to under 10% in 1997.
Mexican firms continue to benefit from NAFTA (North American Free Trade
Agreement) as they increase their presence in the U.S. market. This, coupled
with falling inflation and strong export-oriented sectors, has restored Mexico
to its position as one of the premier Latin American economies. The movement
towards a more progressive, well-balanced political regime is another positive.
ASIA/PACIFIC RIM: Despite improving fundamentals in many Asia/Pacific Rim
economies, volatility reigned in most of these markets over the last year. Wide
price swings were due primarily to three events which increased nervousness
among market participants: the death of China's patriarch Deng Xiaoping earlier
this year; the reversion of Hong Kong from British sovereignty to Chinese rule;
and the currency devaluation scare throughout the region.
Within this difficult environment, results have been mixed. The strongest
returns have been posted in China, as investors began to realize the long-term
potential of this economy. Disappointments, on the other hand, have occurred in
Thailand, Malaysia, and the Philippines. In these three countries, large
current-account deficits and slowing economic growth caused the traditional
fixed-rate or pegged currency system to become quite expensive for their
respective governments. Consequently, in July these governments decided to
abandon or loosen their currency ties to the U.S. dollar (allowing the currency
to free-float against foreign currencies). This decision, in turn, led to sharp
devaluations vis-a-vis the U.S. dollar - thus reducing returns for U.S.
investors in these markets.
Historically speaking, currency fluctuations - although having the potential
to erode investors' returns - are short-term phenomena that have little impact
on the long-term fundamentals of an economy.
EUROPE: European corporations are presently going through structural changes
that are similar to those experienced by American companies in the 1980s and
early 1990s. By focusing on the bottom line, European firms have become more
efficient and profitable. These changes, along with increased worker
productivity, have led to growth in corporate earnings and stock prices. In
fact, all major European markets have posted positive returns in 1997 (in U.S.
dollars).
<PAGE>
The constraints of the Maastricht Treaty have been another positive
influence on the region's economies and stock prices. This treaty, which creates
the foundation for the European Union, has introduced fiscal discipline to
politicians who traditionally have been quite liberal in their spending
patterns. In turn, interest rates have moved lower, helping increase stock
returns. However, these fiscal constraints have also contributed to the
double-digit unemployment rates of many countries.
INVESCO SPECIALTY FUNDS, INC.
Each of the funds is managed by a team of investment professionals. For the
international equity funds, a senior investment policy group determines the
country-by-country allocation of the fund's assets, overall stock selection
methodology, and risk control policies. Realty Fund's investments, however, are
selected by a team of portfolio managers who collectively determine investment
decisions.
The line graphs below illustrate the value of a $10,000 investment in each
of the INVESCO Specialty Funds, plus reinvested dividends and capital gain
distributions, from inception through 7/31/97. The charts and other total return
figures cited reflect the funds' operating expenses, but the indexes do not have
expenses, which would, of course, have lowered their performance.(1),(2)
ASIAN GROWTH FUND
For the one-year period ended 7/31/97, INVESCO Asian Growth Fund had a total
return of 27.04%, compared to a total return of 9.31% for the MSCI-Far East Ex
Japan Index. The fund's one-year performance handily beat the average one-year
return of 17.96% for the Lipper Pacific Ex Japan Fund objective. (Lipper
Analytical Services, Inc. is an independent mutual fund analyst, which tracks
fund performance by total return unadjusted for commissions. Of course, past
performance is not a guarantee of future results.)(1),(2)
The strong relative performance of the fund over the last year can be
attributed to two factors. First, we were able to successfully avoid problem
economies that experienced market losses. We stayed out of South Korea early in
1997 and, more recently, away from the Philippines, Thailand, and Indonesia.
Second, the fund's increased emphasis on Hong Kong companies with strong
earnings ties to China dramatically boosted performance. Firms such as China
Resources Enterprise, China Merchants Holdings International Ltd., and
Continental Mariner Investment Ltd. experienced strong price appreciation as the
reversion of Hong Kong to Chinese rule went smoothly.
Recently, the fund's results have been enhanced by exposure to India and
Singapore. We favor India as it offers abundant liquidity and recovering
earnings. In Singapore, gains in the Gross Domestic Product (GDP) rate have
produced a "safe haven" for investors in a volatile region.
Looking Forward
The fast-growing economies of Asia and the Pacific Rim have the potential to
deliver powerful returns. However, patience is the key. We continue to favor
Hong Kong and South Korea. We are quite excited about Hong Kong, as it evolves
from a small island city to a conduit to one of the world's fastest growing
economies.
<PAGE>
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in INVESCO Asian Growth Fund to the value of a $10,000 investment in the
MSCI- Far East Ex-Japan, assuming in each case reinvestment of all dividends
and capital gain distributions, for the period from inception (3/1/96)
through 7/31/97.
Asian Growth Fund
Average Annual Total Return
as of 7/31/97 (2)
------------------------------
1 Year 27.04%
------------------------------
Since Inception (3/96) 9.65%
------------------------------
The Philippines, Thailand, and Indonesia are markets that the fund is
currently avoiding. The currency scare that occurred in July has made these
countries riskier investments for the short-term. However, these devaluations
should be a positive step towards long-term economic development, and we
anticipate becoming more active in these markets in the future.
Fund Management
William Barron, director and portfolio manager for INVESCO Asia Limited in
Hong Kong, leads a group of specialists in managing INVESCO Asian Growth Fund.
Bill was previously with Aetna Investment Management, Hong Kong, and Chase
Manhattan Trust. A Chartered Financial Analyst, he earned a BA from Harvard
University.
EUROPEAN SMALL COMPANY FUND
For the one-year period ended 7/31/97, INVESCO European Small Company Fund
achieved a total return of 11.71%, compared to the James Capel Smaller European
Index, which had a total return of 15.80%. (Of course, past performance is not a
guarantee of future results.)(1),(2)
Over the last year, European investors have emulated their U.S. counterparts
by focusing on the strength, stability of earnings, and liquidity associated
with large-capitalization stocks. This fascination caused most European
small-cap stocks to underperform their large-cap brethren. In fact, many
European small-cap stocks appear undervalued from historical measures, and are
trading at multiples below their growth rates - indicating stronger long-term
potential than large-caps.
Within this difficult environment, we continue to search for companies with
accelerating earnings, dominant market positions, motivated management, and
industries with secular growth. An example of a strong performer which meets our
criteria is QIAGEN NV. This company is the dominant supplier of products for the
separation and purification of genetic material, and has posted an impressive
record of sales and growth in the last few years.
European Small Company Fund
Average Annualized Total Return
as of 7/31/97 (2)
--------------------------------
1 Year 11.71%
--------------------------------
Since Inception (2/95) 23.59%
--------------------------------
<PAGE>
From a regional perspective, we continue to favor the United Kingdom, as
economic strength drives that market higher. In the U.K., our focus is on
domestically oriented stocks that may benefit from the buoyant expansion - such
as Hambro Countrywide PLC (residential estate agents) and Helical Bar PLC (a
property development company).
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in INVESCO European Small Company Fund to the value of a $10,000 investment
in the James Capel Smaller European Index, assuming in each case
reinvestment of all dividends and capital gain distributions, for the period
from inception (2/15/95) through 7/31/97.
Looking Forward
We continue to be optimistic about European small-cap companies. Their
fundamentals continue to improve as corporate restructuring, economic growth,
and an increasing "equity culture" in Europe may produce strong market returns
for years to come. Another positive development has been the devaluation of most
European currencies against the U.S. dollar (except the pound sterling). This
devaluation will allow European exporters to be more competitive in foreign
markets and is a major reason we favor exporters in continental Europe.
Fund Management
Claire Griffiths and Andy Crossley of our London sister company, INVESCO
Asset Management Limited, lead a group responsible for management of INVESCO
European Small Company Fund. Claire graduated from St. John's College,
Cambridge, and began her investment career in 1989. Andy began his investment
career in 1988 after graduating from Loughborough University.
LATIN AMERICAN GROWTH FUND
For the one-year period ended 7/31/97, INVESCO Latin American Growth Fund
had a total return of 48.06%, compared to a total return of 56.83% for the
MSCI-Latin American Index. (Of course, past performance is not a guarantee of
future results.)(1),(2)
Like the phoenix rising from its ashes, Latin American markets have
recovered from the currency devaluation scare in 1994 and 1995, to become the
world's leader of emerging and developing markets. Fueled by deregulation,
corporate restructuring, stronger-than-expected economic growth, subdued
inflation, and stable currency exchanges, most markets have posted record highs
in 1997.
Individual stock selection has driven the fund's performance. Stocks such as
Telecomunicacoes Brasileiras SA, Siderar SAIC Series A Shrs, and Cia Anonima
Nacional Telefonos de Venezuela ADR Representing Class D Shrs have enhanced
returns over the last year. All three have benefited from tariff reform.
Telebras, a former Brazilian state-owned telecommunications company that was
privatized, doubled in stock price as revenue increased from demand for fixed
and cellular phones. Siderar, an Argentinean steel company, is a market-leading
company with improving margins; this company continues to experience increased
revenue as the economic recovery in Argentina gathers strength. CANTV, a
Venezuelan phone company that is partly owned by GTE, also has the potential for
strong earnings growth as new investments in technology should lead to internal
cost-cutting and productivity gains.
<PAGE>
Regarding regional allocation, we tend to favor Brazil and Peru. In Brazil,
structural changes implemented by President Cardoso continue to pay economic
dividends. We are particularly interested in the electric utility industry,
where the privatization process is creating investment opportunities. Peru's
market has suffered from President Fujimori's loss of popularity and the Tupak
Amaru hostage crisis; their economy, however, remains one of the strongest in
the region, and earnings growth could be strong for the next couple of years.
Latin American Growth Fund
Average Annual Total Return
as of 7/31/97 (2)
---------------------------
1 Year 48.06%
---------------------------
Since Inception 31.91%
---------------------------
Looking Forward
As strong as the Latin American markets have been in the last year, they are
still attractive from a valuation standpoint. Currently, price-to-earnings
ratios on '98 earnings range between 10x to 15x. This ratio is lower than those
of Asia and many emerging and mature markets, although economic growth rates for
Latin American countries are expected to be superior.
Short-term volatility is inherent to Latin American markets, and substantial
price swings are likely. However, economic fundamentals are strong, offering
excellent long-term potential for the patient investor.
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in INVESCO Latin American Growth Fund to the value of a $10,000 investment
in the MSCI-Latin American Index, assuming in each case reinvestment of all
dividends and capital gain distributions, for the period from inception
(2/15/95) through 7/31/97.
Fund Management
Peter Jarvis and Jane Lyon of our London sister company, INVESCO Asset
Management Limited, lead a group responsible for management of INVESCO Latin
American Growth Fund. Peter graduated from St. John's College, Oxford, and
joined INVESCO in 1993 specializing in Latin American securities. Jane began her
investment career in 1986 after graduating from Oxford University.
REALTY FUND
For the seven-month period ended 7/31/97, the Realty Fund had a return of
12.24%, compared to a return of 8.99% for the NAREIT Index for the same period.
(Of course, past performance is not a guarantee of future results.)(1),(2)
Realty Fund
Cumulative Total Return
as of 7/31/97 (2)
------------------------------
Since Inception (1/97) 12.24%
------------------------------
<PAGE>
Falling victim to its past successes, year-to-date real estate equity
returns have suffered from an oversupply of initial and secondary public
offerings of REIT (Real Estate Investment Trusts) equities. However, it
presently appears that supply and demand is rebalancing. Meanwhile, the industry
group continues to recover from the overbuilding that occurred in the 1980s.
Combined with vibrant economic expansion in the U.S., this has led to strong
earnings growth for REITs.
Within this current environment, we continue to favor the hotel and office
segments. The hotel industry is benefiting from strong rental growth caused by
an expanding economy with increased corporate and leisure travel. The office
sector recovery has been primarily dependent on the combination of strong GDP
growth and the lack of new office building construction over the past decade.
This has allowed landlords to begin raising office rents faster then the rate of
inflation.
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in INVESCO Realty Fund to the value of a $10,000 investment in the NAREIT
Index, assuming in each case reinvestment of all dividends and capital gain
distributions, for the period from inception (1/1/97) through 7/31/97.
We are presently underweighting apartments and retail properties. Low
mortgage rates have encouraged renters to purchase houses for the first time,
decreasing the demand for apartments. For retail properties, industry
consolidation and oversupplied conditions have led to negative pricing
pressures. This trend is likely to continue.
Looking Forward
The long-term fundamentals of the real estate industry - low interest rates
and a strong economy - remain strong. However, investors may need to modify
their immediate expectations. Historically, this sector's performance is
comparable to growth and income investment vehicles, where 20% annual returns
are not the norm. Realty Fund should be part of a well-diversified investment
portfolio, not used as a market timing vehicle.
Fund Management
The fund's investments are selected by a team of INVESCO Realty Advisors,
Inc. (IRAI) portfolio managers who are collectively responsible for the
investment decisions relating to the fund.
WORLDWIDE CAPITAL GOODS FUND
For the one-year period ended 7/31/97, Lipper Analytical Services ranked
Worldwide Capital Goods Fund #3 of 175 global funds, based on total return
unadjusted for commissions.(2),(3)
Worldwide Capital Goods Fund
Average Annual Total Return
as of 7/31/97 (2)
----------------------------
1 Year 50.86%
----------------------------
Since Inception 14.22%
----------------------------
<PAGE>
For the one-year period ended 7/31/97, INVESCO Worldwide Capital Goods Fund
had a total return of 50.86%, compared to a total return of 52.02% for the
domestic S&P 500 and 16.29% for the international MSCI-EAFE. Keep in mind that
these indexes measure broad equity performance, while the fund invests in a
targeted market sector. (Of course, past performance is not a guarantee of
future results.)(1),(2)
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 S&P 500 and the value of a $10,000 investment in the MSCI-EAFE,
assuming in each case reinvestment of all dividends and capital gain
distributions, for the period from inception (8/1/94) through 7/31/97.
The demand for capital goods increased last year as global economies
continued to expand. Emerging and developing nations, in particular, need
capital goods to develop their infrastructure. This increased demand, combined
with more efficient capital goods companies - through corporate restructuring,
industry consolidation, and heightened productivity - led to superior earnings
growth and higher stock prices for the sector.
There are six broadly defined capital goods industries that the fund invests
in: machinery, farm equipment, machine tools, truck manufacturing, diversified
companies, and pumps and valves. Although the fund targets a specific sector of
the economy, the performance of these six sub-sectors historically do not
correlate to one another. Their different performance characteristics may help
the fund perform well over the complete business cycle.
Over the last year, the fund's results have been enhanced by exposure to
U.S. large-capitalization stocks. Companies such as General Electric (a
broadly-diversified, market-leading capital goods company) and Emerson Electric
(a market-leading producer of electronic products) produced superior returns
last year. Recently we have started to increase our focus on mid- to small-cap
capital goods stocks. We feel these companies might have stronger earnings
growth potential over the next year.
When analyzing mid- to smaller-cap capital goods stocks, we will stay true
to our investment discipline. We will continue to look for market-leading
companies that are experiencing accelerating earnings growth, or firms that have
developed a market niche through good services or products. The fund continues
to favor U.S. companies. However, we are concerned that a stronger dollar may
affect their profitability.
Looking Forward
As exciting as fund returns have been over the last year, we believe that
the capital goods sector may continue to benefit from favorable fundamentals.
Corporate restructuring and industry consolidation have improved the long-term
profitability of many companies. These changes, combined with strength in the
U.S. and global economies, should increase the demand for capital goods which
may continue to drive earnings growth.
Fund Manager
INVESCO Worldwide Capital Goods Fund is managed by Vice President Albert M.
Grossi. Before joining INVESCO in 1995, he was associated with Westinghouse
Pension Investments Corp. Al earned an MBA and BA from Rutgers University.
<PAGE>
WORLDWIDE COMMUNICATIONS FUND
For the one-year period ended 7/31/97, INVESCO Worldwide Communications Fund
had a total return of 33.93%, compared to a total return of 52.02% for the
domestic S&P 500 and 16.29% for the international MSCI-EAFE. Keep in mind that
these indexes measure broad equity performance, while the fund invests in a
targeted market sector. (Of course, past performance is not a guarantee of
future results.)(1),(2)
Strong returns were produced for the fund by both domestic and international
companies. For international stocks, successes were found in Latin American
markets where growing economies, government privatization of state-owned
industries, and increased demand for telephone services enhanced the
profitability of many telecommunications companies. Telecomunicacoes Brasileiras
SA, Telecomunicacoes de Sao Paulo, and Telecom Argentina STET-France Telecom SA
all produced solid returns. Both Telecomunicacoes Brasileiras SA and
Telecomunicacoes de Sao Paulo are Brazilian companies that are benefiting from
the structural changes implemented by President Cardoso. Telecom Argentina
STET-France Telecom SA is a market-leading Argentinean company with earnings
growth driven by an improving economy and robust demand for its products.
Worldwide Communications Fund
Average Annual Total Return
as of 7/31/97 (2)
-----------------------------
1 Year 33.93%
-----------------------------
Since Inception 23.86%
-----------------------------
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 S&P 500 and the value of a $10,000 investment int he
MSCI-EAFE, assuming in each case reinvestment of all dividends and capital
gain distributions, for the period from inception (8/1/94) through 7/31/97.
More than half of the world's population has never used a phone. Emerging
economies must establish and maintain reliable telecommunication services to
participate in world markets. Such untapped markets for the telecommunications
industry hold exciting long-term possibilities. However, potential for strong
growth does not always translate into immediate price appreciation for
telecommunications stocks. This was especially true last year, when this
industry rapidly fell in and out of favor with investors. We feel this increased
volatility was a temporary phenomenon, and investors will eventually focus on
the real growth prospects of the telecommunications industry.
In the U.S. market, excellent returns were posted by companies in the
competitive local exchange and long distance industries. Competitive local
exchange carriers enjoy a favorable regulatory environment, and are experiencing
greater-than-expected line growth. For example, McLeod USA Inc. and Brooks Fiber
Properties have both been active in acquiring local exchange providers, which
has increased their earnings growth and potential profitability.
<PAGE>
Looking Forward
The long-term fundamentals of the telecommunications industry appear strong.
Presently, we are intrigued with telecommunications equipment companies. Many of
these firms are in the early stages of development and are likely to see solid
earnings growth in the future. This growth may be driven by the need of
telecommunication service providers to upgrade their networks to handle an
anticipated explosion of data traffic, and to provide enhanced voice services.
An added bonus is that many of these companies are presently priced at
reasonable levels compared to their projected growth rates.
Fund Manager
Effective July 1, 1997, Brian B. Hayward assumed the responsibilities of
portfolio manager of Worldwide Communications Fund. Previously, he was a senior
equity analyst for Mississippi Valley Advisors in St. Louis, Missouri and began
his investment career in 1985. Brian earned a BA in Mathematics and a MA in
Economics from the University of Missouri. He is a Chartered Financial Analyst.
(1) The MSCI-EAFE, MSCI-Pacific Ex Japan, MSCI-Latin and James Capel Smaller
European Index are unmanaged indexes of common stocks considered to be
representative respectively of the equity markets of Europe/Australia/Far East;
Pacific Basin excluding Japan; Latin America; and European small-capitalization.
The S&P 500 is an unmanaged index indicative of the broad U.S. stock market. The
NAREIT is an unmanaged index indicative of the securitized U.S. real estate
market.
(2) 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.
(3) Lipper rankings are provided for one-, five-, and 10-year periods, except
for funds introduced more recently, and are based on total return unadjusted for
commissions.
<PAGE>
INVESCO Specialty Funds, Inc.
TEN LARGEST COMMON STOCK HOLDINGS
July 31, 1997
Description Value
- ---------------------------------------------------------------------------
ASIAN GROWTH Fund
Cheung Kong Holdings Ltd $ 1,421,760
Hutchison Whampoa Ltd 1,394,444
Sun Hung Kai Properties Ltd 1,155,568
HSBC Holdings PLC 1,046,172
New World Development Ltd 1,008,070
Hang Seng Bank Ltd 947,199
Development Bank Ltd Foreign Shrs 843,984
Advanced Systems Automation Ltd 822,788
China Resources Enterprise 799,740
Yukong Ltd 780,506
EUROPEAN SMALL COMPANY Fund
Saville Systems PLC Sponsored ADR $ 1,880,625
Bulgari SpA 1,585,836
QIAGEN NV New York Registered Shrs 1,512,000
OXiGENE Inc 1,182,550
Simint SpA 1,163,427
Games Workshop Group PLC 1,073,627
Barco NV 1,069,455
Innovative Technologies Group PLC 1,028,182
Data Modul AG 1,026,639
Tomra Systems A/S A 1,023,485
LATIN AMERICAN GROWTH Fund
Light Participacoes SA $ 3,905,817
Telecomunicacoes Brasileiras SA 3,493,075
Cemex SA de CV Series B Shrs 3,161,516
Fomento Economico Mexicano SA de CV Series B Shrs 3,122,875
Cifra SA de CV Series C Shrs 2,791,842
Panamerican Beverages Class A 2,680,000
Sociedad Comercial del Plata SA 2,327,963
Chilgener SA Sponsored ADR 2,294,766
Cia Siderurgica Nacional 2,262,234
Cia Anonima Nacional Telefonos
de Venezuela ADR Representing
Class D Shrs 2,181,250
REALTY Fund
Patriot American Hospitality $ 2,103,456
First Industrial Realty Trust 1,775,812
FelCor Suite Hotels 1,587,300
Beacon Properties 1,541,913
American General Hospitality 1,341,900
Liberty Property Trust SBI 1,273,912
Essex Property Trust 1,207,500
Prentiss Properties Trust 1,172,600
Koger Equity 1,131,262
Kimco Realty 1,122,000
<PAGE>
WORLDWIDE CAPITAL GOODS Fund
General Electric $ 631,688
Allied Signal 553,500
Beijing Enterprises Holdings Ltd 509,395
Stone Container 493,763
Cummins Engine 486,700
Burlington Northern Santa Fe 482,812
PACCAR Inc 426,775
Owens-Illinois Inc 424,350
Praxair Inc 407,925
Xerox Corp 403,025
WORLDWIDE COMMUNICATIONS Fund
NEXTEL Communications Class A $ 3,136,250
WorldCom Inc 2,620,313
SBC Communications 2,012,375
Brooks Fiber Properties 1,979,075
Northern Telecom Ltd 1,850,756
McLeodUSA Inc Class A 1,801,250
BellSouth Corp 1,786,037
Motorola Inc 1,702,625
MCI Communications 1,695,000
Newbridge Networks 1,621,088
Composition of holdings is subject to change.
<PAGE>
INVESCO Specialty Funds, Inc.
Statement of Investment Securities
July 31,1997
Shares or
Industry Principal
Description Code Amount Value
- --------------------------------------------------------------------------------
ASIAN GROWTH Fund
COMMON STOCKS, RIGHTS &
WARRANTS 92.50%
AUSTRALIA 3.37%
MIM Holdings Ltd MM 300,000 $ 415,766
QNI Ltd MM 200,000 372,550
WMC Holdings Ltd GP 55,000 319,074
------------
1,107,390
------------
HONG KONG 33.63%
Cheung Kong Holdings Ltd RE 128,000 1,421,760
Cheung Kong Infrastructure
Holdings Ltd RE 209,000 723,434
China Light & Power Ltd EU 119,000 682,414
China Merchants Holdings
International Ltd BD 250,000 718,436
China Resources Enterprise RE 160,000 799,740
CITIC Pacific Ltd CG 105,000 665,869
Continental Mariner Investment Ltd* RE 400,000 387,471
Guangdong Investment Ltd CG 150,000 214,078
Guangdong Investment Ltd
Warrants (Exp 1999)* CG 15,000 8,621
Hang Seng Bank Ltd BK 64,900 947,199
Hutchison Whampoa Ltd CG 143,000 1,394,444
Hysan Development Ltd RE 148,000 471,191
Ka Wah Bank Ltd BK 400,000 454,633
New World Development Ltd RE 140,000 1,008,070
Sun Hung Kai Properties Ltd RE 92,000 1,155,568
------------
11,052,928
------------
INDIA 8.25%
Gujarat Ambuja Cement Ltd
Sponsored GDR BD 51,700 523,204
Hindalco Industries Ltd Sponsored GDR AL 15,800 584,600
Mahindra & Mahindra Ltd Sponsored GDR* AM 8,000 116,000
Ranbaxy Laboratories Ltd GDR HD 22,500 554,625
State Bank of India GDR FN 16,000 434,000
Tata Engineering & Locomotive
Ltd Sponsored GDR* AM 16,300 202,120
Tata Engineering & Locomotive
Ltd Sponsored GDR
Representing Series S Shrs AM 24,300 297,675
------------
2,712,224
------------
<PAGE>
INDONESIA 4.19%
PT Bank Danamon Indonesia
Foreign Shrs BK 434,000 174,077
PT Bank Internasional Indonesia
Warrants (Exp 2000)* BK 22,652 7,052
PT Dynaplast Foreign Shrs CH 450,000 425,452
PT Mayora Indah Foreign Shrs FD 312,500 161,156
PT Sierad Produca Foreign Shrs FD 998,000 304,989
PT Telekomunikasi Indonesia
Foreign Shrs TN 200,000 305,600
------------
1,378,326
------------
LUXEMBOURG 1.58%
Korea Asia Fund IDR* FN 63 519,750
------------
MALAYSIA 12.23%
Hong Leong Credit Berhad FN 60,000 201,403
Hong Leong Credit Berhad
Class A Shrs* FN 18,000 54,980
Warrants* FN 12,000 13,867
Landmarks Berhad LH 346,000 376,643
Magnum Corp Berhad CG 511,000 655,104
Malaysian Industrial
Development Finance Berhad FN 245,000 327,100
Malaysian Resources Berhad CG 90,000 209,938
Metroplex Berhad RE 320,000 311,929
Public Bank Berhad Foreign Shrs BK 102,000 146,239
Rashid Hussain Berhad Rights* IV 3,285 25
Renong Berhad CG 287,000 367,935
Road Builder Holdings Berhad EC 36,000 150,199
Sime Darby Berhad MY 180,000 566,661
Tanjong PLC GM 68,000 199,886
Time Engineering Berhad
Warrants (Exp 2001)* MY 39,000 14,718
United Engineers Berhad Ltd EC 38,000 265,200
United Merchant Group Berhad FN 138,000 155,980
------------
4,017,807
------------
PHILIPPINES 4.27%
Bank of the Philippine Islands BK 31,500 164,018
Benpres Holdings Sponsored GDR* BR 45,100 269,576
First Philippine Holdings B Shrs CG 123,000 150,570
Mondragon International Philippines* RT 661,000 164,111
Petron Corp OG 140,200 29,007
Uniwide Holdings* DB 2,000,000 320,692
William Gothong & Aboitiz* AF 4,000,000 306,209
------------
1,404,183
------------
<PAGE>
SINGAPORE 16.40%
Advanced Systems Automation Ltd* MY 369,000 822,788
City Developments Ltd RE 56,000 475,867
DBS Land Ltd RE 160,000 498,165
Development Bank Ltd Foreign Shrs BK 65,000 843,984
Keppel Land Ltd BD 200,000 571,040
Overseas Union Bank Ltd Foreign Shrs BK 91,000 590,789
Singapore Land Ltd RE 96,000 473,148
United Overseas Bank Ltd BK 55,000 598,233
Wing Tai Holdings Ltd RE 190,000 516,656
------------
5,390,670
------------
SOUTH KOREA 4.71%
Cho Hung Bank Ltd BK 28,050 156,065
Daewoo Heavy Industries MY 67,500 585,716
Sungmi Telecom Electronics CM 220 26,088
Yukong Ltd OG 31,000 780,506
------------
1,548,375
------------
THAILAND 0.68%
Electricity Generating PLC
Foreign Shrs EU 45,000 132,002
Thai Farmers Bank PLC
Warrants (Exp 2002)* BK 1,875 1,353
Total Access Communications PLC TC 18,400 90,160
------------
223,515
------------
UNITED KINGDOM 3.19%
HSBC Holdings PLC BK 30,000 1,046,172
------------
TOTAL COMMON STOCKS, RIGHTS &
WARRANTS (Cost $29,477,556) 30,401,340
------------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 7.50%
UNITED STATES 7.50%
Repurchase Agreement with State Street
Bank & Trust Co dated 7/31/1997 due
8/1/1997 at 5.670%, repurchased at
$2,465,388 (Collateralized by US
Treasury Notes due 6/30/2001 at
6.625% value $2,528,965)
(Cost $2,465,000) RA 2,465,000 2,465,000
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $31,942,556) (Cost for
Income Tax Purposes $31,985,446) $ 32,866,340
============
<PAGE>
EUROPEAN SMALL COMPANY Fund
COMMON STOCKS 95.99%
AUSTRALIA 1.18%
Cortecs International Ltd
London Shrs* HD 300,000 $ 825,300
------------
AUSTRIA 1.41%
Wolford AG Bearer Shrs TA 10,568 988,560
------------
BELGIUM 2.90%
Barco NV EL 5,100 1,069,455
Creyf's SA SV 12,000 965,398
------------
2,034,853
------------
DENMARK 3.52%
Coloplast A/S Registered B Shrs HC 14,000 950,205
Falck Holding A/S AF 14,800 740,160
NeuroSearch A/S* HD 13,200 782,740
------------
2,473,105
------------
FINLAND 2.50%
KCI Konecranes International MY 18,500 743,312
TT Tieto OY Series B Shrs CO 11,600 1,012,658
------------
1,755,970
------------
FRANCE 10.27%
Altran Technologies SA EC 2,300 742,464
CIPE-France SA SV 8,200 979,897
Dassault Systemes SA CO 15,300 1,005,589
FDM Pharma* BI 12,000 407,914
Grand Optical Photoservice PI 4,500 733,227
Ingenico SA* SV 39,000 933,357
LVL Medical Groupe HC 6,900 896,974
Picogiga SA* ES 20,627 647,874
UBI Soft Entertainment* TY 10,300 858,266
------------
7,205,562
------------
GERMANY 1.46%
Data Modul AG EL 27,650 1,026,639
------------
IRELAND 5.43%
Adare Printing Group PLC PB 88,500 952,841
IONA Technologies PLC Sponsored ADR* CO 48,900 981,056
Saville Systems PLC Sponsored ADR* CO 29,500 1,880,625
------------
3,814,522
------------
<PAGE>
ITALY 5.96%
Bulgari SpA CJ 280,000 1,585,836
Gucci Group NV New York
Registered Shrs RT 15,300 965,813
SAES Getters SpA
Non-Conv Savings Shrs EL 51,460 465,178
Simint SpA* TA 167,000 1,163,427
------------
4,180,254
------------
NETHERLANDS 11.56%
Aalberts Industries NV CG 36,500 1,015,115
Baan Co NV* CO 14,000 966,000
Beter Bed Holding NV HF 46,400 940,344
Content Beheer NV SV 22,000 845,949
Fugro NV Certificates EC 31,600 881,896
Goudsmit NV* SV 34,100 963,212
Koninklijke Ahrend Groep NV* OE 29,200 988,634
QIAGEN NV New York Registered Shrs* BI 28,000 1,512,000
------------
8,113,150
------------
NORWAY 6.75%
Agresso Group A/S A* CO 300,000 767,614
Ark A/S A CO 93,400 857,890
Nera A/S A CM 162,500 1,017,088
Tandberg A/S A* CM 23,600 301,928
Tandberg Television A/S A* CM 94,400 767,981
Tomra Systems A/S A MY 50,000 1,023,485
------------
4,735,986
------------
SPAIN 0.84%
Adolfo Dominguez* TA 17,000 587,542
------------
SWEDEN 6.88%
Assa Abloy AB Series B Shrs MG 42,800 940,609
Biacore International AB* HC 16,961 168,270
Caran AB Series B Shrs CO 105,750 690,575
OXiGENE Europe AB* HD 7,700 253,349
Pricer AB Series B Shrs* SV 20,460 722,004
Scala International AB* CO 7,000 281,304
Scandic Hotels AB* LH 47,500 793,364
WM-data AB Series B Shrs CO 50,000 979,540
------------
4,829,015
------------
SWITZERLAND 2.20%
Disetronic Holding AG HC 400 753,918
Stratec Holding AB Registered B Shrs HC 600 793,598
------------
1,547,516
------------
<PAGE>
UNITED KINGDOM 31.45%
ABI Leisure Group PLC LT 433,666 553,900
Acorn Group PLC* CO 70,000 189,131
American Port Services PLC AF 149,500 396,586
Antonov PLC* AP 330,974 506,742
Appleyard Group PLC AM 375,000 466,688
AromaScan PLC* EL 267,933 199,627
Ash & Lacy PLC MG 150,000 353,700
Atlantic Telecom Group PLC* CA 370,000 945,165
Avocet Mining PLC* GP 200,000 517,450
Cantab Pharmaceuticals PLC* BI 35,217 393,583
Countryside Properties PLC RE 500,000 728,688
Eurocamp PLC LT 141,245 513,461
Filtronic Comtek PLC TL 50,000 298,844
First Choice Holidays PLC* LT 350,000 561,663
GEI International PLC MY 200,000 307,850
Games Workshop Group PLC LT 117,500 1,073,627
Greenway Holdings PLC PC 163,749 104,574
Hambro Countrywide PLC RE 400,000 759,800
Helical Bar PLC RE 85,000 755,788
Infobank International Holdings PLC* CO 220,454 635,348
Innovative Technologies Group PLC* HD 229,999 1,028,182
Intelligent Environments Group PLC* CO 300,000 343,875
Kenwood Appliances PLC HF 105,000 232,116
Lionheart PLC* HB 531,250 80,468
MAID PLC* CO 163,500 514,044
McCarthy & Stone PLC HB 240,000 475,530
Memory Corp PLC* CO 340,000 158,674
NSM PLC* GP 575,000 75,325
Norbain PLC EL 120,000 489,285
Orbis PLC SV 750,000 454,406
PPL Therapeutics PLC* BI 40,000 248,900
Pendragon PLC* AM 100,000 500,256
Persona Group PLC CO 75,000 464,845
Psion PLC CO 106,000 525,932
Queensborough Holdings PLC RE 600,000 297,206
Regal Hotel Group PLC LH 650,000 436,394
Richards PLC TA 337,500 179,613
Rutland Trust PLC FN 650,000 596,050
SEP Industrial Holdings PLC* MG 500,000 241,531
Savills PLC* SV 300,000 550,200
Skillsgroup PLC* CO 100,000 219,425
Slimma PLC TA 170,000 102,999
Specialty Shops PLC RE 202,500 412,834
Symonds PLC* MG 500,000 290,656
Syndicate Capital Trust PLC FN 200,000 396,275
TransTec PLC MG 265,000 403,562
VERO Group PLC CM 200,000 284,925
Vymura PLC BD 415,834 854,565
Wagon Industrial Holdings PLC* MG 125,000 460,547
Wainhomes PLC EC 241,269 493,847
------------
22,074,682
------------
<PAGE>
UNITED STATES 1.68%
OXiGENE Inc* HD 35,300 1,182,550
------------
TOTAL COMMON STOCKS
(Cost $62,805,544) 67,375,206
------------
PREFERRED STOCKS 4.01%
GERMANY 4.01%
Fresenius AG Non-Voting Pfd HC 4,455 916,806
Marschollek, Lautenschlaeger und
Partners AG Non-Voting Pfd IN 4,445 1,074,466
Sander (Jil) AG Non-Voting Pfd TA 1,460 825,065
------------
TOTAL PREFERRED STOCKS
(Cost $2,455,031) 2,816,337
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $65,260,575)
(Cost for Income Tax Purposes
$65,304,382) $ 70,191,543
============
LATIN AMERICAN GROWTH Fund
COMMON STOCKS 67.24%
ARGENTINA 11.78%
Aluar Aluminio Argentino SAIC
Class B Shrs* AL 170,000 697,139
Atanor SA
Series B Shrs* CH 60,000 102,020
Series D Shrs CH 240,000 408,082
Cresud SA Series B Shrs* FD 485,000 1,096,319
Disco SA Sponsored ADR* RT 35,000 1,706,250
Inversiones y Representaciones
SA Sponsored GDR RE 20,000 872,500
Latas de Aluminio SA
Sponsored GDR Representing
Regulation S Shrs*~ AL 110,000 1,540,000
Nortel Inversora SA ADR* TL 50,000 1,418,750
Perez Companc SA OG 184,014 1,512,898
SA Importadora y Exportadora
de la Patagonia Series B Shrs RT 40,000 640,128
SA San Miguel AGICI y F B Shrs* AG 40,000 1,020,204
Siderar SAIC Series A Shrs* IS 230,000 1,127,225
Sociedad Comercial del Plata SA* MY 949,999 2,327,963
------------
14,469,478
------------
BRAZIL 12.66%
Cia de Eletricidade do Estado
da Bahia* EU 14,400,000 1,436,011
Cia Paranaense de Energia-Copel EU 52,000,000 936,288
<PAGE>
Cia Paulista de Forca e Luz EU 9,500,000 1,947,368
Cia Siderurgica Nacional IS 70,000,000 2,262,234
Encorpar* TA 5,800,000 0
Light Participacoes SA EU 9,000,000 3,905,817
Rossi Residencial SA GDR
Regulation S*~ RE 63,600 919,020
Telecomunicacoes Brasileiras SA TL 26,000,000 3,493,075
Telecomunicacoes do Parana SA TL 925,000 640,573
------------
15,540,386
------------
CHILE 7.91%
Administradora de Fondos
de Pensiones Provida SA
Sponsored ADR FN 36,700 795,931
Banco de A Edwards Sponsored ADR
Representing Series A Shrs BK 75,000 1,518,750
Chilgener SA Sponsored ADR EU 77,135 2,294,766
Cristalerias de Chile SA Sponsored ADR CT 50,000 1,100,000
Enersis SA Sponsored ADR EU 45,000 1,673,438
Sociedad Quimica y Minera
de Chile SA Sponsored ADR
Representing Series B Shrs CH 24,000 1,459,500
Supermercados Unimarc SA
Sponsored ADR* RT 50,000 865,625
------------
9,708,010
------------
ECUADOR 0.26%
La Cemento Nacional Sponsored GDR^ BD 1,500 326,006
------------
MEXICO 27.07%
Alfa SA de CV Participation
Certificates Series A Shrs MY 230,718 1,850,807
Cemex SA de CV Series B Shrs BD 550,000 3,161,516
Cifra SA de CV Series C Shrs RT 1,600,000 2,791,842
Consorcio ARA SA de CV
Sponsored ADR* RE 1,400 55,170
Consorcio ARA SA de CV
Sponsored ADR*^ RE 20,600 811,786
Controladora Comercial
Mexicana SA de CV GDR RT 105,000 2,126,250
Corporacion GEO SA de CV
Series B Shrs* BD 170,000 977,196
Empresas la Moderna SA de CV
Sponsored ADR Participation
Certificates Representing
Ord Series A Shrs* TO 78,000 1,720,875
Fomento Economico Mexicano
SA de CV Series B Shrs BV 385,000 3,122,875
Gruma SA de CV Series B Shrs* FD 202,000 962,455
Grupo Accion SA de CV
Regulation S Sponsored ADR*~ EC 45,000 635,625
<PAGE>
Grupo Carso SA de CV
Series A-1 Shrs MY 260,000 2,108,954
Grupo Financiero Banamex-
Accival SA de CV Series B Shrs* BK 700,000 2,150,469
Grupo Minsa SA de CV
Sponsored ADR Representing
Series C Shrs*^ FD 70,000 894,166
Grupo Televisa SA de CV
Participation Certificates
Representing Series A, D & L Shrs* BR 140,000 2,174,612
Panamerican Beverages Class A BV 80,000 2,680,000
Sanluis Corp SA de CV Participation
Certificates Representing
Series B, C & D Shrs MY 250,000 1,935,231
Telefonos de Mexico SA de CV
Ord Series L Shrs TN 500,000 1,385,957
Tubos de Acero de Mexico SA
Sponsored ADR* IS 90,000 1,693,125
------------
33,238,911
------------
PERU 5.78%
Cementos Lima SA Sponsored ADR BD 38,017 772,935
Cia de Minas Buenaventura SA
Series A Shrs GP 70,257 574,012
Series T Shrs GP 80,000 600,904
Credicorp Ltd FN 70,730 1,361,553
Ferreyros SA Regulation S
Sponsored ADR~ MY 35,464 747,734
Luz del Sur Servicious SA
Series B Shrs EU 1,850,000 2,173,193
Telefonica del Peru SA Sponsored
ADR Representing Class B Shrs TN 35,000 864,062
------------
7,094,393
------------
VENEZUELA 1.78%
Cia Anonima Nacional Telefonos
de Venezuela ADR Representing
Class D Shrs TL 50,000 2,181,250
------------
TOTAL COMMON STOCKS
(Cost $68,875,624) 82,558,434
------------
PREFERRED STOCKS 32.76%
BRAZIL 32.76%
Banco Bradesco SA Non-Voting Pfd BK 161,446,500 1,744,159
Banco Itau SA Non-Voting Pfd BK 4,824,000 2,850,748
Centrais Eletricas Brasileiras SA
Class B Non-Voting Pfd EU 6,000,000 3,573,407
Cia Brasileira de Distribuicao
Grupo Pao de Acucur Pfd RT 45,000,000 997,230
<PAGE>
Cia Brasileira de Distribuicao
Grupo Pao de Acucar Sponsored
ADR Representing Pfd RT 50,000 1,108,040
Regulation S Pfd~ RT 38,067 830,336
Cia Cervejaria Brahma Non-Voting Pfd FD 1,005,513 761,330
Cia de Tecidos Norte de
Minas-Coteminas Pfd TA 5,800,000 2,195,752
Cia Energetica de Brasilia Pfd EU 3,600,000 561,773
Cia Energetica de Minas Gerais Pfd EU 19,999,000 1,134,200
Cia Energetica do Ceara Pfd A Shrs* EU 150,000,000 858,726
Cia Paranaense de Energia-Copel
Series B Pfd EU 100,000,000 1,939,058
Globex Utilidades SA Pfd UR 60,000 718,560
Itausa-Investimentos Itau SA
Non-Voting Pfd MY 1,500,000 1,454,294
Lojas Renner SA Pfd RT 16,000,000 849,492
Multicanal Participacoes SA Sponsored
ADR Representing Pfd Shrs* CA 130,000 1,462,500
Perdigao SA Comercio e
Industria Non-Voting Pfd AG 702,900,000 1,557,673
Petrobras Distribuidora SA Pfd OG 50,000,000 1,648,199
Petroleo Brasileiro SA Pfd OG 12,500,000 3,797,322
Telecomunicacoes Brasileiras SA
Sponsored ADR Representing Pfd TL 52,000 7,715,500
Telecomunicacoes de Minas
Gerais SA B Pfd TL 6,000,000 1,011,080
Telecomunicacoes do Parana SA Pfd TL 575,000 467,221
Weg SA Pfd EE 1,400,000 988,920
------------
TOTAL PREFERRED STOCKS
(Cost $33,096,813) 40,225,520
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $101,972,437)
(Cost for Income Tax Purposes
$101,985,944) $122,783,954
============
REALTY Fund
COMMON STOCKS 100.00%
CANADA 1.29%
RioCan REIT RE 8,000 118,158
Trizec Hahn RE 16,200 375,638
------------
493,796
------------
<PAGE>
HONG KONG 1.72%
Cheung Kong Holdings Ltd ADR RE 18,300 203,130
New World Development Ltd
Sponsored ADR Representing Ord Shrs RE 18,600 265,050
Sun Hung Kai Properties Ltd
Sponsored ADR RE 15,100 189,662
------------
657,842
------------
SINGAPORE 0.63%
Singapore Land Ltd ADR RE 49,000 241,496
------------
UNITED STATES 96.36%
American General Hospitality RE 49,700 1,341,900
AMRESCO Inc* FN 7,200 215,100
Apartment Investment&
Management Class A RE 23,400 748,800
Arden Realty Group RE 36,000 978,750
Bay Apartment Communities RE 17,540 674,194
Beacon Properties RE 42,100 1,541,913
Bedford Property Investors RE 29,300 584,169
Brandywine Realty Trust SBI RE 29,500 660,063
CBL & Associates Properties RE 26,400 673,200
Cali Realty RE 18,600 680,063
Catellus Development* RE 18,600 381,300
Chelsea GCA Realty RE 8,200 323,388
Crescent Real Estate Equities RE 22,200 693,750
Duke Realty Investments RE 16,100 715,444
Equity Office Properties Trust SBI* RE 10,800 313,200
Equity Residential Properties
Trust SBI RE 17,250 870,047
Essex Property Trust RE 36,800 1,207,500
Excel Realty Trust RE 34,500 1,026,375
FelCor Suite Hotels RE 40,700 1,587,300
First Industrial Realty Trust RE 57,400 1,775,812
First Union Real Estate Equity
& Mortgage Investments SBI RE 29,100 387,394
Gables Residential Trust SBI RE 32,000 854,000
Healthcare Realty Trust RE 32,300 932,662
Highwoods Properties RE 22,300 744,262
Irvine Apartment Communities RE 20,800 624,000
Kilroy Realty RE 33,260 835,657
Kimco Realty RE 33,000 1,122,000
Koger Equity RE 58,200 1,131,262
Liberty Property Trust SBI RE 48,300 1,273,912
MGI Properties RE 29,800 657,462
Merry Land & Investment RE 37,400 818,125
Patriot American Hospitality RE 84,349 2,103,456
Prentiss Properties Trust RE 45,100 1,172,600
Price REIT RE 22,500 852,187
Public Storage RE 23,700 703,594
RFS Hotel Investors RE 21,100 385,075
Rouse Co RE 13,300 394,844
<PAGE>
Servico Inc* LH 45,000 765,000
Shurgard Storage Centers Class A RE 30,200 855,038
Simon DeBartolo Group RE 27,530 880,960
Starwood Lodging Trust RE 11,000 512,875
Sun Communities RE 10,000 361,875
Sunstone Hotel Investors RE 34,900 488,600
TriNet Corp Realty Trust RE 30,000 1,066,875
------------
36,915,983
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $36,109,021)
(Cost for Income Tax Purposes
$36,468,795) $38,309,117
============
WORLDWIDE CAPITAL GOODS Fund
COMMON STOCKS 83.18%
ARGENTINA 0.63%
MetroGas SA Sponsored ADR
Representing Class B Shrs OG 15,000 144,375
------------
BRAZIL 0.34%
Light Servicos de Eletricidade SA EU 150,000 78,947
------------
CANADA 0.61%
Tembec Inc Class A* PF 13,800 139,379
------------
CHINA 2.22%
Beijing Enterprises Holdings Ltd* SV 80,000 509,395
------------
GERMANY 2.28%
Daimler-Benz AG Sponsored
ADR Representing Ord Shrs AM 4,000 334,750
Hoechst AG CH 4,000 188,044
------------
522,794
------------
JAPAN 1.44%
Honda Motor Ltd American Shrs AM 5,000 330,313
------------
MEXICO 0.97%
Cemex SA de CV Participation
Certificates BD 20,000 101,679
Grupo Carso SA de CV Series A-1 Shrs MY 15,000 121,670
------------
223,349
------------
NETHERLANDS 1.49%
Chicago Bridge & Iron NV EC 15,000 343,125
------------
UNITED KINGDOM 0.78%
Gallaher Group PLC ADR* TO 10,000 179,375
------------
<PAGE>
UNITED STATES 72.42%
Allied Signal MG 6,000 553,500
ASARCO Inc GP 7,500 255,000
Boston Properties* RE 7,500 209,062
Bowater Inc PF 6,000 314,250
Brush Wellman MG 15,000 342,188
Burlington Northern Santa Fe RR 5,000 482,812
CalEnergy Co* EU 6,100 245,906
Case Corp MY 3,000 187,313
Chevron Corp OG 3,700 292,762
Coastal Corp NG 6,200 337,125
Cooper Industries MY 6,000 333,375
Crown Cork & Seal CT 5,000 252,813
Cummins Engine AP 6,200 486,700
Dana Corp AP 7,500 340,781
Eaton Corp AM 3,700 334,156
Emerson Electric EE 6,000 354,000
Exxon Corp OG 5,000 321,250
Federal Express* AF 5,000 322,812
Fortune Brands TO 7,000 248,063
Galileo International* LT 12,000 316,500
General Cable* EE 10,000 301,250
General Electric EE 9,000 631,688
Gentex Corp* AP 10,000 226,250
Georgia-Pacific Corp PF 3,500 330,531
Honeywell Inc EE 5,000 373,438
Ingersoll-Rand Co MY 4,900 333,506
Kennametal Inc MY 5,700 274,669
Maxim Integrated Products* ES 2,000 138,250
Minnesota Mining & Manufacturing MG 3,700 350,575
Nabors Industries* OG 10,000 312,500
Norfolk Southern RR 3,000 332,250
Northrop Grumman AE 3,000 345,375
Nuevo Energy* OG 5,000 214,063
Owens-Illinois Inc* CT 12,300 424,350
PACCAR Inc AM 8,600 426,775
Phillips Petroleum OG 5,000 230,313
Praxair Inc CH 7,400 407,925
Premark International MG 10,000 315,625
Santa Fe International* OG 9,000 371,250
Schweitzer-Mauduit International PF 6,500 253,906
Sealed Air* PF 7,700 360,937
Stone Container CT 29,700 493,763
Sundstrand Corp AE 5,500 341,000
Tenneco Inc CG 5,000 233,125
Tyco International Ltd MG 3,500 283,500
UCAR International* IS 4,000 178,500
USX-Marathon Group OG 7,500 241,406
Union Pacific RR 5,000 358,438
<PAGE>
United Meridian* OG 6,000 191,625
Washington Gas Light NG 10,000 260,000
Waste Management PC 5,000 160,000
Xerox Corp OE 4,900 403,025
------------
16,630,176
------------
TOTAL COMMON STOCKS
(Cost $16,761,210) 19,101,228
------------
FIXED INCOME SECURITIES 2.29%
UNITED STATES 2.29%
Wind River Systems Conv Sub Notes^
5.000%, 8/1/2002
(Cost $500,000) CO 500,000 525,625
------------
OTHER SECURITIES 1.31%
MEXICO 1.31%
Grupo Imsa SA de CV Sponsored
ADR Representing Units
(Each unit consists of 3 Series
B shrs and 2 Series C shrs)
(Cost $264,850) CG 10,000 300,625
------------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 13.22%
UNITED STATES 13.22%
Repurchase Agreement with
State Street Bank & Trust Co
dated 7/31/1997 due 8/1/1997
at 5.670%, repurchased at
$3,035,478 (Collateralized
by US Treasury Bonds due
2/15/2023 at 7.125%
value $3,191,583)
(Cost $3,035,000) RA 3,035,000 3,035,000
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $20,561,060) (Cost for
Income Tax Purposes $20,573,265) $ 22,962,478
============
WORLDWIDE COMMUNICATIONS Fund
COMMON STOCKS 77.51%
ARGENTINA 3.24%
Telecom Argentina STET-France
Telecom SA Sponsored ADR
Representing Class B Shrs TN 20,300 $ 1,173,594
Telefonica de Argentina SA Sponsored
ADR Representing 10 Class B Shrs TN 32,000 1,270,000
------------
2,443,594
------------
<PAGE>
CANADA 6.37%
BCE Inc TN 44,000 1,339,250
Newbridge Networks* TN 31,100 1,621,088
Northern Telecom Ltd TN 17,700 1,850,756
------------
4,811,094
------------
CHILE 0.93%
Cia de Telecomunicaciones de
Chile SA Sponsored ADR
Representing Series A Shrs TL 21,250 699,922
------------
FINLAND 1.92%
Nokia Corp Sponsored ADR
Representing Class A Shrs CM 16,900 1,447,063
------------
HONG KONG 1.15%
Asia Satellite Telecommunications
Holdings Ltd Sponsored ADR TL 29,000 870,000
------------
ITALY 3.94%
Telecom Italia Mobile SpA TN 450,000 1,519,155
Telecom Italia SpA* TL 229,500 1,459,895
------------
2,979,050
------------
NETHERLANDS 0.43%
Royal PTT Nederland NV Sponsored
ADR Representing Ord Shrs TL 8,000 327,000
------------
PERU 0.65%
Telefonica del Peru SA Sponsored
ADR Representing Class B Shrs TN 20,000 493,750
------------
PORTUGAL 1.76%
Portugal Telecom SA Sponsored
ADR Representing Ord Shrs TL 33,000 1,328,250
------------
SPAIN 1.92%
Telefonica de Espana SA TN 27,000 725,110
Telefonica de Espana SA Sponsored
ADR Representing 10 B Shrs TN 9,200 724,500
------------
1,449,610
------------
SWEDEN 1.20%
Ericsson (L M) Telephone Sponsored
ADR Representing Class B Shrs CM 20,000 905,000
------------
<PAGE>
UNITED KINGDOM 3.31%
Cable & Wireless PLC Sponsored ADR TL 40,000 1,202,500
COLT Telecom Group PLC Sponsored
ADR Representing 4 Ord Shrs* TL 54,500 1,294,375
------------
2,496,875
------------
UNITED STATES 50.69%
AirTouch Communications* TC 20,000 658,750
ALLTEL Corp TN 23,000 756,125
Ameritech Corp TN 20,700 1,395,956
Ascend Communications* CO 18,000 978,750
Belden Inc EL 17,000 658,750
BellSouth Corp TN 37,700 1,786,037
Brooks Fiber Properties* TL 52,600 1,979,075
Century Telephone Enterprises TN 38,900 1,429,575
Cisco Systems* CO 8,500 676,281
Comverse Technology* CM 26,000 1,267,500
FORE Systems* CO 40,000 642,500
ICG Communications* TL 65,000 1,397,500
Intel Corp ES 8,000 734,500
Intermedia Communications* TN 21,700 789,337
International Telecommunication
Data Systems* SV 30,500 762,500
LCI International* TL 54,000 1,076,625
Loral Space & Communications* EL 71,000 1,109,375
MCI Communications TL 48,000 1,695,000
McLeodUSA Inc Class A* TL 52,400 1,801,250
Motorola Inc CM 21,200 1,702,625
NEXTEL Communications Class A* TC 130,000 3,136,250
NYNEX Corp TN 11,400 631,987
P-COM Inc* TL 17,000 625,812
PairGain Technologies CM 59,300 1,274,950
SBC Communications TN 34,000 2,012,375
Southern New England
Telecommunications TN 18,000 715,500
Sprint Corp TL 13,200 653,400
Superior Telecom* EL 15,000 451,875
US WEST Communications Group TL 33,200 1,213,875
Vertex Communications* EE 44,000 1,155,000
Viatel Inc* TL 108,000 499,500
WorldCom Inc* TL 75,000 2,620,313
------------
38,288,848
------------
TOTAL COMMON STOCKS
(Cost $48,216,897) 58,540,056
------------
PREFERRED STOCKS 7.69%
ARGENTINA 1.21%
Nortel Inversora SA ADR
Representing Pfd B* TL 32,100 910,838
------------
<PAGE>
BRAZIL 6.48%
Telecomunicacoes Brasileiras SA
Sponsored ADR Representing Pfd TL 20,400 3,026,850
Telecomunicacoes de Sao Paulo SA Pfd TN 4,436,500 1,548,474
Telecomunicacoes do Rio de
Janeiro SA Pfd TL 2,000,000 320,425
------------
4,895,749
------------
TOTAL PREFERRED STOCKS
(Cost $4,036,044) 5,806,587
------------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 14.80%
UNITED STATES 14.80%
Repurchase Agreement with
State Street Bank & Trust Co
dated 7/31/1997 due 8/1/1997
at 5.670%, repurchased at
$11,181,761 (Collateralized
by US Treasury Bonds due
2/15/2023 at 7.125%
value $11,741,088)
(Cost $11,180,000) RA 11,180,000 $ 11,180,000
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $63,432,941)
(Cost for Income Tax Purposes
$63,601,876) $ 75,526,643
============
* Security is non-income producing.
^ Securities are registered pursuant to Rule 144A and may be deemed to be
restricted for resale to institutional investors.
~ The following are restricted securities at July 31, 1997:
<PAGE>
<TABLE>
<CAPTION>
Value as
Acquisition Acquisition % of
Description Date(s) Cost Net Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Latin American Growth Fund
Cia Brasileira de
Distribuicao Groupo
Pao de Acucar
Sponsored ADR
Representing 6/3/97-
Regulation S Pfd 7/9/97 $ 883,459 0.64%
Ferreyros SA
Regulation S 4/9/97-
Sponsored ADR 5/27/97 609,168 0.57
Grupo Accion SA de
CV Regulation S
Sponsored ADR 6/19/97 720,000 0.49
Latas de Aluminio SA
Sponsored GDR
Representing 5/14/97-
Regulation S Shrs 7/9/97 1,739,599 1.18
Rossi Residencial SA
GDR Regulation S 7/15/97 890,400 0.71
-------
3.59%
=======
</TABLE>
<TABLE>
<CAPTION>
Summary of Investments by Industry
% of
Industry Investment
Industry Code Securities Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asian Growth Fund
Air Freight AF 0.93% $ 306,209
Aluminum AL 1.78 584,600
Automobiles AM 1.87 615,795
Banks BK 15.61 5,129,814
Broadcasting BR 0.82 269,576
Building Materials BD 5.52 1,812,680
Chemicals CH 1.29 425,452
Communications - Equipment
& Manufacturing CM 0.08 26,088
Conglomerates CG 11.16 3,666,559
Distribution DB 0.98 320,692
Electric Utilities EU 2.48 814,416
<PAGE>
Engineering & Construction EC 1.26 415,399
Financial FN 5.19 1,707,080
Foods FD 1.42 466,145
Gaming GM 0.61 199,886
Gold & Precious Metals Mining GP 0.97 319,074
Health Care Drugs -
Pharmaceuticals HD 1.69 554,625
Investment Bank/Broker Firm IV 0.00 25
Lodging - Hotels LH 1.15 376,643
Metals & Mining MM 2.40 788,316
Machinery MY 6.05 1,989,883
Oil & Gas Related OG 2.46 809,513
Real Estate Investment Trust RE 25.08 8,242,999
Repurchase Agreements RA 7.50 2,465,000
Retail RT 0.50 164,111
Telecommunications -
Cellular & Wireless TC 0.27 90,160
Telephone TN 0.93 305,600
-------------------------
100.00% $32,866,340
=========================
European Small Company Fund
Air Freight AF 1.62% $ 1,136,746
Auto Parts AP 0.72 506,742
Automobiles AM 1.38 966,944
Biotechnology BI 3.65 2,562,397
Building Materials BD 1.22 854,565
Cable CA 1.35 945,165
Communications - Equipment
& Manufacturing CM 3.38 2,371,922
Computer Related CO 17.77 12,474,125
Conglomerates CG 1.45 1,015,115
Consumer - Jewelry,
Novelties & Gifts CJ 2.26 1,585,836
Electronics EL 4.63 3,250,184
Electronics - Semiconductor ES 0.92 647,874
Engineering & Construction EC 3.02 2,118,207
Financial FN 1.41 992,325
Gold & Precious Metals Mining GP 0.84 592,775
Health Care Drugs - Pharmaceuticals HD 5.80 4,072,121
Health Care Related HC 6.38 4,479,771
Homebuilding HB 0.79 555,998
Household Furniture & Appliances HF 1.67 1,172,460
Insurance IN 1.53 1,074,466
Leisure Time LT 3.85 2,702,651
Lodging - Hotels LH 1.75 1,229,758
Machinery MY 2.96 2,074,647
Manufacturing MG 3.83 2,690,605
Office Equipment & Supplies OE 1.41 988,634
Photography & Imaging PI 1.04 733,227
Pollution Control PC 0.15 104,574
<PAGE>
Publishing PB 1.36 952,841
Real Estate Investment Trust RE 4.21 2,954,316
Retail RT 1.38 965,813
Services SV 9.14 6,414,423
Telecommunications - Long Distance TL 0.43 298,844
Textile - Apparel Manufacturing TA 5.48 3,847,206
Toys TY 1.22 858,266
-------------------------
100.00% $70,191,543
=========================
Latin American Growth Fund
Agricultural Products AG 2.10% $ 2,577,877
Aluminum AL 1.82 2,237,139
Banks BK 6.73 8,264,126
Beverages BV 4.73 5,802,875
Broadcasting BR 1.77 2,174,612
Building Materials BD 4.27 5,237,653
Cable CA 1.19 1,462,500
Chemicals CH 1.60 1,969,602
Containers CT 0.90 1,100,000
Electric Utilities EU 18.27 22,434,045
Electrical Equipment EE 0.81 988,920
Engineering & Construction EC 0.52 635,625
Financial FN 1.76 2,157,484
Foods FD 3.02 3,714,270
Gold & Precious Metals Mining GP 0.96 1,174,916
Iron & Steel IS 4.14 5,082,584
Machinery MY 8.49 10,424,983
Oil & Gas Related OG 5.67 6,958,419
Real Estate Investment Trust RE 2.16 2,658,476
Retail RT 9.70 11,915,193
Telecommunications - Long Distance TL 13.79 16,927,449
Telephone TN 1.83 2,250,019
Textile - Apparel Manufacturing TA 1.79 2,195,752
Tobacco TO 1.40 1,720,875
Utilities Related UR 0.58 718,560
-------------------------
100.00% $122,783,954
=========================
Realty Fund
Financial FN 0.56% $215,100
Lodging - Hotels LH 2.00 765,000
Real Estate Investment Trust RE 97.44 37,329,017
-------------------------
100.00% $38,309,117
=========================
Worldwide Capital Goods Fund
Aerospace & Defense AE 2.99% $ 686,375
Air Freight AF 1.41 322,812
Auto Parts AP 4.59 1,053,731
<PAGE>
Automobiles AM 6.21 1,425,994
Building Materials BD 0.44 101,679
Chemicals CH 2.60 595,969
Computer Related CO 2.29 525,625
Conglomerates CG 2.32 533,750
Containers CT 5.10 1,170,926
Electric Utilities EU 1.41 324,853
Electrical Equipment EE 7.23 1,660,376
Electronics-- Semiconductors ES 0.60 138,250
Engineering & Construction EC 1.49 343,125
Gold & Precious Metals Mining GP 1.11 255,000
Iron & Steel IS 0.78 178,500
Leisure Time LT 1.38 316,500
Machinery MY 5.45 1,250,533
Manufacturing MG 8.04 1,845,388
Natural Gas NG 2.60 597,125
Office Equipment & Supplies OE 1.75 403,025
Oil & Gas Related OG 10.10 2,319,544
Paper & Forest Products PF 6.09 1,399,003
Pollution Control PC 0.70 160,000
Railroads RR 5.11 1,173,500
Real Estate Investment Trust RE 0.91 209,062
Repurchase Agreements RA 13.22 3,035,000
Services SV 2.22 509,395
Tobacco TO 1.86 427,438
--------------------------
100.00% $22,962,478
==========================
Worldwide Communications Fund
Communications - Equipment
& Manufacturing CM 8.74% $ 6,597,138
Computer Related CO 3.04 2,297,531
Electrical Equipment EE 1.53 1,155,000
Electronics EL 2.94 2,220,000
Electronics - Semiconductors ES 0.97 734,500
Repurchase Agreements RA 14.80 11,180,000
Services SV 1.01 762,500
Telecommunications -
Cellular & Wireless TC 5.03 3,795,000
Telecommunications - Long Distance TL 33.10 25,002,405
Telephone TN 28.84 21,782,569
--------------------------
100.00% $75,526,643
==========================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc.
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1997
<TABLE>
<CAPTION>
Asian European Latin American
Growth Small Company Growth
Fund Fund Fund
-------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost~ $ 31,942,556 $ 65,260,575 $ 101,972,437
=============================================================
At Value~ $ 32,866,340 $ 70,191,543 $ 122,783,954
Cash 5,685 1,264,153 4,946,942
Foreign Currency
(Cost $230,456, $1,581 and $871,738,
respectively) 190,708 1,589 871,619
Receivables:
Investment Securities Sold 26,774 3,604,600 927,613
Fund Shares Sold 31,579 336,540 751,591
Dividends and Interest 35,322 242,757 353,543
Prepaid Expenses and Other Assets 11,746 52,852 25,010
-------------------------------------------------------------
TOTAL ASSETS 33,168,154 75,694,034 130,660,272
-------------------------------------------------------------
LIABILITIES
Payables:
Distributions to Shareholders 0 0 8,907
Investment Securities Purchased 99,475 0 0
Fund Shares Repurchased 63,539 567,829 300,459
Depreciation on Forward Foreign
Currency Contracts 0 12,348 1,437
Accrued Distribution Expenses 6,958 19,233 28,210
Accrued Expenses and Other Payables 28,852 37,688 49,099
-------------------------------------------------------------
TOTAL LIABILITIES 198,824 637,098 388,112
-------------------------------------------------------------
Net Assets at Value $ 32,969,330 $ 75,056,936 $ 130,272,160
=============================================================
NET ASSETS
Paid-in Capital* 29,462,899 61,539,489 103,074,800
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income (Loss) (138) (6,316) (119,953)
<PAGE>
Accumulated Undistributed Net Realized Gain
on Investment Securities and Foreign
Currency Transactions 2,621,021 8,595,868 6,510,783
Net Appreciation of Investment Securities
and Foreign Currency Transactions 885,548 4,927,895 20,806,530
-------------------------------------------------------------
Net Assets at Value $ 32,969,330 $ 75,056,936 $ 130,272,160
=============================================================
Shares Outstanding 2,903,612 4,608,602 7,092,642
Net Asset Value, Offering and Redemption
Price per Share $ 11.35 $ 16.29 $ 18.37
=============================================================
~ Investment securities at cost and value at July 31, 1997 include a repurchase
agreement of $2,465,000 for Asian Growth Fund.
* The Fund has 600 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 ASSETS AND LIABILITIES (CONTINUED)
July 31, 1997
Worldwide Worldwide
Realty Capital Goods Communications
Fund Fund Fund
-------------------------------------------------------------
ASSETS
Investment Securities:
At Cost~ $ 36,109,021 $ 20,561,060 $ 63,432,941
=============================================================
At Value~ $ 38,309,117 $ 22,962,478 $ 75,526,643
Cash 0 3,018 259,078
Foreign Currency
(Cost $0, $0 and $4,378, respectively) 0 0 4,274
Receivables:
Investment Securities Sold 277,766 0 0
Fund Shares Sold 322,412 850,265 229,097
Dividends and Interest 57,541 11,242 97,238
Prepaid Expenses and Other Assets 30,536 15,780 21,322
-------------------------------------------------------------
TOTAL ASSETS $ 38,997,372 $ 23,842,783 $ 76,137,652
-------------------------------------------------------------
LIABILITIES
Payables:
Custodian 1,605,568 0 0
Distributions to Shareholders 19,793 354 9,022
Investment Securities Purchased 579,091 1,531,450 0
Fund Shares Repurchased 103,658 28,922 3,625,115
Accrued Distribution Expenses 7,353 4,111 14,942
Accrued Expenses and Other Payables 24,374 24,410 30,276
-------------------------------------------------------------
TOTAL LIABILITIES 2,339,837 1,589,247 3,679,355
-------------------------------------------------------------
Net Assets at Value $ 36,657,535 $ 22,253,536 $ 72,458,297
=============================================================
NET ASSETS
Paid-in Capital* 34,538,046 19,020,364 56,082,857
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income 34,791 838 (61,753)
Accumulated Undistributed Net Realized Gain
(Loss) on Investment Securities and
Foreign Currency Transactions (115,069) 830,913 4,343,767
Net Appreciation of Investment Securities
and Foreign Currency Transactions 2,199,767 2,401,421 12,093,426
-------------------------------------------------------------
Net Assets at Value $ 36,657,535 $ 22,253,536 $ 72,458,297
=============================================================
<PAGE>
Shares Outstanding 3,334,988 1,751,600 4,733,450
Net Asset Value, Offering and Redemption
Price per Share $ 10.99 $ 12.70 $ 15.31
=============================================================
</TABLE>
~ Investment securities at cost and value at July 31, 1997 include repurchase
agreements of $3,035,000 and $11,180,000 for Worldwide Capital Goods and
Worldwide Communications Funds, respectively.
* The Fund has 600 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
Year Ended July 31, 1997
<TABLE>
<CAPTION>
Asian European Latin American
Growth Small Company Growth
Fund Fund Fund
------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 444,531 $ 1,681,529 $ 1,819,443
Interest 128,856 318,632 200,926
Foreign Taxes Withheld (54,848) (255,735) (71,325)
------------------------------------------------------------
TOTAL INCOME 518,539 1,744,426 1,949,044
------------------------------------------------------------
EXPENSES
Investment Advisory Fees 218,813 928,226 485,690
Distribution Expenses 72,937 309,409 161,897
Transfer Agent Fees 113,451 353,726 177,930
Administrative Fees 14,376 28,565 19,714
Custodian Fees and Expenses 108,013 188,581 185,698
Directors' Fees and Expenses 8,275 12,397 9,608
Professional Fees and Expenses 26,983 29,522 26,235
Registration Fees and Expenses 33,127 99,681 42,418
Reports to Shareholders 14,612 44,998 19,695
Other Expenses 3,357 15,192 10,530
------------------------------------------------------------
TOTAL EXPENSES 613,944 2,010,297 1,139,415
Fees and Expenses Absorbed by Investment Adviser (14,744) 0 0
Fees and Expenses Paid Indirectly (23,390) (46,400) (64,709)
------------------------------------------------------------
NET EXPENSES 575,810 1,963,897 1,074,706
------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (57,271) (219,471) 874,338
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 2,717,229 8,995,970 6,819,951
Change in Net Appreciation of Investment
Securities and Foreign Currency Transactions 2,533,318 5,896,544 19,631,044
------------------------------------------------------------
NET GAIN ON INVESTMENT SECURITIES 5,250,547 14,892,514 26,450,995
------------------------------------------------------------
Net Increase in Net Assets from Operations $ 5,193,276 $ 14,673,043 $ 27,325,333
============================================================
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc.
STATEMENT OF OPERATIONS (CONTINUED)
Period Ended July 31, 1997 (Note 1)
Worldwide Worldwide
Realty Capital Goods Communications
Fund Fund Fund
-------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 809,009 $ 106,324 $ 897,919
Interest 46,094 76,265 383,572
Foreign Taxes Withheld (776) (1,599) (52,236)
-------------------------------------------------------------
TOTAL INCOME 854,327 180,990 1,229,255
-------------------------------------------------------------
EXPENSES
Investment Advisory Fees 112,846 48,575 358,300
Distribution Expenses 37,615 18,683 137,847
Transfer Agent Fees 74,155 42,296 261,010
Administrative Fees 7,257 11,121 18,269
Custodian Fees and Expenses 9,468 13,119 24,519
Directors' Fees and Expenses 3,205 7,682 9,739
Professional Fees and Expenses 23,908 23,626 26,028
Registration Fees and Expenses 21,153 22,048 52,523
Reports to Shareholders 6,876 3,856 33,213
Other Expenses 524 1,747 9,099
-------------------------------------------------------------
TOTAL EXPENSES 297,007 192,753 930,547
Fees and Expenses Absorbed by
Investment Adviser (102,675) (44,302) 0
Fees and Expenses Paid Indirectly (431) (5,354) (10,501)
-------------------------------------------------------------
NET EXPENSES 193,901 143,097 920,046
-------------------------------------------------------------
NET INVESTMENT INCOME 660,426 37,893 309,209
-------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on Investment
Securities and Foreign Currency
Transactions (81,769) 1,139,730 4,688,859
Change in Net Appreciation of Investment
Securities and Foreign Currency
Transactions 2,199,767 2,381,692 11,765,158
-------------------------------------------------------------
NET GAIN ON INVESTMENT SECURITIES 2,117,998 3,521,422 16,454,017
-------------------------------------------------------------
Net Increase in Net Assets from Operations $ 2,778,424 $ 3,559,315 $ 16,763,226
=============================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Specialty Funds, Inc.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Asian Growth
Fund
Year Period European Small Company
Ended Ended Fund
July 31 July 31 Year Ended July 31
------------------------------ -------------------------------
1997 1996 1997 1996
(Note 1)
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ (57,271) $ 33,239 $ (219,471) $ 443,500
Net Realized Gain (Loss) on Investment
Securities and Foreign Currency
Transactions 2,717,229 (39,425) 8,995,970 3,681,763
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 2,533,318 (1,647,770) 5,896,544 (1,229,632)
----------------------------- -------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS 5,193,276 (1,653,956) 14,673,043 2,895,631
----------------------------- -------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (30,298) 0 (439,757)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 0 0 (3,874,335) 0
----------------------------- -------------------------------
TOTAL DISTRIBUTIONS 0 (30,298) (3,874,335) (439,757)
----------------------------- -------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 58,289,655 18,102,250 390,188,113 241,646,456
Reinvestment of Distributions 0 30,018 3,693,369 436,279
------------------------------ -------------------------------
58,289,655 18,132,268 393,881,482 242,082,735
Amounts Paid for Repurchases of Shares (44,828,305) (2,133,310) (423,884,261) (154,078,587)
------------------------------ -------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 13,461,350 15,998,958 (30,002,779) 88,004,148
------------------------------ -------------------------------
Total Increase (Decrease) in Net Assets 18,654,626 14,314,704 (19,204,071) 90,460,022
NET ASSETS
Beginning of Period 14,314,704 0 94,261,007 3,800,985
------------------------------ -------------------------------
End of Period $32,969,330 $14,314,704 $ 75,056,936 $ 94,261,007
============================== ===============================
<PAGE>
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income
(Loss) Included in Net Assets
at End of Period (138) 2,591 (6,316) 4,726
FUND SHARE TRANSACTIONS
Shares Sold 5,695,778 1,818,644 24,262,011 16,101,290
Shares Issued from Reinvestment of
Distributions 0 3,354 240,298 28,931
------------------------------ -------------------------------
5,695,778 1,821,998 24,502,309 16,130,221
Shares Repurchased (4,391,861) (222,303) (26,142,644) (10,210,062)
------------------------------ -------------------------------
Net Increase (Decrease) in Fund Shares 1,303,917 1,599,695 (1,640,335) 5,920,159
============================== ===============================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Specialty Funds, Inc.
Statement of Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
Realty
Fund
Latin American Growth Period
Fund Ended
Year Ended July 31 July 31
--------------------------------- ------------
1997 1996 1997
(Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 874,338 $ 219,683 $ 660,426
Net Realized Gain (Loss) on Investment
Securities and Foreign Currency
Transactions 6,819,951 481,310 (81,769)
Change in Net Appreciation of Investment
Securities and Foreign Currency
Transactions 19,631,044 1,170,499 2,199,767
-------------------------------- ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 27,325,333 1,871,492 2,778,424
-------------------------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (898,745) (217,967) (658,935)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (763,367) (350,025) 0
-------------------------------- ------------
TOTAL DISTRIBUTIONS (1,662,112) (567,992) (658,935)
-------------------------------- ------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 147,554,103 38,393,207 87,811,086
Reinvestment of Distributions 1,643,078 562,352 633,951
-------------------------------- ------------
149,197,181 38,955,559 88,445,037
Amounts Paid for Repurchases of Shares (76,652,142) (15,617,725) (53,906,991)
-------------------------------- ------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 72,545,039 23,337,834 34,538,046
-------------------------------- ------------
Total Increase in Net Assets 98,208,260 24,641,334 36,657,535
NET ASSETS
Beginning of Period 32,063,900 7,422,566 0
-------------------------------- ------------
End of Period $ 130,272,160 $32,063,900 $36,657,535
================================ ============
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income
Included in Net Assets at End
of Period $ (119,953) $ 28,380 $ 34,791
-------------------------------------------------------
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 9,413,898 3,077,189 8,503,849
Shares Issued from Reinvestment
of Distributions 108,476 48,510 62,289
-------------------------------- ------------
9,522,374 3,125,699 8,566,138
Shares Repurchased (4,922,997) (1,267,483) (5,231,150)
-------------------------------- ------------
Net Increase in Fund Shares 4,599,377 1,858,216 3,334,988
================================ ============
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Specialty Funds, Inc.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended July 31
<TABLE>
<CAPTION>
Worldwide Capital Goods Worldwide Communications
Fund Fund
------------------------------- --------------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 37,893 $ 4,056 $ 309,209 $ 699,676
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 1,139,730 760,106 4,688,859 4,577,595
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 2,381,692 (798,684) 11,765,158 (1,242,052)
------------------------------- --------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS 3,559,315 (34,522) 16,763,226 4,035,219
------------------------------- --------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (40,745) 0 (307,162) (701,251)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (487,207) (192,500) (3,964,664) (2,990,139)
------------------------------- --------------------------------
TOTAL DISTRIBUTIONS (527,952) (192,500) (4,271,826) (3,691,390)
------------------------------- --------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 36,882,095 8,918,314 105,661,260 86,755,968
Reinvestment of Distributions 523,895 191,459 4,049,521 3,647,177
------------------------------- --------------------------------
37,405,990 9,109,773 109,710,781 90,403,145
Amounts Paid for Repurchases of Shares (25,914,782) (11,515,410) (100,260,270) (67,484,918)
------------------------------- --------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 11,491,208 (2,405,637) 9,450,511 22,918,227
------------------------------- --------------------------------
Total Increase (Decrease) in Net Assets 14,522,571 (2,632,659) 21,941,911 23,262,056
NET ASSETS
Beginning of Period 7,730,965 10,363,624 50,516,386 27,254,330
------------------------------- --------------------------------
End of Period $ 22,253,536 $ 7,730,965 $ 72,458,297 $ 50,516,386
=============================== ================================
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income
Included in Net Assets at
End of Period $ 838 $ 4,840 $ (61,753) $ 3,625
-----------------------------------------------------------
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 3,284,566 904,991 7,791,340 6,894,716
Shares Issued from Reinvestment of
Distributions 55,141 20,133 324,919 306,451
------------------------------- --------------------------------
3,339,707 925,124 8,116,259 7,201,167
Shares Repurchased (2,392,625) (1,174,317) (7,446,966) (5,352,376)
------------------------------- --------------------------------
Net Increase (Decrease) in Fund Shares 947,082 (249,193) 669,293 1,848,791
=============================== ================================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Specialty Funds, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Specialty
Funds, Inc. (the "Fund") is incorporated in Maryland and presently consists of
six separate Funds: Asian Growth Fund, European Small Company Fund, Latin
American Growth Fund, Realty Fund, Worldwide Capital Goods Fund and Worldwide
Communications Fund. The investment objectives are: to achieve capital
appreciation for Asian Growth, European Small Company, Latin American Growth and
Worldwide Capital Goods Funds; to achieve current income for Realty Fund; and to
achieve a high total return on investments through capital appreciation and
current income for Worldwide Communications Fund. The Fund is registered under
the Investment Company Act of 1940 (the "Act") as a diversified, open-end
management investment company. Investment operations of Asian Growth Fund and
Realty Fund commenced on March 1, 1996 and January 1, 1997, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION - Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales
price in the market where such securities are primarily traded. If last
sales prices are not available, securities are valued at the highest closing
bid price obtained from one or more dealers making a market for such
securities or by a pricing service approved by the Fund's board of
directors.
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.
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.
Options are valued at the last sales price on the principal exchange on
which the options are traded. If there is no last sales price reported, then
the bid price will be used.
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.
<PAGE>
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. The
cost of securities is translated into U.S. dollars at the rates of exchange
prevailing when such securities are acquired. Income and expenses are
translated into U.S. dollars at the rates of exchange prevailing when
accrued.
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. In the event of
default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral or proceeds may be subject to legal
proceedings.
C. OPTIONS - The Fund may hold options for investment purposes with the intent
to hedge the portfolio against ongoing exposure to market value and interest
rate fluctuations.
The use of such instruments may involve certain risks as a result of
unanticipated movements in the market. A lack of correlation between the
value of an instrument underlying an option and the asset being hedged, or
unexpected adverse price movements could render the Fund's hedging strategy
unsuccessful. In addition, there can be no assurance that a liquid secondary
market will exist for any option purchased or sold. The Fund will realize a
gain or loss upon the expiration or closing of the option transaction. When
an option is excercised, the proceeds on sales for a written call option,
the purchase cost for a written put option, or the cost of the security for
a purchased put or call option is adjusted by the amount of premium
received or paid. Options written are reported as a liability in the
Statement of Assets and Liabilities and are marked to market on a daily
basis. Realized gains or losses on purchased option transactions are
included in Net Realized Gain (Loss) on Investment Securities and Foreign
Currency Transactions in the Statement of Operations.
Written call option activity for Worldwide Communications Fund for the
year ended July 31, 1997 was as follows:
Number Amounts
of Options of Premiums
- --------------------------------------------------------------------------------
Options Written 500 $ 17,749.37
Options Expired 500 (17,749.37)
D. 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
<PAGE>
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. 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 Fund may have elements of risk due to concentrated investments in
specific industries or foreign issuers located in a specific country. Such
concentrations 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 investments 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.
E. 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.
Latin American Growth, Worldwide Capital Goods and Worldwide
Communications Funds incurred and elected to defer post-October 31 net
currency losses of $122,389, $1,993 and $62,726, respectively, to the year
ended July 31, 1998. Asian Growth Fund incurred and elected to defer post-
October 31 net capital losses of $76,253 to the year ended July 31, 1998. To
the extent future capital gains are offset by capital loss carryovers and
deferred post-October 31 losses, such gains will not be distributed to
shareholders.
Dividends paid by the Fund from net investment income and distributions
of net realized short-term capital gains are, for federal income tax
purposes, taxable as ordinary income to shareholders. Of the ordinary income
distributions declared for the year ended July 31, 1997 for Worldwide
Capital Goods and Worldwide Communications Funds, 9.63% and 8.56%,
respectively, 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.
<PAGE>
F. 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, market discounts, amortized
premiums, nontaxable dividends, net operating losses and expired capital
loss carryforwards.
For the year ended July 31, 1997, 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
- --------------------------------------------------------------------------------
Asian Growth Fund $ 54,542 $ (57,133) $ 2,591
European Small Company Fund 208,429 (208,429) -
Latin American Growth Fund (123,926) 123,926 -
Realty Fund 33,300 (33,300) -
Worldwide Capital Goods Fund (1,150) 1,197 (47)
Worldwide Communications Fund (67,425) 80,538 (13,113)
G. 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.
H. 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.
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, Distribution
Expenses and Transfer Agent Fees are reduced by credits earned by each Fund
from security brokerage transactions under certain broker/service
arrangements with third parties. Such credits are included in Fees and
Expenses Paid Indirectly in the Statement of Operations.
For the year ended July 31, 1997, Fees and Expenses Paid Indirectly
consisted of the following:
<PAGE>
Custodian Fees Distribution Transfer
Fund and Expenses Expenses Agent Fees
- --------------------------------------------------------------------------------
Asian Growth Fund $23,390 $ 0 $ 0
European Small Company Fund 43,886 0 2,514
Latin American Growth Fund 64,709 0 0
Realty Fund 431 0 0
Worldwide Capital Goods Fund 5,354 0 0
Worldwide Communications Fund 10,194 39 268
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 is based on the annual
rate of each Fund's average net assets as follows:
AVERAGE NET ASSETS
-------------------------------------------
$0 to $500 Million Over
$500 to $1 $1
Fund Million Billion Billion
- --------------------------------------------------------------------------------
Asian Growth Fund 0.75% 0.65% 0.55%
European Small Company Fund 0.75% 0.65% 0.55%
Latin American Growth Fund 0.75% 0.65% 0.55%
Worldwide Capital Goods Fund 0.65% 0.55% 0.45%
Worldwide Communications Fund 0.65% 0.55% 0.45%
The Realty Fund's investment Advisory fee is computed at the rate of 0.75%
of average net assets.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of
Worldwide Capital Goods and Worldwide Communications Funds are made by ITC. A
separate Sub-Advisory Agreement between IFG and INVESCO Asia Limited ("INVESCO
Asia"), a wholly owned subsidiary of IFG, provides that investment decisions of
Asian Growth Fund are made by INVESCO Asia. A separate Sub-Advisory Agreement
between IFG and INVESCO Asset Management Limited ("IAM"), an affiliate of IFG,
provides that investment decisions of European Small Company and Latin American
Growth Funds are made by IAM. A separate Sub-Advisory Agreement between IFG and
INVESCO Realty Advisors ("INVESCO Realty"), an affiliate of IFG, provides that
investment decisions of Realty Fund are made by INVESCO Realty. Fees for such
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 $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.
<PAGE>
A plan of distribution pursuant to Rule 12b-1 of the Act provided for
reimbursement of marketing and advertising expenditures to IFG (the
"Distributor") to a maximum of 0.25% of annual average net assets. Effective
January 1, 1997, the Rule 12b-1 distribution plan was modified by action of the
Board of Directors so that the Fund compensates IFG for permissible activities
and services in connection with the distribution of each Fund's shares. For the
year ended, July 31, 1997, Asian Growth, European Small Company, Latin American
Growth, Worldwide Capital Goods and Worldwide Communications Funds paid the
Distributor $69,220, $316,214, $140,784, $16,318, and $133,882, respectively,
for reimbursement of expenses incurred. For the period ended July 31, 1997,
Realty Fund paid the Distributor $30,262 for reimbursement of expenses incurred.
Accordingly, the above amounts reflect reimbursements under the plan for the
five months ended December 31, 1996 and compensation under the plan for the
seven months ended July 31, 1997. Effective September 29, 1997, INVESCO
Distributors, Inc., a wholly owned subsidiary of IFG, will replace IFG as the
Distributor.
IFG and ITC have voluntarily agreed, in some instances, to absorb certain
fees and expenses incurred by Worldwide Capital Goods Fund. IFG and IAM have
voluntarily agreed, in some instances, to absorb certain fees and expenses
incurred by Latin American Growth Fund. IFG and INVESCO Asia have voluntarily
agreed, in some instances, to absorb certain fees and expenses incurred by Asian
Growth Fund. IFG and INVESCO Realty have voluntarily agreed, in some instances,
to absorb certain fees and expenses incurred by Realty Fund.
A 1% redemption fee is retained by Asian Growth and Latin American Growth
Funds to offset transaction costs and other expenses associated with short-term
redemptions and exchanges. The fee is imposed on redemptions or exchanges of
shares held less than three months. The redemption fee is accounted for as an
addition to Paid-in Capital. Total redemption fees received by Asian Growth and
Latin American Growth Funds for the year ended July 31, 1997 were $149,535 and
$247,768, respectively.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended July
31, 1997, 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
- --------------------------------------------------------------------------------
Asian Growth Fund $ 55,273,306 $ 42,960,000
European Small Company Fund 99,955,364 130,987,913
Latin American Growth Fund 108,911,119 44,783,074
Realty Fund 56,918,608 20,727,802
Worldwide Capital Goods Fund 23,022,946 13,096,554
Worldwide Communications Fund 57,152,629 46,875,326
There were no purchases or sales of U.S. Government securities.
NOTE 4 - APPRECIATION AND DEPRECIATION. At July 31, 1997, 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:
<PAGE>
Gross Gross Net
Fund Appreciation Depreciation Appreciation
- --------------------------------------------------------------------------------
Asian Growth Fund $ 3,715,256 $ 2,834,362 $ 880,894
European Small Company Fund 11,502,403 6,615,242 4,887,161
Latin American Growth Fund 22,399,536 1,601,526 20,798,010
Realty Fund 2,006,972 166,650 1,840,322
Worldwide Capital Goods Fund 2,470,815 81,602 2,389,213
Worldwide Communications Fund 13,202,062 1,277,295 11,924,767
NOTE 5 - TRANSACTIONS WITH AFFILIATES AND AFFILIATED COMPANIES. Certain of the
Fund's officers and directors are also officers and directors of IFG, ITC, IAM,
INVESCO Asia or INVESCO Realty.
The Fund has adopted an unfunded deferred compensation plan covering all
independent directors of the Fund who will have served as an independent
director for at least five years at the time of retirement. Benefits under this
plan are based on an annual rate equal to 40% of the retainer fee at the time of
retirement.
Pension expenses for the year ended July 31, 1997, 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
- --------------------------------------------------------------------------------
Asian Growth Fund $ 139 $ 240 $ 379
European Small Company Fund 960 1,650 2,610
Latin American Growth Fund 300 516 817
Realty Fund 0 0 0
Worldwide Capital Goods Fund 83 (5) 144
Worldwide Communications Fund 617 516 1,377
An affiliated company represents ownership by the Fund of at least 5% of the
voting securities of the issuer during the period, as defined in the Act. A
summary of the transactions during the year ended July 31, 1997, in which the
issuer was an affiliate of the Fund, is as follows:
<TABLE>
<CAPTION>
Purchases Sales Realized
------------------------------------------- Dividend Gain on Value at
Affiliate Shares Cost Shares Cost Income Investments 7/31/97
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Latin American
Growth Fund
Centrais
Electricas
Brasileiras SA
Class B Non-
Voting Pfd 3,300,000 $ 1,494,598 400,000 $ 108,202 - $ 29,638 $3,573,407
</TABLE>
<PAGE>
NOTE 6 - LINE OF CREDIT. The Fund has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 10% of the Net Assets at Value of each respective
Fund. 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 July
31, 1997, there were no such borrowings.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Period
Ended Ended
July 31 July 31
---------- ----------
1997 1996^
Asian Growth Fund
<S> <C> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $ 8.95 $ 10.00
----------- -----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.02) 0.02
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 2.42 (1.05)
----------- -----------
Total from Investment Operations 2.40 (1.03)
----------- -----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.02
----------- -----------
Net Asset Value - End of Period 11.35 8.95
=========== ===========
TOTAL RETURN+ 27.04% (10.31%)*
RATIOS
Net Assets - End of Period ($000 Omitted) $ 32,969 $ 14,315
Ratio of Expenses to Average Net Assets# 2.05%@ 2.19%~@
Ratio of Net Investment Income (Loss)
to Average Net Assets# (0.20%) 0.94%~
Portfolio Turnover Rate 161% 2%*
Average Commission Rate Paid^^ $ 0.0047 $ 0.0198
</TABLE>
^ From March 1, 1996, commencement of investment operations, to July 31, 1996.
+ Total return does not reflect the effect of the applicable redemption fees.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG and INVESCO
Asia for the year ended July 31, 1997 and for the period ended July 31, 1996.
If such expenses had not been voluntarily absorbed, ratio of expenses to
average net assets would have been 2.10% and 2.79% (annualized),
respectively, and ratio of net investment income to average net assets would
have been (0.25%) and 0.34% (annualized), respectively.
<PAGE>
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period
Ended
Year Ended July 31 July 31
----------------------------- ----------
1997 1996 1995^
European Small Company Fund
<S> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 15.08 $ 11.56 $ 10.00
----------------------------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.05) 0.07 0.04
Net Gains on Securities
(Both Realized and Unrealized) 1.79 3.52 1.56
----------------------------- ----------
Total from Investment Operations 1.74 3.59 1.60
----------------------------- ----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.07 0.04
Distributions from Capital Gains 0.53 0.00 0.00
----------------------------- ----------
Total Distributions 0.53 0.07 0.04
----------------------------- ----------
Net Asset Value - End of Period 16.29 15.08 11.56
============================= ==========
TOTAL RETURN 11.71% 31.07% 15.98%*
RATIOS
Net Assets - End of Period
($000 Omitted) $ 75,057 $ 94,261 $ 3,801
Ratio of Expenses to Average
Net Assets# 1.62%@ 1.68%@ 2.00%~
Ratio of Net Investment Income
(Loss) to Average Net Assets# (0.18%) 1.23% 2.37%~
Portfolio Turnover Rate 87% 141% 0%*
Average Commission Rate Paid^^ $ 0.0108 $ 0.0125 -
</TABLE>
<PAGE>
^ From February 15, 1995, commencement of investment operations, to July 31,
1995.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG, MIL and IAM
for the period ended July 31, 1995. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 10.17%
(annualized), and ratio of net investment income to average net assets would
have been (5.80%) (annualized).
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period
Ended
Year Ended July 31 July 31
-------------------------- ----------
1997 1996 1995^
Latin American Growth Fund
<S> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 12.86 $ 11.69 $ 10.00
-------------------------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.13 0.08 0.02
Net Gains on Securities
(Both Realized and Unrealized) 5.88 1.62 1.69
-------------------------- ----------
Total from Investment Operations 6.01 1.70 1.71
-------------------------- ----------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.14 0.09 0.02
Distributions from Capital Gains 0.36 0.44 0.00
-------------------------- ----------
Total Distributions 0.50 0.53 0.02
-------------------------- ----------
Net Asset Value - End of Period $ 18.37 $ 12.86 $ 11.69
========================== ==========
TOTAL RETURN+ 48.06% 15.27% 17.09%*
RATIOS
Net Assets - End of Period
($000 Omitted) $130,272 $ 32,064 $ 7,423
Ratio of Expenses to
Average Net Assets# 1.76% 2.14%@ 2.00%~
Ratio of Net Investment Income
to Average Net Assets# 1.35% 1.26% 0.79%~
Portfolio Turnover Rate 72% 29% 30%*
Average Commission Rate Paid^^ $ 0.0002 $ 0.0001 -
</TABLE>
<PAGE>
^ From February 15, 1995, commencement of investment operations, to July 31,
1995.
+ Total return does not reflect the effect of the applicable redemption fees.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG, MIL and IAM
for the period ended July 31, 1995. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 4.49%
(annualized), and ratio of net investment income to average net assets would
have been (1.70%) (annualized).
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
July 31
----------
1997^
Realty Fund
PER SHARE DATA
Net Asset Value - Beginning of Period $ 10.00
----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.22
Net Gains on Securities (Both Realized
and Unrealized) 0.99
----------
Total from Investment Operations 1.21
----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.22
----------
Net Asset Value - End of Period 10.99
==========
TOTAL RETURN 12.24%*
RATIOS
Net Assets - End of Period ($000 Omitted) $ 36,658
Ratio of Expenses to Average Net Assets# 1.20%~@
Ratio of Net Investment Income to
Average Net Assets# 4.08%~
Portfolio Turnover Rate 70%*
Average Commission Rate Paid^^ $ 0.0666
^ From January 1, 1997, commencement of investment operations, to July 31,
1997.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of Realty Fund were voluntarily absorbed by IFG and INVESCO
Realty for the period ended July 31, 1997. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have been
1.83% (annualized) and ratio of net investment income to average net assets
would have been 3.45% (annualized).
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended July 31
-------------------------------------------
1997 1996 1995^
Worldwide Capital Goods Fund
<S> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 9.61 $ 9.84 $ 10.00
--------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05 0.01 0.01
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 4.37 0.01 (0.16)
--------------------------------------------
Total from Investment Operations 4.42 0.02 (0.15)
--------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.06 0.00 0.01
Distributions from Capital Gains 1.27 0.25 0.00
--------------------------------------------
Total Distributions 1.33 0.25 0.01
--------------------------------------------
Net Asset Value - End of Period $ 12.70 $ 9.61 $ 9.84
============================================
TOTAL RETURN 50.86% 0.27% (1.49%)
RATIOS
Net Assets - End of Period
($000 Omitted) 22,254 7,731 10,364
Ratio of Expenses to
Average Net Assets# 1.98%@ 2.11%@ 2.00%
Ratio of Net Investment Income
to Average Net Assets# 0.51% 0.05% 0.25%
Portfolio Turnover Rate 192% 247% 193%
Average Commission Rate Paid^^ $0.0584 $0.0907 -
</TABLE>
^ Commencement of investment operations was August 1, 1994.
# Various expenses of the Worldwide Capital Goods Fund were voluntarily
absorbed by IFG and ITC 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 2.58%, 2.49% and 2.96%, respectively, and
ratio of net investment income to average net assets would have been (0.09%),
(0.33%) and (0.71%), respectively.
<PAGE>
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended July 31
--------------------------------------------
1997 1996 1995^
Worldwide Communications Fund
<S> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 12.43 $ 12.30 $ 10.00
--------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.06 0.22 0.11
Net Gains on Securities
(Both Realized and Unrealized) 3.90 1.38 2.35
--------------------------------------------
Total from Investment Operations 3.96 1.60 2.46
--------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.06 0.22 0.11
Distributions from Capital Gains 1.02 1.25 0.05
--------------------------------------------
Total Distributions 1.08 1.47 0.16
--------------------------------------------
Net Asset Value - End of Period $ 15.31 $ 12.43 $ 12.30
============================================
TOTAL RETURN 33.93% 13.67% 24.83%
RATIOS
Net Assets - End of Period
($000 Omitted) $ 72,458 $ 50,516 $ 27,254
Ratio of Expenses to
Average Net Assets 1.69%@ 1.66%@ 1.95%
Ratio of Net Investment Income
to Average Net Assets 0.56% 1.78% 1.43%
Portfolio Turnover Rate 96% 157% 215%
Average Commission Rate Paid^^ 0.0611 0.1285 -
</TABLE>
^ Commencement of investment operations was August 1, 1994.
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
INVESCO Specialty 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 Asian Growth Fund, INVESCO
European Small Company Fund, INVESCO Latin American Growth Fund, INVESCO Realty
Fund, INVESCO Worldwide Capital Goods Fund and INVESCO Worldwide Communications
Fund (constituting INVESCO Specialty Funds, Inc., hereafter referred to as the
"Fund") at July 31, 1997, the results of each of their operations for each of
the periods indicated, 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 generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at July
31, 1997 by correspondence with the custodian and the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
Price Waterhouse LLP
Denver, Colorado
September 5, 1997
<PAGE>
FAMILY OF FUNDS
NEWSPAPER
FUND NAME FUND CODE TICKER SYMBOL ABBREVIATION
- --------------------------------------------------------------------------------
INTERNATIONAL
International Growth 49 FSIGX IntlGr
Asian Growth 41 IVAGX AsianGr
European 56 FEURX Europ
European Small Company 37 IVECX EuroSmCo
Latin American Growth 34 IVSLX LatinAmGr
Pacific Basin 54 FPBSX PcBas
- --------------------------------------------------------------------------------
SECTOR
Energy 50 FSTEX Enrgy
Environmental Services 59 FSEVX Envirn
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Realty 42 IVSRX Realty
Technology 55 FTCHX Tech
Utilities 58 FSTUX Util
Worldwide Capital Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
- --------------------------------------------------------------------------------
CAPITAL APPRECIATION
Growth 10 FLRFX Grwth
Dynamics 20 FIDYX Dynm
Small Company 74 IDSCX DivSmCo
Emerging Growth 60 FIEGX Emgrth
- --------------------------------------------------------------------------------
GROWTH & INCOME
Industrial Income 15 FIIIX IndInc
Value Equity 46 FSEQX ValEq
Multi-Asset Allocation 70 IMAAX MulAstAl
Balanced 71 IMABX Bal
Total Return 48 FSFLX TotRtn
- --------------------------------------------------------------------------------
BOND
Short-Term Bond 33 INIBX ShTrBd
Intermediate Government Bond 47 FIGBX IntGov
U.S. Government Securities 32 FBDGX USGvt
Select Income 30 FBDSX SelInc
High Yield 31 FHYPX HiYld
- --------------------------------------------------------------------------------
TAX-EXEMPT
Tax-Free Intermediate Bond 36 IVTIX *
Tax-Free Long-Term Bond 35 FTIFX TxFre
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET
U.S. Government Money Fund 44 FUGXX InvGvtMF
Cash Reserves 25 FDSXX InvCshR
Tax-Free Money Fund 40 FFRXX InvTaxFree
* This fund does not meet size requirements to be assigned a ticker symbol in
newspaper listings.
For more information about any of the INVESCO Funds, including management fees
and expenses, please call us at 1-800-525-8085 for a prospectus. Read it
carefully before you invest or send money.
<PAGE>
INVESCO FUNDS
We're easy to stay in touch with:
Investor Services Representatives,
1-800-525-8085
PAL(R), your Personal Account Line,
1-800-424-8085
On the World Wide Web:
http://www.invesco.com
Denver Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center, 7800 E. Union Avenue,
Lobby Level
INVESCO Funds Group, Inc.,(SM) Distributor
(As of 9/29/97, INVESCO Distributors, Inc.,
Distributor)
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied by a current prospectus.
