KNOWLEDGE DISCIPLINE SERVICE CHOICE
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YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
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INVESCO Specialty Funds
LATIN AMERICAN GROWTH
REALTY
TELECOMMUNICATIONS
(FORMERLY, WORLDWIDE COMMUNICATIONS)
ANNUAL
[INVESCO ICON]
INVESCO
ANNUAL REPORT | July 31, 1999
<PAGE>
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"... WE REMAIN OPTIMISTIC THAT THE TELECOMMUNICATIONS REVOLUTION HAS FAR TO GO,
AND WE HOPE TO BE ABLE TO REPORT ON FURTHER SUCCESSES." (PAGE 8)
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The line graphs illustrate the value of a $10,000 investment, plus
reinvested dividends and capital gain distributions, for the periods from
inception through 7/31/99. The charts and other total return figures cited
reflect the funds' operating expenses, but the indexes do not have expenses,
which would, of course, have lowered their performance. (Of course, past
performance is not a guarantee of future results.)(1),(2)
Note: Because we believe Telecommunications Fund is best compared to the
S&P 500 due to the nature of our investment strategy, we will eventually no
longer use the MSCI-EAFE Index.
Graph: INVESCO Latin American Growth Fund Total Return from Inception (2/95) vs.
MSCI Emerging Markets - Latin America
This line graph compares the value of a $10,000 investment in INVESCO
Latin American Growth Fund to the value of a $10,000 investment in the
MSCI Emerging Markets-Latin America Index, assuming in each case
reinvestment of all dividends and capital gain distributions, for the
period from inception (2/95) through 7/31/99.
Graph: INVESCO Realty Fund Total Return from Inception (1/97) vs. NAREIT and S&P
500.
This line graph compares the value of a $10,000 investment in INVESCO
Realty Fund to the value of a $10,000 investment in each of the S&P 500
and NAREIT Indexes, assuming in each case reinvestment of all dividends
and capital gain distributions, for the period from inception (1/97)
through 7/31/99.
Graph: INVESCO Telecommunications Fund Total Return from Inception (8/94) vs.
MSCI-EAFE and S&P 500
This line graph compares the value of a $10,000 investment in INVESCO
Telecommunications Fund to the value of a $10,000 investment in each of
the MSCI-EAFE and S&P 500 Indexes, assuming in each case reinvestment of
all dividends and capital gain distributions, for the period from
inception (8/94) through 7/31/99.
TOTAL RETURN
PERIODS ENDED 7/31/99(1)
6 months 1 year Since Inception* Page
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LATIN AMERICAN GROWTH 43.27% -24.87% 0.92% (2/95) 3
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REALTY 1.45% -13.29% -3.59% (1/97) 5
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TELECOMMUNICATIONS 31.57% 65.52% 33.89% (8/94) 7
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*AVERAGE ANNUALIZED
<PAGE>
LATIN AMERICAN GROWTH FUND
Your Fund's Performance: A Report From The Manager
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Dear Shareholder:
This was a very disappointing period for our fund. The financial crisis that
began in Asia and spread to emerging markets around the world took a heavy toll
on our investments, one from which we are still recovering. Over the past six
months, for example, our fund has gained 43.27%, but this has still left us with
a substantial loss over the past year.(1)
For the one-year period ended July 31, 1999, the value of your shares declined
24.87%. This decline exceeded that of the MSCI Emerging Markets Latin America
Index over the same period, which fell 5.23%. (Of course, past performance is
not a guarantee of future results.)(1),(2)
PROBLEMS OVERSEAS AND AT HOME
As we noted in our semiannual report, Latin American markets experienced many
problems last year, only some of which were of the regions own making. In the
face of the Asian turmoil that first erupted two years ago, investors became
very reluctant to invest in any emerging market; this anxiety reached a pitch
following the Russian loan default, which seemed to unfairly indict all emerging
markets, including those in Latin America. Additionally, the drop in world
commodity prices proved harmful to Latin American economies, many of which rely
on exports of agricultural goods, raw materials, and other commodities.
Not all problems stemmed from foreign sources, however. Brazil's currency
problems, and particularly its massive devaluation early this year, sent markets
throughout the region dramatically lower--just as Asia itself began to recover.
Political instability in another important regional economy, Venezuela, has also
served as a drag on the markets. Most importantly, many Latin American economies
slipped into recession as they proved unable to reconcile their need for foreign
capital and a stable currency with constricting export markets and evaporating
domestic demand.
A REVISED FOCUS
Our fund suffered especially from these events, largely because of its heavy
investment in Brazilian firms before the onset of problems in 1998. Since
assuming management of the fund last fall, I have begun moving our holdings into
companies more closely tied to growth outside the region mainly those that focus
on exports and earn U.S. dollars for their goods. While maintaining our emphasis
on Brazil, I have also increased our exposure to the faster-growing economies of
Chile and Argentina.
Investors in Latin American markets can take comfort in the fact that they own
stocks that are still relatively inexpensive compared to world averages.
Overseas investing will always carry with it extra risks, but we are confident
that our fund has already withstood most of the tough pitches--a rising dollar,
low commodity prices, and the flight to established markets--the international
economy can throw at it. After all this bad news, perhaps investors will begin
focusing on the potential of this large, demographically dynamic, and
resource-rich region.
/s/ David Manuel
David Manuel
Lead Manager
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FUND MANAGER
MANAGED BY A GROUP OF SPECIALISTS IN THE VARIOUS COUNTRIES. TEAM LEADER:
DAVID MANUEL
PORTFOLIO MANAGER, INVESCO ASSET MANAGEMENT LIMITED (LONDON). BA,
DOWNING COLLEGE; PHD, IMPERIAL COLLEGE. JOINED INVESCO IN 1998. BEGAN INVESTMENT
CAREER IN 1987. HAS MANAGED THIS FUND SINCE 1998.
<PAGE>
REALTY FUND
Your Fund's Performance: A Report From The Managers
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Dear Shareholder:
When we last wrote you, we noted our frustration with the disparity between the
healthy real estate market and the sickly valuations of many real estate
companies. Despite generally high occupancy rates and moderate levels of new
construction, many investors took a gloomy view of real estate investment trust
(REIT) firms. The combination of low-priced stocks and healthy profits caused
yields on REIT stocks to jump to very high levels, which indicated to us that
the prices were unlikely to stay so low for long.
Indeed, investors began to find opportunity in this disparity this spring. Most
notable among them was the famous investor Warren Buffett, who announced $50
million worth of REIT investments in April. Partly based on the announcement
from the sage of Omaha, the REIT market began a rebound. Our fund participated
in this rebound, although not to the full extent we had hoped.
For the one-year period ended July 31, 1999, the value of your shares declined
13.29%. This return significantly trailed that of the S&P 500 over the same
period, which rose 20.20%, but it was more in line with the NAREIT Index, which
fell 5.76%. (Of course, past performance is not a guarantee of future
results.)(1),(2)
REALTY FEARS DISSIPATE
Two of the fears that drove the REIT market lower in 1998 dissipated in 1999.
First, the American economy did not slow significantly, which would have caused
demand to slacken. Second, and perhaps just as important, fears of a global
deflation, one which would drag down real estate prices along with those of
other hard assets such as metals, proved unfounded. Indeed, inflation rather
than deflation became the central concern of many investors. The fear of higher
interest rates began to have a negative effect on the markets as spring began,
and the REIT sector was not immune.
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FUND MANAGERS
JOE V. RODRIGUEZ, JR., CFP
PORTFOLIO MANAGER, INVESCO REALTY ADVISORS. BBA, MBA, BAYLOR UNIVERSITY. JOINED
INVESCO IN 1990. BEGAN INVESTMENT CAREER IN 1983. HAS MANAGED THIS FUND SINCE
ITS INCEPTION IN JANUARY 1997.
JAMES W. TROWBRIDGE
PORTFOLIO MANAGER, INVESCO REALTY ADVISORS. BS, INDIANA UNIVERSITY. JOINED
INVESCO IN 1989. BEGAN INVESTMENT CAREER IN 1975. HAS MANAGED THIS FUND SINCE
ITS INCEPTION IN JANUARY 1997.
<PAGE>
Should the American economy continue to remain in danger of growing too fast,
however, we are optimistic that REITs will prove a relatively attractive
investment. Hard assets such as property are relatively safe havens in times of
inflationary pressure, as they tend to appreciate. Indeed, further economic
growth will only heighten the already healthy demand for real estate.
A FOCUS ON THE STRONG ECONOMY
One area likely to benefit from the continued strong growth of the U.S. economy
is the office properties sector. Many office REITs are enjoying strong internal
cash flow, and two factors suggest that the future may be even brighter. First,
many REITs have been locked into long-term embedded leases with tenants. These
leases are now turning over, allowing office REITs to renegotiate leases at much
more attractive prices. Second, the pessimism that surrounded REITs last year is
now helping many firms. Unable to obtain credit, REITs and other private
developers cut back on new construction last year, thus improving the future
balance between office supply and demand.
While we are currently heavily invested in office REITs, we have been scaling
back our investments in retail REITs. Many investors worry that the Internet and
online retailing will take a toll on brick-and-mortar merchandisers, which would
in turn hurt the companies that provide them sales space. This may or may not
prove to be the case, but it seems to us a factor that will continue to drive
prices in the industry lower until the issue is resolved.
It is worth noting, however, that we think it is difficult at this point to
stumble over a bad area of investment in REITs, if only because virtually all
REITs remain very inexpensive compared to the broader stock market. In our
opinion, REITs suffered from a fire sale of sorts last year. While some of the
choicest companies have been snatched up by us and other investors, we believe
that many attractively priced firms remain. We hope that these
investments--bargains, to our thinking--will allow us to offer you some much
better news in our next report.
/s/ James W. Trowbridge /s/ Joe V. Rodriguez
James W. Trowbridge Joe V. Rodriguez
Portfolio Manager Portfolio Manager
<PAGE>
TELECOMMUNICATIONS FUND
(FORMERLY WORLDWIDE COMMUNICATIONS)
Your Fund's Performance: A Report From The Manager
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Dear Shareholder:
We are happy to report that this was an extremely successful year for our fund
by almost any measure. The telecommunications sector proved exceptionally
vibrant, but our fund also performed well when compared to others that target
telecommunications firms. For the one-year period ended 8/31/99, INVESCO
Telecommunications Fund was ranked #2 of 11 telecommunications funds by Lipper
Analytical Services, based on total returns unadjusted for commissions. The fund
was ranked #1 of 6 for the five-year period. (Lipper is an independent mutual
fund analyst.)
For the one-year period ended July 31, 1999, the value of your shares rose
65.52%. This return handily exceeded that of the S&P 500 and MSCI-EAFE over the
same period, which rose 20.20% and 10.02%, respectively. (Of course, past
performance is not a guarantee of future results.)(1),(2)
THREE FORCES
Throughout the past year, we have maintained a consistent focus on the three
forces we believe are driving change in the industry.
o The first of these is the deregulation of the industry around the world, which
is creating valuable new opportunities for the most competitive firms.
o The second major trend is the huge growth in data traffic spurred by the
Internet, which is creating the need for vast amounts of new communications
infrastructure.
o Finally, the migration of voice traffic to wireless carriers is shifting
around the competitive landscape.
Of course, not all major companies will benefit from these changes equally.
While targeting a large range of firms, therefore, we have focused on those we
believe to be most solidly positioned. This has led us to communications
equipment manufacturers, in particular. Some, like the Internet router maker
Cisco Systems, are large and well known; others, such as the communications chip
maker JDS Uniphase, are less so. Yet they all share the advantage of proprietary
technologies that are integral to the sectors expansion.
A FLUID ENVIRONMENT
Among carriers, the situation is much more fluid. Through a process of
consolidation, the ranks of globally competitive carriers has been steadily
shrinking. In the United States, many of the Baby Bells left from the breakup of
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FUND MANAGER
BRIAN HAYWARD, CFA
VICE PRESIDENT, INVESCO FUNDS GROUP. BA, MA, UNIVERSITY OF MISSOURI. JOINED
INVESCO IN 1997. BEGAN INVESTMENT CAREER IN 1985. HAS MANAGED THIS FUND SINCE
MAY 1997.
<PAGE>
AT&T have rejoined, while cross-border alliances are linking these and other
firms with formerly staid competitors in Europe and elsewhere. Although it
becomes steadily clearer, the end result of this consolidation is difficult to
foresee precisely at this moment.
As a result, we have been more active in moving around our investments in
long-distance and local telecommunications firms. Lately, we have reduced our
exposure to long-distance firms based on our
determination that price competition within the industry is becoming more
intense. Additionally, we have reduced our exposure to firms such as America
Online, whose valuations became extremely high due to Internet speculation.
Instead, our largest holding now is SBC Communications, which is assembling a
unique structure out of former Baby Bells that will allow it to serve lucrative
urban markets across a wide swath of the country.
Our gains over this past year were extraordinary in the true sense of the word,
and we would not want investors to come to expect similar ones as we move
forward. Still, we remain optimistic that the telecommunications revolution has
far to go, and we hope to be able to report on further successes though, as
always in investing, this can never be guaranteed.
/s/ Brian Hayward
Brian Hayward
Vice President
<PAGE>
INVESCO | ANNUAL REPORT | JULY 31, 1999
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MARKET HEADLINES:
AUGUST 1998 TO JULY 1999
The turnaround in the fall of 1998 may be remembered as one of the most striking
periods in stock market history. On the heels of the Asian financial crisis, the
markets seemed in a freefall, but a quick series of rate cuts by the Federal
Reserve Board provided a quick burst of confidence to bargain-hunting investors.
Throughout the winter, the largest, fastest-growing companies led U.S. stock
market advances as investors kept one eye on the continuing problems overseas
and another on the blossoming technological promise of the American economy. The
firms most directly tied to technological innovations, such as
telecommunications companies and Internet providers, outdistanced the pack.
Meanwhile, cyclical issues suffered, as did many small or slower-growing company
stocks.
By the spring of 1999, however, the threat of economic overheating rather than
worldwide depression loomed largest in many investors minds. Signs of renewed
economic strength abroad and remarkable growth figures at home led many to
believe that the Federal Reserve Board would soon reverse course and tighten the
money supply to cool down the economy--and indeed, market interest rates crept
upward. Too much growth rather than too little encouraged many to head for
cyclical industries poised to benefit from improving markets.
As the cyclical rotation continued, the market averages seemed to bounce against
a ceiling, putting an end to their dizzying ascent since the fall. Although
investors headed back into the market in June, reassured once again by economic
data that inflation was not an imminent threat, they headed back out in July in
response to disturbing information about employment costs. With investors
focusing one eye over the shoulders of the Federal Reserve on data about
inflationary pressures, and the other eye on impressive earnings reports, the
market seemed primed for more volatility ahead.
SINCE THE FUNDS ARE ACTIVELY MANAGED, HOLDINGS WILL CHANGE OVER TIME.
(1)TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
FOR THE PERIODS INDICATED. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT, WHEN
REDEEMED, AN INVESTORS SHARES MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
(2)THE S&P 500 IS AN UNMANAGED INDEX OF COMMON STOCKS CONSIDERED REPRESENTATIVE
OF THE BROAD U.S. STOCK MARKET THE MSCI-EMERGING MARKETS-LATIN AMERICA INDEX IS
AN UNMANAGED INDEX INDICATIVE OF THE LATIN AMERICAN MARKETS, AND THE NAREIT IS
AN UNMANAGED INDEX INDICATIVE OF THE U.S. REAL ESTATE INVESTMENT TRUST MARKET.
FINALLY, THE MSCI-EAFE IS AN UNMANAGED INDEX INDICATIVE OF THE EQUITY MARKETS OF
EUROPE, AUSTRALIA, AND THE FAR EAST.
YEAR 2000 COMPUTER ISSUE (UNAUDITED)
Many computer systems in use today may not be able to recognize any date
after December 31, 1999. If these systems are not fixed by that date, it is
possible that they could generate erroneous information or fail altogether.
INVESCO has committed substantial resources in an effort to make sure that its
own major computer systems will continue to function on and after January 1,
2000. Of course, INVESCO cannot fix systems that are beyond its control. If
INVESCO's own systems, or the systems of third parties upon which it relies, do
not perform properly after December 31, 1999, the funds could be adversely
affected.
In addition, the markets for, or values of, securities in which the funds invest
may possibly be hurt by computer failures affecting portfolio investments or
trading of securities beginning January 1, 2000. For example, improperly
functioning computer systems could result in securities trade settlement
problems and liquidity issues, production issues for individual companies and
overall economic uncertainties. Individual issuers may incur increased costs in
making their own systems Year 2000 compliant. The combination of market
uncertainty and increased costs means that there is a possibility that Year 2000
computer issues may adversely affect the funds investments.
<PAGE>
TEN LARGEST COMMON STOCK HOLDINGS
INVESCO Specialty Funds, Inc.
July 31, 1999
DESCRIPTION VALUE
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Latin American Growth Fund
Grupo Televisa SA de CV Participation Certificates
Representing Series A, D & L Shrs $ 1,100,884
Carso Global Telecomunicaciones SA Series A-1 Shrs 819,847
Telecomunicacoes Brasileiras SA 701,934
Grupo Carso SA de CV Series A-1 Shrs 594,123
Cemex SA de CV Series B Shrs 578,551
Kimberly-Clark de Mexico SA de CV Series A Shrs 565,588
Cia Paranaense de Energia-Copel 559,172
Quinenco SA Sponsored ADR Representing 10 Ord Shrs 523,375
Grupo Industrial Saltillo SA de CV Series B Shrs 504,685
Cia Cervecerias Unidas SA Sponsored ADR Representing 5 Cmn Shrs 497,562
Realty Fund
Starwood Hotels & Resorts Worldwide SBI Class B Shrs $ 1,404,000
Equity Office Properties Trust 1,105,500
Avalonbay Communities 1,093,568
Prologis Trust SBI 890,238
Arden Realty 888,300
Public Storage 883,650
Duke-Weeks Realty 875,000
Equity Residential Properties Trust SBI 826,250
Apartment Investment & Management Class A Shrs 816,250
Trizec Hahn 798,188
Telecommunications Fund
SBC Communications $ 31,201,500
NEXTLINK Communications Class A Shrs 30,924,075
Mannesmann AG 28,258,253
Vodafone Airtouch PLC Sponsored ADR Representing 10 Ord Shrs 28,143,850
Cisco Systems 27,990,419
COLT Telecom Group PLC Sponsored ADR Representing 4 Ord Shrs 27,668,375
EchoStar Communications Class A Shrs 27,582,475
MCI WorldCom 22,523,490
Frontier Corp 22,197,175
Metromedia Fiber Network Class A Shrs 21,433,800
Composition of holdings is subject to change.
<PAGE>
STATEMENT OF INVESTMENT SECURITIES
<TABLE>
<CAPTION>
INVESCO SPECIALTY FUNDS, INC.
July 31, 1999
SHARES OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
<S> <C> <C> <C>
Latin American Growth Fund
62.28 COMMON STOCKS
6.27 ARGENTINA
Acindar Industria Argentina de Aceros
Series B Shrs(a) IS 93,517 $ 99,158
Banco de Galicia y Buenos Aires SA de CV
Sponsored ADR Representing 4 Class B Shrs(a) BK 17,000 276,250
Banco Hipotecario SA(a) FN 21,507 189,333
Banco Rio de la Plata SA Sponsored ADR
Representing 2 Class B Shrs BK 40,000 360,000
Bansud SA Series B Shrs(a) BK 85,000 176,003
Juan Minetti SA BD 146,648 384,333
==============================================================================================
1,485,077
7.66 BRAZIL
Cia Paranaense de Energia-Copel EU 132,000,000 559,172
Rossi Residencial SA GDR Regulation S
Representing 5 Ord Shrs(c) HB 58,600 46,880
Tele Centro Sul Participacoes SA(a) TN 49,936,000 231,936
Telecomunicacoes Brasileiras SA TN 16,837,000 701,934
Telecomunicacoes de Sao Paulo SA TN 3,500,000 276,259
==============================================================================================
1,816,181
8.30 CHILE
Banco Santiago SA Sponsored ADR Representing
1,039 Ord Shrs BK 15,000 320,625
Cia Cervecerias Unidas SA Sponsored ADR
Representing 5 Cmn Shrs BV 19,000 497,562
Embotelladora Arica SA Sponsored ADR
Representing 10 Class B Shrs(b) BV 15,000 165,000
Quinenco SA Sponsored ADR Representing
10 Ord Shrs FN 53,000 523,375
Sociedad Quimica y Minera de Chile SA
Sponsored ADR Representing 10 Series B Shrs CH 15,000 460,312
==============================================================================================
1,966,874
33.18 MEXICO
Alfa SA de CV Participation Certificates
Series A Shrs(a) CH 135,718 486,978
Carso Global Telecomunicaciones SA
Series A-1 Shrs(a) TL 140,000 819,847
Cemex SA de CV Series B Shrs BD 135,000 578,551
<PAGE>
SHARES OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
Consorcio ARA SA de CV
Regulation S Sponsored ADR Representing
10 Shrs(a)(c) HB 1,400 $ 52,173
Sponsored ADR Representing 10 Shrs(a)(b) HB 5,932 221,067
Corporacion GEO SA de CV Series B Shrs(a) HB 100,000 376,916
Grupo Carso SA de CV Series A-1 Shrs(a) CG 150,000 594,123
Grupo Financiero Bancomer SA de CV
Series O Shrs(a) FN 1,475,732 372,390
Grupo Financiero Banorte SA de CV
Series O Shrs(a) FN 250,000 271,508
Grupo Industrial Bimbo SA de CV Series A Shrs(a) FD 180,000 403,428
Grupo Industrial Maseca SA de CV Series B Shrs FD 550,000 374,787
Grupo Industrial Saltillo SA de CV Series B Shrs IS 150,000 504,685
Grupo Posadas SA Series A Shrs(a) LH 291,600 198,084
Grupo Televisa SA de CV Participation
Certificates Representing Series A,
D & L Shrs(a) BR 56,500 1,100,884
Grupo Televisa SA de CV Sponsored GDR
Representing 2 Ord Participation
Certificates(a) BR 5,000 191,250
Industrias Penoles SA Participation Certificates MM 150,000 402,470
Kimberly-Clark de Mexico SA de CV Series A Shrs PF 160,000 565,588
Pepsi-Gemex SA Sponsored GDR Representing 6Ord
Participation Certificates(a) BV 45,000 348,750
==============================================================================================
7,863,479
1.12 PANAMA
Banco Latinoamericano de Exportaciones SA
Series E Shrs BK 10,000 266,250
==============================================================================================
4.13 PERU
Credicorp Ltd FN 38,250 408,797
Ferreyros SAA MY 414,035 263,274
Luz del Sur Servicios SAA Series B Shrs EU 250,000 168,716
Union de Cervecerias Backus y Johnston SAA
Series I Shrs BV 385,560 138,774
==============================================================================================
979,561
1.62 VENEZUELA
CA La Electricidad de Caracas Sponsored ADR
Representing 50 Equity Units EU 22,796 383,431
==============================================================================================
TOTAL COMMON STOCKS (Cost $18,146,533) 14,760,853
==============================================================================================
32.18 PREFERRED STOCKS
3.05 ARGENTINA
Nortel Inversora SA ADR Representing 1/20th
Pfd B Shr TL 48,300 721,481
==============================================================================================
27.15 BRAZIL
Cia Cimento Portland Itau Pfd BD 1,250,000 109,121
Cia de Tecidos Norte de Minas Coteminas Pfd TA 3,800,000 295,579
Cia Energetica de Brasilia Pfd Series A Shrs(a) EU 2,080,000 38,411
Cia Energetica de Minas Gerais Pfd EU 26,711,876 464,879
Cia Energetica do Ceara-Coelce Series A Shrs Pfd EU 99,496,350 211,576
Cia Vale do Rio Doce Pfd A Shrs(a) MM 35,000 693,341
<PAGE>
SHARES OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
Eletropaulo Metropolitana SA Pfd(a) EU 11,028,000 $ 453,586
Embratel Participacoes SA Pfd TL 29,000,000 316,452
Empresa Bandeirante de Energia SA Pfd(a) EU 12,240,000 66,440
Investimentos Itaus SA Pfd CG 1,000,000 498,041
Investimentos Itaus SA Pfd Receipts CG 40,287 19,163
Petroleo Brasileiro SA Pfd OG 7,535,000 1,085,765
Renner Participacoes SA Pfd RT 10,000,000 10,632
Tele Centro Sul Participacoes SA ADR
Representing 5,000 Pfd Shrs TN 4,000 213,250
Tele Norte Leste Paricipacoes SA Pfd TN 25,000,000 409,905
Telecomunicacoes Brasileiras SA Sponoserd ADR
Representing 1,000 Pfd Shrs TN 6,000 375
Telecomunicacoes de Sao Paulo SA Pfd TN 4,025,000 403,176
Usinas Siderurgicas de Minas Gerais SA
Pfd A Shrs(a) IS 130,000 381,925
Votorantim Celulose e Papel SA Pfd PF 27,010,000 763,142
==============================================================================================
6,434,759
1.98 LUXEMBOURG
Quilmes Industrial Quinsa SA Sponsored ADR
Representing Non-Voting Pfd BV 45,000 469,687
==============================================================================================
TOTAL PREFERRED STOCKS (Cost $11,523,206) 7,625,927
==============================================================================================
5.54 OTHER SECURITIES
5.54 MEXICO
Controladora Comercial Mexicana SA de CV GDR
Representing 20 Linked BC Units (Each unit
consists of 3 Series B Shrs and 1 Series C Shr) RT 27,000 462,375
Controladora Comercial Mexicana SA de CV BC Units
(Each unit consists of 3 Series B Shrs and
1 Series C Shr) RT 62,800 52,824
Fomento Economico Mexicano SA de CV Sponsored
ADR Representing 10 Units
(Each unit consists of 10 Series B Shrs,
20 Series D-B Shrs and 20 Series D-L Shrs) BV 23,200 797,500
==============================================================================================
TOTAL OTHER SECURITIES (Cost $1,037,109) 1,312,699
==============================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $30,706,848)
(Cost for Income Tax Purposes $30,922,503) $ 23,699,479
==============================================================================================
Realty Fund
94.67 COMMON STOCKS
1.52 LODGINGHOTELS
Host Marriott 16,490 $ 170,053
MeriStar Hotels & Resorts(a) 19,000 70,062
==============================================================================================
240,115
<PAGE>
SHARES OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
85.78 REAL ESTATE INVESTMENT TRUST
Apartment Investment & Management Class A Shrs 20,000 $ 816,250
Arden Realty 37,600 888,300
Avalonbay Communities 32,223 1,093,568
Boston Properties 21,400 732,950
CarrAmerica Realty 20,600 496,975
Cornerstone Properties 10,000 159,375
Duke-Weeks Realty 40,000 875,000
Equity Office Properties Trust 44,000 1,105,500
Equity Residential Properties Trust SBI 20,000 826,250
General Growth Properties 17,000 562,062
Highwoods Properties 1,300 30,550
Hospitality Properties Trust SBI 700 19,075
Innkeepers USA Trust 30,000 266,250
Kilroy Realty 2,700 60,750
Kimco Realty 2,000 75,000
Liberty Property Trust SBI 2,300 54,337
Mack-Cali Realty 10,000 280,000
Prentiss Properties Trust SBI 18,200 419,738
Prologis Trust SBI 45,800 890,238
Public Storage 34,400 883,650
Reckson Associates Realty 18,100 403,856
SL Green Realty 10,500 217,219
Starwood Hotels & Resorts Worldwide SBI Class B Shrs 52,000 1,404,000
Sunstone Hotel Investors 20,000 182,500
Taubman Centers 18,200 241,150
Vornado Realty Trust 15,000 530,625
==============================================================================================
13,515,168
7.37 REAL ESTATE RELATED
Excel Legacy(a) 30,000 120,000
St Joe 9,700 242,500
Trizec Hahn 43,000 798,188
==============================================================================================
1,160,688
TOTAL COMMON STOCKS (Cost $15,514,396) 14,915,971
==============================================================================================
5.33 SHORT-TERM INVESTMENTSREPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 7/30/1999
due 8/2/1999 at 4.960%, repurchased at $839,347
(Collateralized by US Treasury Inflationary Index
Notes, due 7/15/2002 at 3.625%, value $858,660)
(Cost $839,000) $ 839,000 839,000
==============================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $16,353,396)
(Cost for Income Tax Purposes $16,948,543) $ 15,754,971
==============================================================================================
<PAGE>
SHARES OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
Telecommunications Fund
90.33 COMMON STOCKS
1.51 BERMUDA
Global Crossing Ltd(a) TL 375,301 $ 15,574,992
==============================================================================================
2.99 CANADA
AT&T Canada Class B Shrs Depository Receipts(a) TN 324,300 20,451,169
Nortel Networks CM 116,300 10,307,088
==============================================================================================
30,758,257
2.00 FINLAND
Nokia Corp Sponsored ADR Representing
Class A Shrs CM 241,900 20,576,619
==============================================================================================
2.75 GERMANY
Mannesmann AG MY 185,800 28,258,253
==============================================================================================
1.50 IRELAND
Bord Telecom Eireann PLC Sponsored ADR
Representing 4 Shrs(a) TN 313,000 6,162,188
Esat Telecom Group PLCSponsored ADR
Representing 2 Ord Shrs(a) TL 229,100 9,278,550
==============================================================================================
15,440,738
1.94 NETHERLANDS
Equant NV New York Shrs(a) CO 214,700 19,094,881
Versatel Telecom International NV(a) TN 66,600 926,666
==============================================================================================
20,021,547
6.43 UNITED KINGDOM
COLT Telecom Group PLC Sponsored ADR
Representing 4 Ord Shrs(a) TN 307,000 27,668,375
Energis PLC(a) TN 308,500 8,236,210
Freeserve PLC(a) CO 565,100 2,160,490
Vodafone Airtouch PLC Sponsored ADR
Representing 10 Ord Shrs TC 133,700 28,143,850
==============================================================================================
66,208,925
71.21 UNITED STATES
ADC Telecommunications(a) CM 198,600 8,837,700
Allegiance Telecom(a) TL 170,800 8,593,375
Amdocs Ltd(a) TN 546,000 14,537,250
America Online(a) SV 183,900 17,493,487
Ameritech Corp TN 110,400 8,086,800
AT&T Corp TL 292,620 15,197,951
Bell Atlantic TN 130,610 8,326,387
BellSouth Corp TN 439,200 21,081,600
CMGI Inc(a) SV 153,200 14,123,125
CenturyTel Inc TN 166,875 7,133,906
Cisco Systems(a) CO 450,550 27,990,419
<PAGE>
SHARES OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
Comverse Technology(a) CM 144,200 $ 10,896,113
Concentric Network(a) CO 312,400 7,536,650
COVAD Communications Group(a) CO 183,500 8,441,000
Crown Castle International(a) TC 357,600 7,531,950
EMC Corp(a) CO 261,500 15,837,094
eBay Inc(a) RT 69,100 6,750,206
EchoStar Communications Class A Shrs(a) BR 403,400 27,582,475
Exodus Communications(a) CO 143,200 17,192,950
Frontier Corp TN 400,400 22,197,175
GTE Corp TN 111,000 8,179,312
Gemstar International Group Ltd(a) PI 261,600 17,331,000
General Instrument(a) CM 370,200 16,797,825
Global TeleSystems Group(a) TL 623,600 19,877,250
Intermedia Communications(a) TN 339,100 9,346,444
JDS Uniphase(a) EL 174,600 15,779,475
Lucent Technologies CM 287,375 18,697,336
MCI WorldCom(a) TL 273,012 22,523,490
McLeodUSA Inc(a) TN 241,400 7,196,737
Metromedia Fiber Network Class A Shrs(a) CM 667,200 21,433,800
Microsoft Corp(a) CO 213,500 18,320,969
Motorola Inc CM 69,700 6,360,125
NTL Inc(a) CA 181,000 18,801,375
NEXTLINK Communications Class A Shrs(a) TN 275,800 30,924,075
NorthPoint Communications Group(a) CO 40,800 994,500
PSINet Inc(a) CO 346,000 17,894,695
QUALCOMM Inc(a) CM 101,000 15,756,000
Qwest Communications International(a) TL 242,600 7,156,700
RCN Corp(a) TN 226,900 9,529,800
SBC Communications TN 545,600 31,201,500
SDL Inc(a) ES 115,400 7,839,987
Scientific-Atlanta Inc CM 160,500 5,858,250
Sprint Corp TL 302,600 15,640,637
Tandy Corp RT 300,000 15,393,750
Teligent Inc Class A Shrs(a) TC 146,450 10,562,706
Tellabs Inc(a) CM 279,000 17,175,937
Verio Inc(a) CO 127,900 9,120,869
Viatel Inc(a) TL 325,000 12,025,000
Visual Networks(a) CO 74,000 2,668,625
Vitesse Semiconductor(a) ES 138,000 8,814,750
VoiceStream Wireless(a) TC 413,100 18,641,138
<PAGE>
SHARES OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
WinStar Communications(a) TC 288,100 $ 15,125,250
Yahoo! Inc(a) CO 35,000 4,775,313
==============================================================================================
733,112,233
TOTAL COMMON STOCKS (Cost $642,212,782) 929,951,564
==============================================================================================
9.67 SHORT-TERM INVESTMENTS
7.77 COMMERCIAL PAPER
7.77 UNITED STATES
American Express Credit, 5.080%, 8/5/1999 CF $40,000,000 40,000,000
Ford Motor Credit, 5.100%, 8/3/1999 FN $40,000,000 40,000,000
==============================================================================================
TOTAL COMMERCIAL PAPER (Cost $80,000,000) 80,000,000
==============================================================================================
1.90 REPURCHASE AGREEMENTS
1.90 UNITED STATES
Repurchase Agreement with State Street dated
7/30/1999 due 8/2/1999 at 4.960%,
repurchased at $19,548,077 (Collateralized
by US Treasury Bonds, due 8/15/2013 at
12.000%, value $20,011,433) (Cost $19,540,000) RA $19,540,000 19,540,000
==============================================================================================
TOTAL SHORT-TERM INVESTMENTS (Cost $99,540,000) 99,540,000
==============================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $741,752,782)
(Cost for Income Tax Purposes $743,279,194) $1,029,491,564
==============================================================================================
</TABLE>
(a) Security is non-income producing.
(b) Securities acquired pursuant to Rule 144A. The Fund deems such securities to
be liquid because an institutional market exists.
(c) The following are restricted securities at July 31, 1999:
SCHEDULE OF RESTRICTED OR ILLIQUID SECURITIES
<TABLE>
<CAPTION>
VALUE AS
ACQUISITION ACQUISITION % OF
DESCRIPTION DATE(S) COST NET ASSETS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Latin American Growth Fund
Consorcio ARA SA de CV Regulation S
Sponsored ADR Representing 10 Shrs 1/7/97-10/17/97 $ 63,175 0.22%
Rossi Residencial SA GDR Regulation S
Representing 5 Ord Shrs 07/15/97 820,400 0.20
=============================================================================================
0.42%
==============================================================================================
</TABLE>
<PAGE>
SUMMARY OF INVESTMENTS BY INDUSTRY
SHARES OR
INDUSTRY PRINCIPAL
INDUSTRY CODE AMOUNT VALUE
- --------------------------------------------------------------------------------
Latin American Growth Fund
Banks BK 5.90% $ 1,399,128
Beverages BV 10.20 2,417,273
Broadcasting BR 5.45 1,292,134
Building Materials BD 4.52 1,072,005
Chemicals CH 4.00 947,290
Conglomerates CG 4.69 1,111,327
Electric Utilities EU 9.90 2,346,211
Financial FN 7.45 1,765,403
Foods FD 3.28 778,215
Homebuilding HB 2.94 697,036
Iron & Steel IS 4.16 985,768
Lodging Hotels LH 0.84 198,084
Machinery MY 1.11 263,274
Metals Mining MM 4.62 1,095,811
Oil & Gas Related OG 4.58 1,085,765
Paper & Forest Products PF 5.61 1,328,730
Retail RT 2.22 525,831
Telecommunications--Long Distance TL 7.84 1,857,780
Telephone TN 9.44 2,236,835
Textile--Apparel Manufacturing TA 1.25 295,579
================================================================================
100.00% $ 23,699,479
================================================================================
Telecommunications Fund
Broadcasting BR 2.68% $ 27,582,475
Cable CA 1.83 18,801,375
Communications--Equipment & Manufacturing CM 14.83 152,696,793
Computer Related CO 14.77 152,028,455
Consumer Finance CF 3.89 40,000,000
Electronics EL 1.53 15,779,475
Electronics--Semiconductor ES 1.62 16,654,737
Financial FN 3.89 40,000,000
Machinery MY 2.74 28,258,253
Photography & Imaging PI 1.68 17,331,000
Repurchase Agreements RA 1.90 19,540,000
Retail RT 2.15 22,143,956
Services SV 3.07 31,616,612
Telecommunications--Cellular & Wireless TC 7.77 80,004,894
Telecommunications--Long Distance TL 12.22 125,867,945
Telephone TN 23.43 241,185,594
================================================================================
100.00% $ 1,029,491,564
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
INVESCO Specialty Funds, Inc.
July 31, 1999
LATIN AMERICAN
GROWTH REALTY
FUND FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 30,706,848 $ 16,353,396
================================================================================
At Value(a) $ 23,699,479 $ 15,754,971
Cash 0 6,110
Receivables:
Investment Securities Sold 23,116 1,395,672
Fund Shares Sold 4,871 645,467
Dividends and Interest 116,310 3,714
Prepaid Expenses and Other Assets 27,816 29,514
================================================================================
TOTAL ASSETS 23,871,592 17,835,448
================================================================================
LIABILITIES
Payables:
Custodian 78,526 0
Distributions to Shareholders 1,042 8,362
Investment Securities Purchased 0 0
Fund Shares Repurchased 187,232 402,052
Accrued Distribution Expenses 5,962 3,969
Accrued Expenses and Other Payables 30,857 15,375
================================================================================
TOTAL LIABILITIES 303,619 429,758
================================================================================
NET ASSETS AT VALUE $ 23,567,973 $ 17,405,690
================================================================================
NET ASSETS
Paid-in Capital(b) $ 45,847,487 $ 25,544,789
Accumulated Undistributed Net
Investment Income (Loss) 21,585 (13,166)
Accumulated Undistributed Net
Realized Loss on Investment
Securities and Foreign Currency
Transactions (15,296,162) (7,527,508)
Net Depreciation of Investment
Securities and Foreign Currency
Transactions (7,004,937) (598,425)
================================================================================
NET ASSETS AT VALUE $ 23,567,973 $ 17,405,690
================================================================================
Shares Outstanding 2,853,193 2,523,480
NET ASSET VALUE, Offering and
Redemption Price per Share $ 8.26 $ 6.90
================================================================================
(a) Investment securities at cost and value at July 31, 1999 include a
repurchase agreement of $839,000 for Realty Fund.
(b) The Fund has 800 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
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
INVESCO Specialty Funds, Inc.
July 31, 1999
TELECOMMUNICATIONS
FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 741,752,782
================================================================================
At Value(a) $ 1,029,491,564
Receivables:
Investment Securities Sold 859,659
Fund Shares Sold 6,895,990
Dividends and Interest 478,854
Appreciation on Forward Foreign Currency Contracts 23,565
Prepaid Expenses and Other Assets 140,933
================================================================================
TOTAL ASSETS 1,037,890,565
================================================================================
LIABILITIES
Payables:
Custodian 2,465
Investment Securities Purchased 4,876,501
Fund Shares Repurchased 3,521,685
Accrued Distribution Expenses 219,156
Accrued Expenses and Other Payables 14,365
================================================================================
TOTAL LIABILITIES 8,634,172
================================================================================
NET ASSETS AT VALUE $ 1,029,256,393
================================================================================
NET ASSETS
Paid-in Capital(b) $ 740,054,274
Accumulated Undistributed Net Investment Loss (147,992)
Accumulated Undistributed Net Realized Gain on
Investment Securities and Foreign Currency Transactions 1,610,507
Net Appreciation of Investment Securities and
Foreign Currency Transactions 287,739,604
================================================================================
NET ASSETS AT VALUE $ 1,029,256,393
================================================================================
Shares Outstanding 32,368,809
NET ASSET VALUE, Offering and Redemption
Price per Share $ 31.80
================================================================================
(a) Investment securities at cost and value at July 31, 1999 include a
repurchase agreement of $19,540,000.
(b) The Fund has 800 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
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
INVESCO Specialty Funds, Inc.
Year Ended July 31, 1999
LATIN AMERICAN
GROWTH REALTY
FUND FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 606,177 $ 1,050,159
Interest 42,334 110,326
Foreign Taxes Withheld (55,471) (392)
================================================================================
TOTAL INCOME 593,040 1,160,093
================================================================================
EXPENSES
Investment Advisory Fees 176,481 157,568
Distribution Expenses 58,827 52,522
Transfer Agent Fees 320,395 219,575
Administrative Fees 15,500 14,814
Custodian Fees and Expenses 66,531 16,043
Directors Fees and Expenses 10,103 9,479
Professional Fees and Expenses 25,428 19,233
Registration Fees and Expenses 36,659 34,587
Reports to Shareholders 70,405 52,780
Other Expenses 14,550 1,683
================================================================================
TOTAL EXPENSES 794,879 578,284
Fees and Expenses Absorbed by Investment
Adviser (286,269) (296,226)
Fees and Expenses Paid Indirectly (37,974) (9,164)
================================================================================
NET EXPENSES 470,636 272,894
================================================================================
NET INVESTMENT INCOME 122,404 887,199
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities (7,528,927) (7,221,719)
Foreign Currency Transactions (3,390,315) 7,103
================================================================================
Total Net Realized Loss (10,919,242) (7,214,616)
================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 3,417,020 3,441,428
Foreign Currency Transactions (2,232,715) 27,723
================================================================================
Total Net Appreciation 1,184,305 3,469,151
================================================================================
NET LOSS ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS (9,734,937) (3,745,465)
================================================================================
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (9,612,533) $ (2,858,266)
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS (CONTINUED)
INVESCO Specialty Funds, Inc.
Year Ended July 31, 1999
TELECOMMUNICATIONS
FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 1,694,795
Interest 2,013,945
Foreign Taxes Withheld (62,432)
================================================================================
TOTAL INCOME 3,646,308
================================================================================
EXPENSES
Investment Advisory Fees 3,079,599
Distribution Expenses 1,233,307
Transfer Agent Fees 1,211,700
Administrative Fees 145,056
Custodian Fees and Expenses 72,543
Directors Fees and Expenses 21,879
Professional Fees and Expenses 37,762
Registration Fees and Expenses 98,193
Reports to Shareholders 224,344
Other Expenses 18,954
================================================================================
TOTAL EXPENSES 6,143,337
Fees and Expenses Paid Indirectly (48,993
===============================================================================
NET EXPENSES 6,094,344
================================================================================
NET INVESTMENT LOSS (2,448,036)
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 2,869,599
Foreign Currency Transactions (1,168,817)
================================================================================
Total Net Realized Gain 1,700,782
================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 245,426,818
Foreign Currency Transactions (102,416)
================================================================================
Total Net Appreciation 245,324,402
================================================================================
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 247,025,184
================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 244,577,148
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Latin American Growth Fund
YEAR ENDED JULY 31
- --------------------------------------------------------------------------------
1999 1998
OPERATIONS
Net Investment Income (Loss) $ 122,404 $ (2,871)
Net Realized Loss on Investment
Securities and Foreign Currency
Transactions (10,919,242) (1,133,650)
Change in Net Appreciation
(Depreciation) of Investment
Securities and Foreign
Currency Transactions 1,184,305 (28,995,772)
================================================================================
NET DECREASE IN NET ASSETS FROM
OPERATIONS (9,612,533) (30,132,293)
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (60,137) 0
In Excess of Net Investment Income 0 (1,644)
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 0 (5,377,132)
In Excess of Net Realized Gain on
Investment Securities and Foreign
Currency Transactions (324,757) (3,968,378)
================================================================================
TOTAL DISTRIBUTIONS (384,894) (9,347,154)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 38,298,451 41,383,944
Reinvestment of Distributions 377,451 9,253,953
================================================================================
38,675,902 50,637,897
Amounts Paid for Repurchases of Shares (39,835,797) (106,705,315)
================================================================================
NET DECREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (1,159,895) (56,067,418)
================================================================================
TOTAL DECREASE IN NET ASSETS (11,157,322) (95,546,865)
NET ASSETS
Beginning of Period 34,725,295 130,272,160
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in
Excess of) Net Investment Income
of $21,585 and ($42,636),
respectively) $ 23,567,973 $ 34,725,295
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 4,926,437 2,743,691
Shares Issued from Reinvestment
of Distributions 49,594 725,787
================================================================================
4,976,031 3,469,478
Shares Repurchased (5,228,033) (7,456,925)
================================================================================
NET DECREASE IN FUND SHARES (252,002) (3,987,447)
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Realty Fund
YEAR ENDED JULY 31
- --------------------------------------------------------------------------------
1999 1998
OPERATIONS
Net Investment Income $ 887,199 $ 1,293,905
Net Realized Gain (Loss) on
Investment Securities and
Foreign Currency Transactions (7,214,616) 4,205,231
Change in Net Appreciation
(Depreciation) of Investment
Securities and Foreign
Currency Transactions 3,469,151 (6,267,343)
================================================================================
NET DECREASE IN NET ASSETS FROM
OPERATIONS (2,858,266) (768,207)
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (860,435) (1,231,251)
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 0 (2,808,471)
In Excess of Net Realized Gain on
Investment Securities and Foreign
Currency Transactions (1,731,958) 0
================================================================================
TOTAL DISTRIBUTIONS (2,592,393) (4,039,722)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 116,589,416 125,593,955
Reinvestment of Distributions 2,451,567 3,806,928
================================================================================
119,040,983 129,400,883
Amounts Paid for Repurchases of Shares (119,732,760) (137,702,363)
================================================================================
NET DECREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (691,777) (8,301,480)
================================================================================
TOTAL DECREASE IN NET ASSETS (6,142,436) (13,109,409)
NET ASSETS
Beginning of Period 23,548,126 36,657,535
================================================================================
End of Period (Including Accumulated
Undistributed Net Investment Income
(Loss) of ($13,166) and $10,184,
respectively) $ 17,405,690 $ 23,548,126
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 15,431,175 11,521,060
Shares Issued from Reinvestment of
Distributions 346,136 366,311
================================================================================
15,777,311 11,887,371
Shares Repurchased (15,826,855) (12,649,335)
================================================================================
NET DECREASE IN FUND SHARES (49,544) (761,964)
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Telecommunications Fund
YEAR ENDED JULY 31
- --------------------------------------------------------------------------------
1999 1998
OPERATIONS
Net Investment Loss $ (2,448,036) $ (230,214)
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 1,700,782 6,087,498
Change in Net Appreciation of
Investment Securities and Foreign
Currency Transactions 245,324,402 30,321,776
================================================================================
NET INCREASE IN NET ASSETS FROM
OPERATIONS 244,577,148 36,179,060
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions (5,207,012) (5,103,352)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 1,499,364,986 521,582,449
Reinvestment of Distributions 5,082,544 4,810,525
================================================================================
1,504,447,530 526,392,974
Amounts Paid for Repurchases of Shares (991,137,779) (353,350,473)
================================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 513,309,751 173,042,501
================================================================================
TOTAL INCREASE IN NET ASSETS 752,679,887 204,118,209
NET ASSETS
Beginning of Period 276,576,506 72,458,297
================================================================================
End of Period (Including Accumulated
Undistributed Net Investment Loss
of ($147,992) and ($3,205),
respectively) $ 1,029,256,393 $ 276,576,506
================================================================================
------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 57,707,098 28,810,576
Shares Issued from Reinvestment
of Distributions 268,634 319,200
================================================================================
57,975,732 29,129,776
Shares Repurchased (39,721,071) (19,749,078)
================================================================================
NET INCREASE IN FUND SHARES 18,254,661 9,380,698
================================================================================
See Notes to Financial Statements
<PAGE>
INVESCO Notes to financial statements -- INVESCO Specialty Funds, Inc.
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO
Specialty Funds, Inc. (the Fund) is incorporated in Maryland and presently
consists of three separate Funds: Latin American Growth Fund, Realty Fund and
Telecommunications Fund (formerly known as Worldwide Communications Fund). On
May 28, 1999, the board of directors approved the name change to
Telecommunications Fund. On February 3, 1999, the board of directors of the Fund
approved the liquidation of Worldwide Capital Goods Fund and effective May 21,
1999, Worldwide Capital Goods Fund liquidated its assets and closed the Fund.
The investment objectives of the Funds are: to achieve capital appreciation for
Latin American Growth; to achieve current income for Realty Fund; and to achieve
a high total return on investments through capital appreciation and current
income for Telecommunications Fund. The Fund is registered under the Investment
Company Act of 1940 (the Act) as a diversified, open-end management investment
company.
On May 20, 1999, shareholders of Realty and S&P 500 Index Funds, and on May 28,
1999, shareholders of Latin American Growth and Telecommunications Funds
approved an Agreement and Plan of Reorganization and Termination, providing for
the conversion of each Fund from a separate series of INVESCO Specialty Funds,
Inc. to the following:
<TABLE>
<CAPTION>
FUND NEW SERIES EFFECTIVE DATE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Latin American Growth Fund INVESCO International Funds, Inc. October 20, 1999
Realty Fund INVESCO Sector Funds, Inc. March 20, 2000
S&P 500 Index Fund INVESCO Stock Funds, Inc. July 15, 1999
Telecommunications Fund INVESCO Sector Funds, Inc. March 20, 2000
</TABLE>
On May 20, 1999, the board of directors approved an Agreement and Plan of
Reorganization and Termination in which the following Funds which were
previously a series of INVESCO Specialty Funds, Inc. merged: Asian Growth Fund
(Target Fund) into INVESCO International Funds, Inc. - Pacific Basin Fund
(Surviving Fund) and European Small Company Fund (Target Fund) into INVESCO
International Funds, Inc. - European Fund (Surviving Fund), effective close of
business on June 18, 1999. Shareholders of the Target Funds became shareholders
of the Surviving Funds and received shares of the surviving Funds equal in
dollar value to the then current value of their shares in the Target Funds.
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 Funds 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.
<PAGE>
If market quotations or pricing service valuations are not readily available,
securities are valued at fair value as determined in good faith under procedures
established by the Funds board of directors. Restricted securities are valued in
accordance with procedures established by the Funds board of directors.
Short-term securities are stated at amortized cost (which approximates market
value) if maturity is 60 days or less at the time of purchase, or market value
if maturity is greater than 60 days.
Assets and liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers on the date of valuation.
B. REPURCHASE AGREEMENTS -- Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Funds custodian. The collateral is evaluated daily to ensure
its market value exceeds the current market value of the repurchase agreements
including accrued interest. In the event of default on the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security transactions
are accounted for on the trade date and dividend income is recorded on the ex
dividend date. Certain dividends from foreign securities will be recorded as
soon as the Fund is informed of the dividend if such information is obtained
subsequent to the ex dividend date. Interest income, which may be comprised of
stated coupon rate, market discount, original issue discount and amortized
premium, is recorded on the accrual basis. Income and expenses on foreign
securities are translated into U.S. dollars at rates of exchange prevailing when
accrued. Cost is determined on the specific identification basis. The cost of
foreign securities is translated into U.S. dollars at the rates of exchange
prevailing when such securities are acquired.
The Fund may have elements of risk due to 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 investment securities includes fluctuations from currency exchange rates
and fluctuations in market value.
The Funds 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.
Restricted securities held by the Fund may not be sold except in exempt
transactions or in a public offering registered under the Securities Act of
1933. The risk of investing in such securities is generally greater than the
risk of investing in the securities of widely held, publicly traded companies.
Lack of a secondary market and resale restrictions may result in the inability
of each Fund to sell a security at a fair price and may substantially delay the
sale of the security which each Fund seeks to sell. In addition, these
securities may exhibit greater price volatility than securities for which
secondary markets exist.
D. FEDERAL AND STATE TAXES -- The Fund has complied, 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.
At July 31, 1999, Latin American Growth and Realty Funds had $6,196,374 and
$6,043,601 in net capital loss carryovers which expire in the year 2007.
Latin American Growth and Realty Funds incurred and elected to defer
post-October 31 net capital losses of $8,885,961 and $894,436, respectively, to
the years ended October 31, 1999 and March 31, 2000, respectively. Latin
<PAGE>
American Growth and Telecommunications Funds incurred and elected to defer
post-October 31 net currency losses of $26,068 and $142,796, respectively, to
the years ended October 31, 1999 and March 31, 2000, respectively. To the extent
future capital gains and income are offset by capital loss carryovers and
deferred post-October 31 losses, such gains and income will not be distributed
to shareholders.
Dividends paid by the Fund from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders.
Investment income received from foreign sources may be subject to foreign
withholding taxes. Dividend and interest income is shown gross of foreign
withholding taxes in the accompanying financial statements.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to
shareholders are recorded by the Fund on the ex dividend/distribution date. The
Fund distributes net realized capital gains, if any, to its shareholders at
least annually, if not offset by capital loss carryovers. Income distributions
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions, nontaxable dividends, net operating losses and expired capital
loss carryforwards.
For the year ended July 31, 1999, 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
- --------------------------------------------------------------------------------
Latin American Growth Fund $ 1,954 $(1,954) $ 0
Realty Fund (50,114) 50,114 0
Telecommunications Fund 2,303,249 77,586 (2,380,835)
Net investment income, net realized gains (losses) and net assets were not
affected.
F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund enters into forward foreign
currency contracts in connection with planned purchases or sales of securities
as a hedge against fluctuations in foreign exchange rates pending the settlement
of transactions in foreign securities. A forward foreign currency contract is an
agreement between contracting parties to exchange an amount of currency at some
future time at an agreed upon rate. These contracts are marked-to-market daily
and the related appreciation or depreciation of the contracts is presented in
the Statement of Assets and Liabilities. Any realized gain or loss incurred by
the Fund upon the sale of securities is included in the Statement of Operations.
G. 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 Funds Custodian, agreed upon Custodian Fees and Expenses are reduced by
credits granted by the Custodian from any temporarily uninvested cash. Such
credits are included in Fees and Expenses Paid Indirectly in the Statement of
Operations.
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Funds investment adviser. As compensation for its services
to the Funds, IFG receives an investment advisory fee which is accrued daily at
the applicable rate and paid monthly. The fee is based on the annual rate of
each Funds average net assets as follows:
<PAGE>
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------------
$500 $1 $2 $4 $6
$0 TO MILLION BILLION BILLION BILLION BILLION OVER
$500 TO $1 TO $2 TO $4 TO $6 TO $8 $8
FUND MILLION BILLION BILLION BILLION BILLION BILLION BILLION
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Latin American Growth Fund 0.75% 0.65% 0.55% 0.45%(a) 0.40%(a) 0.375%(a) 0.35%(a)
Telecommunications Fund 0.65% 0.55% 0.45% 0.45% 0.40%(a) 0.375%(a) 0.35%(a)
Realty Fund(b) 0.75% 0.65% 0.55% 0.45% 0.40% 0.375% 0.35%
</TABLE>
(a) These additional contractual breakpoints became effective May 13, 1999.
(b) Prior to May 13, 1999, the investment advisory fee for Realty Fund was
computed at an annual rate of 0.75% of average net assets. Effective May 13,
1999, the investment advisory fee became contractual and is computed at the
above rates.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Asset
Management, Ltd (IAM), an affiliate of IFG, investment decisions of Latin
American Growth Fund are made by IAM. A separate Sub-Advisory Agreement between
IFG and INVESCO Realty Advisors (IRAI), an affiliate of IFG, provides that
investment decisions of Realty Fund are made by IRAI. Fees for such sub-advisory
services are paid by IFG.
A plan of distribution pursuant to Rule 12b-1 of the Act (the Plan) provides for
compensation of marketing and advertising expenditures to INVESCO Distributors,
Inc. (IDI or the Distributor), a wholly owned subsidiary of IFG, to a maximum of
0.25% of annual average net assets. For the year ended, July 31, 1999, Latin
American Growth, Realty and Telecommunications Funds paid the Distributor
$60,568, $54,902 and $1,072,046, respectively, under the plan of distribution.
IFG receives a transfer agent fee from each Fund at an annual rate of $20.00 per
shareholder account, or, where applicable, per participant in an omnibus
account, per year. IFG may pay such fee for participants in omnibus accounts to
affiliates or third parties. The fee is paid monthly at one-twelfth of the
annual fee and is based upon the actual number of accounts in existence during
each month.
In accordance with an Administrative Services Agreement, each Fund paid 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. Effective May 13, 1999,
each Fund pays IFG an annual fee of $10,000, plus an additional amount computed
at an annual rate of 0.045% of average net assets.
IFG and IAM have voluntarily agreed to absorb certain fees and expenses incurred
by Latin American Growth Fund. IFG has voluntarily agreed to absorb certain fees
and expenses incurred by Realty Fund.
A 1% redemption fee is retained by Latin American Growth Fund 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 by Latin American Growth Fund. Total redemption fees received by Latin
American Growth Fund for the year ended July 31, 1999 were $267,420. Effective
May 1, 1999, the redemption fee retained by Latin American Growth Fund changed
to 2% for shares held less than three months.
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended
July 31, 1999, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were as follows:
<PAGE>
FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Latin American Growth Fund $ 20,395,682 $ 21,029,190
Realty Fund 122,475,040 125,614,346
Telecommunications Fund 710,195,889 286,125,606
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At July 31, 1999, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation (depreciation) by Fund were as
follows:
NET
GROSS GROSS APPRECIATION
FUND APPRECIATION DEPRECIATION (DEPRECIATION)
- --------------------------------------------------------------------------------
Latin American Growth Fund $ 2,132,752 $ 9,355,776 $ (7,223,024)
Realty Fund 21,282 1,214,854 (1,193,572)
Telecommunications Fund 295,982,265 9,769,895 286,212,370
NOTE 5 -- TRANSACTIONS WITH AFFILIATES. Certain of the Funds officers and
directors are also officers and directors of IFG, IDI, IAM or IRAI.
Each Fund has adopted an unfunded defined benefit deferred compensation plan
covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 50% of the sum of the
retainer fee at the time of retirement plus the meeting attendance fees.
Pension expenses for the year ended July 31, 1999, included in Directors Fees
and Expenses in the Statement of Operations, and unfunded accrued pension costs
and pension liability included in Prepaid Expenses and Accrued Expenses,
respectively, in the Statement of Assets and Liabilities were as follows:
UNFUNDED
PENSION ACCRUED PENSION
FUND EXPENSES PENSION COSTS LIABILITY
- --------------------------------------------------------------------------------
Latin American Growth Fund $ 1,275 $ 0 $ 2,964
Realty Fund 737 64 1,310
Telecommunications Fund 3,295 4,355 9,554
The independent directors have contributed to a deferred fee agreement plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of selected INVESCO
Funds. The deferred amounts may be invested in the shares of any of the INVESCO
Funds, excluding the INVESCO Variable Investment Funds.
NOTE 6 -- LINE OF CREDIT. Each Fund has available a Redemption Line of Credit
Facility (LOC), from a consortium of national banks, to be used for temporary or
emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 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, 1999, there were no such borrowings.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders 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 Latin American Growth Fund,
INVESCO Realty Fund, and INVESCO Telecommunications Fund, formerly INVESCO
Worldwide Communications Fund, (constituting INVESCO Specialty Funds, Inc.,
hereafter referred to as the Fund) at July 31, 1999, the results of each of
their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended 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 Funds 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, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
September 8, 1999
<PAGE>
FINANCIAL HIGHLIGHTS
Latin American Growth Fund
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
PERIOD
ENDED
YEAR ENDED JULY 31 JULY 31
- --------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995(a)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value Beginning of Period $ 11.18 $ 18.37 $ 12.86 $ 11.69 $ 10.00
============================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)(b) 0.04 0.00 0.13 0.08 0.02
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (2.83) (5.41) 5.88 1.62 1.69
============================================================================================
TOTAL FROM INVESTMENT OPERATIONS (2.79) (5.41) 6.01 1.70 1.71
============================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income(c) 0.02 0.00 0.14 0.09 0.02
Distributions from Capital Gains 0.00 1.02 0.36 0.44 0.00
In Excess of Capital Gains 0.11 0.76 0.00 0.00 0.00
============================================================================================
TOTAL DISTRIBUTIONS 0.13 1.78 0.50 0.53 0.02
============================================================================================
Net Asset Value--End of Period $ 8.26 $ 11.18 $ 18.37 $ 12.86 $ 11.69
============================================================================================
TOTAL RETURN(d) (24.87%) (30.64%) 48.06% 15.27% 17.09%(e)
RATIOS
Net Assets--End of Period
($000 Omitted) $ 23,568 $ 34,725 $130,272 $ 32,064 $ 7,423
Ratio of Expenses to Average
Net Assets(f) 2.17%(g) 1.99%(g) 1.76%(g) 2.14%(g) 2.00%(h)
Ratio of Net Investment Income to
Average Net Assets(f) 0.52% 0.00% 1.35% 1.26% 0.79%(h)
Portfolio Turnover Rate 90% 33% 72% 29% 30%(e)
</TABLE>
(a) From February 15, 1995, commencement of investment operations, to July 31,
1995.
(b) Net Investment Income (Loss) aggregated less than $0.01 on a per share basis
for the year ended July 31, 1998.
(c) Distributions in excess of net investment income for the year ended July 31,
1998, aggregated less than $0.01 on a per share basis.
(d) The applicable redemption fees are not included in the Total Return
calculation.
(e) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(f) Various expenses of the Fund were voluntarily absorbed by IFG and IAM for
the year ended July 31, 1999 and the period ended July 31, 1995. If such
expenses had not been voluntarily absorbed, ratio of expenses to average net
assets would have been 3.39% and 4.49%(annualized), respectively, and ratio
of net investment income to average net assets would have been (0.70%) and
(1.70%)(annualized), respectively.
(g) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, where applicable, which is before any expense offset
arrangements.
(h) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
Realty Fund
(For a Fund Share Outstanding Throughout Each Period)
PERIOD
ENDED
YEAR ENDED JULY 31 JULY 31
- --------------------------------------------------------------------------------
1999 1998 1997(a)
PER SHARE DATA
Net Asset Value--Beginning of Period $ 9.15 $ 10.99 $ 10.00
================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.33 0.38 0.22
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (1.56) (0.96) 0.99
================================================================================
TOTAL FROM INVESTMENT OPERATIONS (1.23) (0.58) 1.21
================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.34 0.39 0.22
Distributions from Capital Gains 0.00 0.87 0.00
In Excess of Capital Gains 0.68 0.00 0.00
================================================================================
TOTAL DISTRIBUTIONS 1.02 1.26 0.22
================================================================================
Net Asset Value--End of Period $ 6.90 $ 9.15 $ 10.99
================================================================================
TOTAL RETURN (13.29%) (6.49%) 12.24%(b)
RATIOS
Net Assets--End of Period ($000 Omitted) $17,406 $23,548 $36,658
Ratio of Expenses to Average Net
Assets(c)(d) 1.34% 1.22% 1.20%(e)
Ratio of Net Investment Income to
Average Net Assets(c) 4.23% 3.53% 4.08%(e)
Portfolio Turnover Rate 697%(f) 258% 70%(b)
(a) From January 1, 1997, commencement of investment operations, to July 31,
1997.
(b) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(c) Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended July 31, 1999 and 1998 and the period ended July 31, 1997. If such
expenses had not been voluntarily absorbed, ratio of expenses to average net
assets would have been 2.76%, 1.97% and 1.83% (annualized), respectively,
and ratio of net investment income to average net assets would have been
2.81%, 2.78 3.45% (annualized), respectively.
(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(e) Annualized
(f) Portfolio turnover was greater than expected during the year due to active
trading undertaken in response to market conditions.
<PAGE>
FINANCIAL HIGHLIGHTS
Telecommunications Fund
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
- ------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995(a)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value--Beginning of Period $ 19.60 $ 15.31 $ 12.43 $ 12.30 $ 10.00
======================================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)(b) (0.00) 0.01 0.06 0.22 0.11
Net Gains on Securities
(Both Realized and Unrealized) 12.57 5.32 3.90 1.38 2.35
======================================================================================================
TOTAL FROM INVESTMENT OPERATIONS 12.57 5.33 3.96 1.60 2.46
======================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.00 0.06 0.22 0.11
Distributions from Capital Gains 0.37 1.04 1.02 1.25 0.05
======================================================================================================
TOTAL DISTRIBUTIONS 0.37 1.04 1.08 1.47 0.16
======================================================================================================
Net Asset Value--End of Period $ 31.80 $ 19.60 $ 15.31 $ 12.43 $ 12.30
======================================================================================================
TOTAL RETURN 65.52% 36.79% 33.93% 13.67% 24.83%
RATIOS
Net Assets--End of Period ($000 Omitted) $1,029,256 $276,577 $72,458 $50,516 $27,254
Ratio of Expenses to Average Net Assets 1.24%(c) 1.32%(c) 1.69%(c) 1.66%(c) 1.95%
Ratio of Net Investment Income(Loss) to
Average Net Assets (0.49%) (0.16%) 0.56% 1.78% 1.43%
Portfolio Turnover Rate 62% 55% 96% 157% 215%
</TABLE>
(a) Commencement of investment operations was August 1, 1994.
(b) Net Investment Income (Loss) aggregated less than $0.01 on a per share basis
for the year ended July 31, 1999.
(c) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
OTHER INFORMATION
UNAUDITED
On May 28, 1999, a special meeting of the shareholders of Latin American Growth
Fund was held at which the ten directors identified below were elected. The
selection of PricewaterhouseCoopers LLP as independent accountants (Proposal 1),
the approval of changes to the fundamental investment restrictions identified
below (Proposal 2) and the approval of an Agreement and Plan of Conversion and
Termination providing for the conversion of Latin American Growth Fund from a
separate series of the Fund to a separate series of INVESCO International Funds,
Inc. (Proposal 3) were ratified. The following is a report of the votes cast:
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- --------------------------------------------------------------------------------
Latin American Growth Fund
Charles W. Brady 1,318,631 N/A 84,749 1,403,380
Fred A. Deering 1,318,631 N/A 84,749 1,403,380
Mark H. Williamson 1,318,631 N/A 84,749 1,403,380
Dr. Victor L. Andrews 1,318,631 N/A 84,749 1,403,380
Bob R. Baker 1,318,631 N/A 84,749 1,403,380
Lawrence H. Budner 1,318,631 N/A 84,749 1,403,380
Dr. Wendy Lee Gramm 1,318,631 N/A 84,749 1,403,380
Kenneth T. King 1,318,792 N/A 84,588 1,403,380
John W. McIntyre 1,318,792 N/A 84,588 1,403,380
Dr. Larry Soll 1,318,792 N/A 84,588 1,403,380
Proposal 1 1,318,722 34,529 50,127 1,403,378
Proposal 2
Modification of Fundamental
Investment Restrictions on:
a--Investment objectives of
Realty Fund 1,199,848 88,366 115,166 1,403,380
b-Issuer diversification 1,199,848 88,366 115,166 1,403,380
c--Borrowing securities and adoption
of non-fundamental restriction on
borrowing 1,199,848 88,366 115,166 1,403,380
d--Real estate investments 1,199,848 88,366 115,166 1,403,380
e--Investing in commodities 1,199,848 88,366 115,166 1,403,380
f--Loans 1,199,848 88,366 115,166 1,403,380
g--Underwriting securities 1,199,848 88,366 115,166 1,403,380
h--Industry concentration for Latin
American Growth Fund only 1,199,848 88,366 115,166 1,403,380
i--Investing in another investment
company 1,199,848 88,366 115,166 1,403,380
Adoption of Fundamental
Restriction on:
j--Issuance of senior securities 1,199,848 88,366 115,166 1,403,380
Proposal 3 1,224,852 80,740 97,788 1,403,380
<PAGE>
OTHER INFORMATION (CONTINUED)
UNAUDITED
On May 20, 1999 and May 28, 1999, a special meeting of the shareholders of
Realty and Telecommunications Funds, respectively, were held at which the ten
directors identified below were elected. The selection of PricewaterhouseCoopers
LLP as independent accountants (Proposal 1), the approval of changes to the
fundamental investment restrictions identified below (Proposal 2) and the
approval of an Agreement and Plan of Conversion and Termination providing for
the conversion of each Fund from a separate series of the Fund to a separate
series of INVESCO Sector Funds, Inc. (Proposal 3) each were ratified. The
following is a report of the votes cast:
<TABLE>
<CAPTION>
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Realty Fund
Charles W. Brady 1,366,922 N/A 73,675 1,440,597
Fred A. Deering 1,366,736 N/A 73,861 1,440,597
Mark H. Williamson 1,367,121 N/A 73,476 1,440,597
Dr. Victor L. Andrews 1,369,225 N/A 71,372 1,440,597
Bob R. Baker 1,369,104 N/A 71,493 1,440,597
Lawrence H. Budner 1,369,818 N/A 70,779 1,440,597
Dr. Wendy Lee Gramm 1,370,423 N/A 70,174 1,440,597
Kenneth T. King 1,367,960 N/A 72,637 1,440,597
John W. McIntyre 1,369,600 N/A 70,997 1,440,597
Dr. Larry Soll 1,370,412 N/A 70,185 1,440,597
Proposal 1 1,378,380 31,780 30,436 1,440,596
Proposal 2
Modification of Fundamental
Investment Restrictions on:
a--Investment objectives of
Realty Fund 1,146,214 77,582 216,801 1,440,597
b--Issuer diversification 1,146,214 77,582 216,801 1,440,597
c--Borrowing securities and adoption
of non-fundamental restriction on
borrowing 1,146,214 77,582 216,801 1,440,597
d--Real estate investments 1,146,214 77,582 216,801 1,440,597
e--Investing in commodities 1,146,214 77,582 216,801 1,440,597
f--Loans 1,146,214 77,582 216,801 1,440,597
g--Underwriting securities 1,146,214 77,582 216,801 1,440,597
h--Industry concentration for Latin
American Growth Fund only 1,146,214 77,582 216,801 1,440,597
i--Investing in another investment
company 1,146,214 77,582 216,801 1,440,597
Adoption of Fundamental Restriction
on:
j--Issuance of senior securities 1,146,214 77,582 216,801 1,440,597
Proposal 3 1,188,679 61,135 190,783 1,440,597
</TABLE>
<PAGE>
OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
WITHHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Telecommunications Fund
Charles W. Brady 12,906,336 N/A 429,123 13,335,459
Fred A. Deering 12,906,061 N/A 429,398 13,335,459
Mark H. Williamson 12,909,520 N/A 425,939 13,335,459
Dr. Victor L. Andrews 12,910,377 N/A 425,082 13,335,459
Bob R. Baker 12,921,076 N/A 414,383 13,335,459
Lawrence H. Budner 12,922,283 N/A 413,176 13,335,459
Dr. Wendy Lee Gramm 12,922,879 N/A 412,580 13,335,459
Kenneth T. King 12,923,761 N/A 411,698 13,335,459
John W. McIntyre 12,924,464 N/A 410,995 13,335,459
Dr. Larry Soll 12,925,904 N/A 409,555 13,335,459
Proposal 1 12,821,274 126,466 387,718 13,335,458
Proposal 2
Modification of Fundamental
Investment Restrictions on:
a--Investment objectives of
Realty Fund 10,050,148 506,309 2,799,002 13,355,459
b--Issuer diversification 10,042,737 513,720 2,799,002 13,355,459
c--Borrowing securities and adoption
of non-fundamental restriction on
borrowing 10,044,751 511,706 2,799,002 13,355,459
d--Real estate investments 10,043,229 513,228 2,799,002 13,355,459
e--Investing in commodities 10,047,198 509,259 2,799,002 13,355,459
f--Loans 10,042,737 513,720 2,799,002 13,355,459
g--Underwriting securities 10,047,691 508,766 2,799,002 13,355,459
h--Industry concentration for Latin
American Growth Fund only 10,047,108 507,349 2,799,002 13,353,459
I--Investing in another investment
company 10,041,357 515,100 2,799,002 13,355,459
Adoption of Fundamental Restriction
on:
j--Issuance of senior securities 10,047,691 508,766 2,799,002 13,355,459
Proposal 3 10,284,204 383,719 2,667,536 13,335,459
</TABLE>
<PAGE>
INVESCO Family of Funds
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- --------------------------------------------------------------------------------
Stock
Growth & Income 21 IVGIX Gro&Inc
INVESCO Endeavor 61 IVENX Endeavor
Blue Chip Growth 10 FLRFX BlChpGro
Dynamics 20 FIDYX Dynm
Small Company Growth 60 FIEGX SmCoGth
Value Equity 46 FSEQX ValEq
S&P 500 Index Fund-Class II 23 ISPIX SP500II
- --------------------------------------------------------------------------------
Bond
U.S. Government Securities 32 FBDGX USGvt
Select Income 30 FBDSX SelInc
High Yield 31 FHYPX HiYld
Tax-Free Bond (formerly,
Tax-Free Long-Term Bond) 35 FTIFX TxFreBd
- --------------------------------------------------------------------------------
Combination Stock & Bond
Equity Income FIIIX EquityInc
(formerly Industrial Income) 15
Total Return 48 FSFLX TotRtn
Balanced 71 IMABX Bal
- --------------------------------------------------------------------------------
Sector
Energy 50 FSTEX Enrgy
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Realty 42 IVSRX Realty
Technology-Class II 55 FTCHX Tech
Utilities 58 FSTUX Util
Telecommunications 39 ISWCX Telecomm
(formerly Worldwide Communications)
- --------------------------------------------------------------------------------
International
International Blue Chip 09 IIBCX ItlBlChp
Pacific Basin 54 FPBSX PcBas
European 56 FEURX Europ
Latin American Growth 34 IVSLX LtnAmerGr
- --------------------------------------------------------------------------------
Money Market
U.S. Government Money Fund 44 FUGXX InvGvtMF
Cash Reserves 25 FDSXX InvCshR
Tax-Free Money Fund 40 FFRXX InvTaxFree
Money Market Reserve 96 IMRXX INVESCOMMR
Tax-Exempt Reserve 95 ITTXX INVESCOTTE
FOR MORE INFORMATION ABOUT ANY OF THE INVESCO FUNDS, INCLUDING MANAGEMENT FEES
AND EXPENSES, PLEASE CALL US AT 1-800-525-8085 FOR A PROSPECTUS. READ IT
CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
<PAGE>
[INVESCO ICON]
INVESCO
YOU SHOULD KNOW WHAT INVESCO KNOWS(TM)
We're easy to stay in touch with:
Investor Services: 1-800-525-8085
PAL(R), your personal account line: 1-800-424-8085
On the World Wide Web: www.invesco.com
In Denver, visit one of our convenient Investor Centers:
Cherry Creek, 3003 East Third Avenue, Suite 1
Denver Tech Center, 7800 East Union Avenue, Lobby Level
INVESCO Distributors, Inc.,(SM) Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied
by a current prospectus.
ASF 9023 8/99
