SEMIANNUAL REPORT
October 31, 1995
INVESCO
DYNAMICS
FUND,
INC.
A Smart Choice
For Maximum
Growth Potential
INVESCO FUNDS
<PAGE>
Economic Overview November 1995
A "soft landing" -- moderate inflation with moderate economic growth -- may
well be underway.
Over the past 12 months, consumer prices have edged up just 2.8% (through
10/31/95). That's well below the figure most analysts had anticipated. Last
winter, forecasts for the 1995 consumer inflation rate ran in the 4% to 5%
range. Producer costs have increased at an even slower rate, just 1.3% over the
past year.
However, even as they puzzle over a low-inflation trend, analysts are hailing
the continued economic recovery. Growth in Gross Domestic Product (GDP) has
remained positive at moderate levels considered more sustainable for a mature
market such as the United States.
These figures may indeed herald the much ballyhooed "soft landing." An
annualized real GDP growth rate of 2.5% was the announced target when the
Federal Reserve Board began raising short-term interest rates in February 1994.
Growth then slowed to annualized rates of 2.7% and 1.3% in the first and second
quarters of 1995, respectively.
Feeling confident that wage and price increases are under control, the Fed
directed a modest cut in interest rates this past summer. Meanwhile, inflation
has remained subdued in its corner, running at about the same annualized rate as
in 1993 and 1994. Despite an unexpectedly strong 4.2% jump in the real GDP
growth rate during the third quarter, the soft landing thus far appears intact.
Stock and bond investors have responded positively to these developments. Led
by technology, health and financial stocks, the S&P 500 has moved up strongly
this year, achieving a total return of 29.28% for the ten months ended 10/31/95.
The Lehman Government/Corporate Bond Index likewise advanced 15.61% over the
same period.1
October 1995 represented a slowdown for market gains -- a timely reminder that
a torrid pace cannot be sustained indefinitely. Of course, during November, the
market resumed its expansion and the Dow Jones Industrial Average broke through
the 5,000 mark for the first time. Therefore, barring any unanticipated
surprises in corporate earnings, the trade deficit or the federal budget, we
continue to expect moderate growth (albeit at a slower rate than we've seen this
year) for many months into the future.
Dynamics Fund
Performance
For the 12 months ended 10/31/95, INVESCO Dynamics Fund achieved a total
return of 28.03%2, outperforming both the S&P 500, which had a total return of
26.32%, and the S&P MidCap 400, with 21.21%.1 In recognition of the fund's
performance, independent mutual fund analyst Morningstar awarded Dynamics Fund
its Five Star rating for the 5 years ended 10/31/95.3 (Of course, past
performance is not a guarantee of future results.)
Dynamics Fund
Average Annualized Total Return
as of 10/31/952
1 year 28.03%
---------------------------------
5 years 26.31%
---------------------------------
10 years 16.04%
---------------------------------
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the INVESCO Dynamics Fund to the value of a $10,000
investment in the S&P 500 and Russell 2000 Indexes, assuming in each case
reinvestment of all dividends and capital gain distributions, for the ten
year period ended 10/31/95.
<PAGE>
According to independent fund analyst Lipper Analytical Services, Dynamics
Fund has outperformed the average capital appreciation fund over the long-term
as well. For the 10-year period ending 10/31/95, we achieved a total return of
16.04% versus an average of 12.97% for the category. For the last five years,
from 10/31/90 to 10/31/95, the fund has done even better, with a 26.31% total
return versus an average of 18.05%. And for the last year, 10/31/94 to 10/31/95,
Dynamics returned 28.03% versus the category average of 21.09%. (Of course, past
performance is not a guarantee of future results.)2
The line graph on page one illustrates the value of a $10,000 investment in
INVESCO Dynamics Fund, plus reinvested dividends and capital gain distributions,
for the 10-year period ended 10/31/95. (Of course, past performance is not a
guarantee of future results.)2
The chart and other total return figures cited reflect the fund's operating
expenses, but the indexes do not have expenses, which would, of course, have
lowered their performance.
Strategic Summary
Much of this year's success can be attributed to the substantial gains in
technology stocks. Many of these gains were harvested in the third quarter for
the following reasons:
The first was to participate in the strong profits enjoyed by the sector
following significant growth during late 1994 and early 1995. The second reason
was our belief that many of these equities had become overvalued and were
vulnerable to a drop in price. This possibility was realized -- and the fund was
protected -- when three major technology sell-offs occurred during the third and
fourth quarters of 1995.
These sales reduced the fund's technology holdings from of a peak of 35% of
the portfolio in late '94 to the current level of about 16%. This reduction of
technology as a percentage of the portfolio brings two longer-term advantages
which should serve us well as we move into 1996. First, greater diversification
means that there is less exposure to any single market that could be negatively
affected by the projected economic softening in 1996. As always, greater
diversification translates into potentially greater stability during market
downtrends.
A second advantage is the fund's increased ability to pursue under-recognized
opportunities within sectors other than technology. Two key areas in which
Dynamics has expanded its holdings in anticipation of potential future strong
returns include agriculture and energy.
Agriculture: Recent improvements in world economies, particularly in the Far
East, translate into greater demand for grain as spending on food increases.
This growing consumption, combined with two consecutive years of poor crop
production, means that 1996 should be a banner year for farming. In anticipation
of worldwide demand, Dynamics Fund has stocked up on seed and fertilizer
equities, including positions in Pioneer Hi-Bred International and Agrium, Inc.
Energy: As the technology involved in oil and gas exploration has become better
and cheaper, small- and medium-sized energy companies have gained the
opportunity to efficiently compete with larger corporations for new discoveries.
The mid-cap companies' smaller size means that successful exploration could
result in an asset value increase of up to 25% to 50% over a short period of
time. By selecting attractively valued companies with current production growth
rates of 15% to 20%, Dynamics Fund can enjoy the benefit of current performance,
with potential for significant upside participation. Key choices among our
holdings at this time include United Meridian, TransTexas Gas, and Anadarko
Petroleum.
Other Sectors: The technology position has been trimmed to the higher quality
core companies. We believe that current holdings in enterprise software,
application software and networking equipment companies, such as Bay Networks,
continue to provide superior growth opportunities in this sector.
<PAGE>
Continued controversy surrounding health-care has led to a defensive posturing
for this portion of the portfolio. Profits taken from the sale of HMO stocks
earlier this year have been directed into proprietary companies such as Nellcor
Puritan Bennet and Medtronic Inc., and faster growing international
pharmaceutical companies such as Sandoz of Switzerland. These companies are
positioned to withstand sector slowdowns; at the same time their strong
pipelines of new business provide good opportunities for growth.
Expected deregulation for cable, broadcasting and communications sectors
should lead to improved cash flow trends in 1996 for the media sector, as well
as precipitating further consolidation in the industry. Key current holdings
include Comcast Corp. Special Class A and US WEST.
Looking Ahead
With projections for a slowing economy during 1996, growth could become more
difficult to achieve across the broad market. However, mid-cap companies have
the ability to respond more quickly to market opportunities than their larger
counterparts, while standing upon greater financial security than many small-cap
corporations. By continuing to rely upon growth stock strategies proven over the
last 10 years, we believe Dynamics Fund is positioned to potentially outperform
the '96 broad market.
Fund Manager
INVESCO Dynamics Fund is managed by INVESCO Senior Vice President Timothy
J. Miller. He received his MBA from the University of Missouri, and a BSBA from
St. Louis University. A 16-year veteran of the investment business, he is a
Chartered Financial Analyst. Mr. Miller joined INVESCO in 1992, and took over
management of Dynamics Fund at the beginning of 1994. He also manages INVESCO
Strategic Leisure Portfolio. Mr. Miller is assisted by Amy Selner, who joined
INVESCO in 1991. She is a graduate of Creighton University, Omaha, where she
earned a BSBA in finance and marketing.
1 The S&P 500 and Dow Jones Industrial Average are unmanaged indexes considered
representative of the performance of the broad U.S. stock market. The S&P MidCap
400 is an unmanaged index indicative of domestic mid-capitalization stock
prices. The Russell 2000 is an unmanaged index indicative of domestic smaller-
capitalization stock prices. The Lehman Government/Corporate Bond Index is an
unmanaged index illustrating the broad fixed-income markets.
2 Total return assumes reinvestment of dividends and capital gain distributions
for the periods indicated. Past performance is not a guarantee of future
results. Investment return and principal value will fluctuate so that, when
redeemed, an investor's shares may be worth more or less than when purchased.
3 Morningstar's proprietary ratings reflect historical risk-adjusted performance
as of 10/31/95 and are subject to change every month. These ratings are
calculated from the fund's 3-, 5-, and 10-year average annual total returns
(based on available track records) in excess of 90-day Treasury bill returns
with appropriate fee adjustments and risk factors that reflect portfolio
performance below 90-day Treasury bill returns. The top 10% of funds in an
investment category receive 5 stars. The next 22.5% receive 4 stars; the next
35%, 3 stars. There are 92 Aggressive Growth funds ranked by Morningstar.
Dynamics Fund's 3- and 5-year ratings are 5 stars, and its 10-year rating is 3
stars.
<PAGE>
INVESCO Dynamics Fund, Inc.
Ten Largest Common Stock Holdings
October 31, 1995
Description Value
- --------------------------------------------------------
Boston Chicken $17,751,563
U S WEST 15,318,581
Agrium Inc 14,760,000
Safeway Inc 14,175,000
HFS Inc 13,842,500
Pioneer Hi-Bred International 12,842,950
Seagram Co Ltd 11,988,000
Sandoz AG Ltd 11,542,449
Informix Corp 10,921,875
St Jude Medical 10,650,000
Composition of holdings is subject to change.
<PAGE>
INVESCO Dynamics Fund, Inc.
Statement of Investment Securities
October 31, 1995
UNAUDITED
Country Code Shares or
if Principal
Description Applicable Amount Value
- --------------------------------------------------------------------------------
COMMON STOCKS 85.39%
AEROSPACE & DEFENSE 1.34%
General Motors Class H 100,000 $ 4,200,000
Loral Corp 130,000 3,851,250
------------
8,051,250
------------
AGRICULTURAL 2.86%
Dekalb Genetics Class B 100,000 4,275,000
Pioneer Hi-Bred International 258,800 12,842,950
------------
17,117,950
------------
BANKING 1.32%
HSBC Holdings PLC UK 400,000 5,820,120
Hang Seng Bank Ltd HK 250,000 2,093,626
------------
7,913,746
------------
BROADCASTING 0.35%
Television Broadcasts Ltd HK 200,000 801,883
Television Broadcasts Ltd ADR^ HK 325,000 1,303,055
------------
2,104,938
------------
BUILDING & CONSTRUCTION RELATED 1.29%
Fluor Corp 65,000 3,672,500
Lowe's Cos 150,000 4,050,000
------------
7,722,500
------------
CABLE TELEVISION 3.20%
Comcast Corp Special Class A 450,000 8,043,750
Cox Communications Class A* 100,000 1,875,000
Tele-Communications Inc -
Liberty Media Group Series A* 100,000 2,462,500
Tele-Communications Inc -
TCI Group Series A* 400,000 6,800,000
------------
19,181,250
------------
CHEMICALS 3.91%
Agrium Inc CA 360,000 14,760,000
Vigoro Corp 200,000 8,675,000
------------
23,435,000
------------
COMPUTER LOCAL NETWORKS 3.25%
Bay Networks* 115,000 7,618,750
cisco Systems* 60,000 4,650,000
Lannet Data Communications Ltd* 250,000 7,187,500
------------
19,456,250
------------
<PAGE>
COMPUTER SERVICES 1.39%
DST Systems* 145,000 3,045,000
Fiserv Inc* 204,500 5,265,875
------------
8,310,875
------------
COMPUTER SOFTWARE 8.13%
Cognos Inc* CA 210,000 6,693,750
Computer Associates International 130,000 7,150,000
Informix Corp* 375,000 10,921,875
Microsoft Corp* 75,000 7,500,000
Oracle Systems* 200,000 8,725,000
SAP AG GM 24,000 3,803,735
Sybase Inc* 100,000 3,925,000
------------
48,719,360
------------
CONTROL INSTRUMENTS 0.68%
Elsag Bailey Process Automation NV ADR* NL 148,400 4,043,900
------------
DIVERSIFIED COMPANIES 2.23%
Hutchison Whampoa Ltd HK 680,000 3,746,606
Kansas City Southern Industries 125,000 5,828,125
Swire Pacific Ltd Class A Shrs HK 500,000 3,750,744
------------
13,325,475
------------
ELECTRICAL EQUIPMENT 0.88%
Honeywell Inc 125,000 5,250,000
------------
ELECTRONICS 0.23%
Leitch Technology* CA 75,000 1,366,155
------------
FINANCE RELATED 1.91%
Block (H & R) Inc 200,000 8,250,000
Filinvest Development Class B*^ RP 1,500,000 1,270,203
SOS Staffing Services* 242,700 1,941,600
------------
11,461,803
------------
FOOD PRODUCTS & BEVERAGES 3.43%
Heineken NV NL 45,370 8,039,740
PT Sekar Bumi Foreign Shrs* ID 450,000 534,600
Seagram Co Ltd CA 333,000 11,988,000
------------
20,562,340
------------
GAMING 2.12%
Circus Circus Enterprises* 200,000 5,325,000
Harrah's Entertainment* 161,500 3,997,125
Trump Hotels & Casino Resorts* 196,800 3,345,600
------------
12,667,725
------------
HEALTH CARE RELATED 1.22%
Columbia/HCA Healthcare 75,000 3,684,375
Inphynet Medical Management* 200,000 3,600,000
------------
7,284,375
------------
<PAGE>
HOTELS 2.31%
HFS Inc* 226,000 13,842,500
------------
MACHINERY 2.95%
Case Corp 107,400 4,094,625
Deere & Co 75,000 6,703,125
Foster Wheeler 150,000 5,625,000
Hardinge Inc 50,000 1,225,000
------------
17,647,750
------------
MEDICAL RELATED 5.74%
Medtronic Inc 100,000 5,775,000
Nellcor Puritan Bennett* 176,000 10,120,000
Pharmacia AB Sponsored
ADR Representing Series A Shrs SW 225,000 7,875,000
St Jude Medical* 200,000 10,650,000
------------
34,420,000
------------
MEDICAL RELATED -- DRUGS 6.79%
Forest Laboratories* 195,800 8,101,225
Pfizer Inc 125,000 7,171,875
Sandoz AG Ltd SZ 14,000 11,542,449
Upjohn Co 150,000 7,612,500
Watson Pharmaceuticals* 140,000 6,265,000
------------
40,693,049
------------
OIL & GAS RELATED 8.97%
Anadarko Petroleum 200,000 8,675,000
Apache Corp 79,200 2,019,600
Enron Oil & Gas 100,000 2,000,000
Noble Affiliates 130,500 3,229,875
Nuevo Energy* 150,000 3,318,750
Oil Search Ltd PP 700,000 591,064
Petroleum Geo-Services A/S
Sponsored ADR* NO 126,200 2,445,125
Phillips Petroleum 250,000 8,062,500
Plains Resources* 175,000 1,192,188
Santa Fe Energy Resources* 400,000 3,550,000
Tejas Gas* 82,500 3,867,188
TransTexas Gas* 318,000 5,088,000
United Meridian* 575,000 9,703,125
------------
53,742,415
------------
REAL ESTATE RELATED 0.24%
Sun Hung Kai Properties Ltd HK 180,000 1,437,570
------------
RECREATION SERVICES 1.90%
Disney (Walt) Co 90,000 5,186,250
Gaylord Entertainment Class A 240,250 6,186,437
------------
11,372,687
------------
<PAGE>
RETAIL 10.50%
Albertson's Inc 250,000 8,312,500
Boston Chicken* 525,000 17,751,563
Melville Corp 150,000 4,800,000
Movie Gallery* 100,000 3,850,000
Rite-Aid Corp 250,000 6,750,000
Safeway Inc* 300,000 14,175,000
Vons Cos* 286,000 7,257,250
------------
62,896,313
------------
TELECOMMUNICATIONS 1.16%
Rogers Cantel Mobile
Communications Class B* CA 100,000 2,075,000
Tele-Communications
International Class A* 216,000 4,887,000
------------
6,962,000
------------
TRANSPORTATION 2.53%
Illinois Central Series A 200,000 7,650,000
Wisconsin Central Transportation* 125,000 7,531,250
------------
15,181,250
------------
UTILITIES 2.56%
U S WEST 321,650 15,318,581
------------
TOTAL COMMON STOCKS
(Cost $457,719,444) 511,489,007
------------
SHORT-TERM INVESTMENTS --
COMMERCIAL PAPER 14.61%
FINANCE RELATED 14.61%
Associates Corp of North America
5.870%, 11/1/1995 $18,500,000 18,500,000
Chevron Oil Finance
5.740%, 11/6/1995 $15,267,000 15,267,000
Deere (John) Capital
5.750%, 11/8/1995 $18,500,000 18,500,000
Household Finance
5.720%, 11/2/1995 $20,679,000 20,679,000
Sears Roebuck Acceptance
5.750%, 11/6/1995 $14,558,000 14,558,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $87,504,000) 87,504,000
------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $545,223,444)
(Cost for Income Tax Purposes
$545,648,670) $ 598,993,007
============
* Security is non-income producing.
^ The following are restricted securities at October 31, 1995:
<PAGE>
Value as
Acquisition Acquisition % of
Description Date Cost Net Assets
- --------------------------------------------------------------------------------
Filinvest Development
Class B 10/4/95 $1,514,684 0.22%
Television Broadcasts
Ltd ADR 2/25/94 1,161,825 0.22
------
0.44%
======
Summary of Investments by Country
% of
Country Investment
Country Code Securities Value
- --------------------------------------------------------------------------------
Canada CA 6.16% $ 36,882,905
Germany GM 0.63 3,803,735
Hong Kong HK 2.19 13,133,484
Indonesia ID 0.09 534,600
Netherlands NL 2.02 12,083,640
Norway NO 0.41 2,445,125
Papua New Guinea PP 0.10 591,064
Philippines RP 0.21 1,270,203
Sweden SW 1.31 7,875,000
Switzerland SZ 1.93 11,542,449
United Kingdom UK 0.97 5,820,120
United States US 83.98 503,010,682
-------------------------
100.00% $598,993,007
=========================
See Notes to Financial Statements
<PAGE>
INVESCO Dynamics Fund, Inc.
Statement of Assets and Liabilities
October 31, 1995
UNAUDITED
ASSETS
Investment Securities at Value
(Cost $545,223,444) $598,993,007
Cash 131,533
Receivables:
Investment Securities Sold 4,713,348
Fund Shares Sold 6,766,072
Dividends and Interest 395,255
Prepaid Expenses and Other Assets 98,147
-------------
TOTAL ASSETS 611,097,362
-------------
LIABILITIES
Payables:
Investment Securities Purchased 23,265,461
Fund Shares Repurchased 6,133,393
Accrued Distribution Expenses 118,490
Accrued Expenses and Other Payables 26,816
-------------
TOTAL LIABILITIES 29,544,160
-------------
Net Assets at Value $581,553,202
=============
NET ASSETS
Paid-in Capital* $450,676,206
Accumulated Undistributed
Net Investment Income 674,739
Accumulated Undistributed Net Realized
Gain on Investment Securities and
Foreign Currency Transactions 76,432,631
Net Appreciation
of Investment Securities and
Foreign Currency Transactions 53,769,626
-------------
Net Assets at Value $581,553,202
=============
Net Asset Value, Offering and Redemption
Price per Share $13.36
======
* The Fund has 100 million authorized shares of common stock, par value of
$0.01 per share, of which 43,543,227 were outstanding at October 31, 1995.
See Notes to Financial Statements
<PAGE>
INVESCO Dynamics Fund, Inc.
Statement of Operations
Six Months Ended October 31, 1995
UNAUDITED
INVESTMENT INCOME
INCOME
Dividends $2,078,283
Interest 1,554,975
Foreign Taxes Withheld (48,796)
-------------
TOTAL INCOME 3,584,462
-------------
EXPENSES
Investment Advisory Fees 1,494,228
Distribution Expenses 639,095
Transfer Agent Fees 522,049
Administrative Fees 43,346
Custodian Fees and Expenses 73,931
Directors' Fees and Expenses 16,247
Professional Fees and Expenses 25,100
Registration Fees and Expenses 51,801
Reports to Shareholders 78,279
Other Expenses 7,315
-------------
TOTAL EXPENSES 2,951,391
Fees Paid Indirectly (39,779)
-------------
NET EXPENSES 2,911,612
-------------
NET INVESTMENT INCOME 672,850
-------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain on Investment Securities and
Foreign Currency Transactions 51,198,297
Change in Net Appreciation
of Investment Securities and
Foreign Currency Transactions 26,672,456
-------------
NET GAIN ON INVESTMENT SECURITIES 77,870,753
-------------
Net Increase in Net Assets from Operations $ 78,543,603
=============
See Notes to Financial Statements
<PAGE>
INVESCO Dynamics Fund, Inc.
Statement of Changes in Net Assets
Six Months Year
Ended Ended
October 31 April 30
------------- -------------
1995 1995
UNAUDITED
OPERATIONS
Net Investment Income $672,850 $ 1,109,817
Net Realized Gain on
Investment Securities and
Foreign Currency Transactions 51,198,297 29,136,854
Change in Net Appreciation
of Investment Securities and
Foreign Currency Transactions 26,672,456 15,196,055
------------- -------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 78,543,603 45,442,726
------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS
Net Investment Income 0 (1,107,928)
Net Realized Gain on
Investment Securities 0 (3,485,672)
------------- -------------
TOTAL DISTRIBUTIONS 0 (4,593,600)
------------- -------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 323,062,981 527,496,500
Reinvestment of Distributions 0 4,474,773
------------- -------------
323,062,981 531,971,273
Amounts Paid for Repurchases
of Shares (241,653,408) (438,513,747)
------------- -------------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS 81,409,573 93,457,526
------------- -------------
Total Increase in Net Assets 159,953,176 134,306,652
NET ASSETS
Beginning of Period 421,600,026 287,293,374
------------- -------------
End of Period (Including
Accumulated Undistributed Net
Investment Income of $674,739
and $1,889, respectively) $ 581,553,202 $ 421,600,026
============= =============
FUND SHARE TRANSACTIONS
Shares Sold 25,751,688 50,821,354
Shares Issued from Reinvestment
of Distributions 0 426,507
------------- -------------
25,751,688 51,247,861
Shares Repurchased (19,270,090) (42,496,240)
------------- -------------
Net Increase in Fund Shares 6,481,598 8,751,621
============= =============
See Notes to Financial Statements
<PAGE>
INVESCO Dynamics Fund, Inc.
Notes to Financial Statements
UNAUDITED
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO
Dynamics Fund, Inc. (the "Fund"), a Maryland Corporation, is registered under
the Investment Company Act of 1940 (the "Act") as a diversified, open-end
management investment company.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
A. SECURITY VALUATION -- Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sale
price in the market where such securities are primarily traded. If last
sale prices are not available, securities are valued at the highest
closing bid price obtained from one or more dealers making a market for
such securities or by a pricing service approved by the Fund's board of
directors.
Foreign securities are valued at the closing price on the principal
stock exchange on which they are traded. In the event that closing prices
are not available for foreign securities, prices will be obtained from the
principal stock exchange at or prior to the close of the New York Stock
Exchange. Foreign currency exchange rates are determined daily prior to
the close of the New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith
by the Fund's board of directors. Restricted securities are valued in
accordance with procedures established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which approximates
market value) if maturity is 60 days or less at the time of purchase, or
at market value if maturity is greater than 60 days.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security
transactions are accounted for on the trade date and dividend income is recorded
on the ex dividend date. Certain dividends from foreign securities will be
recorded as soon as the Fund is informed of the ex dividend date. Cost is
determined on the specific identification basis.
The Fund may have elements of risk due to concentrated investments in
foreign issuers located in a specific country. 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. The Fund combines
fluctuations from currency exchange rates and fluctuations in market value
when computing net realized and unrealized gain and loss from investments.
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 the Fund to sell a security at a fair price and
may substantially delay the sale of the security which the Fund seeks to
sell. In addition, these securities may exhibit greater price volatility
than securities for which secondary markets exist.
C. 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.
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.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions
<PAGE>
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 expiring capital loss carry forwards.
E. EXPENSES -- Under an arrangement between the Fund and the Fund's
Custodian, agreed upon Custodian Fees and Expenses are reduced by credits
granted by the Custodian from any temporarily uninvested cash. Such
credits are included in Fees Paid Indirectly in the Statement of
Operations.
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group,
Inc. ("IFG") serves as the Fund's investment adviser. As compensation for its
services to the Fund, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee is based on the annual
rate of 0.60% on the first $350 million of average net assets; reduced to 0.55%
on the next $350 million of average net assets; and 0.50% of average net assets
in excess of $700 million.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of the
Fund are made by ITC. Fees for such sub-advisory services are paid by IFG.
In accordance with an Administrative Agreement, the Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services.
The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee of $14.00 per shareholder account, or
per participant in an omnibus account. IFG may pay such fee for participants in
omnibus accounts to affiliates or third parties. The fee is paid monthly at
one-twelfth of the annual fee and is based upon the actual number of accounts in
existence during each month.
A plan of distribution pursuant to Rule 12b-1 of the Act provides for
reimbursement of marketing and advertising expenditures to IFG (the
"Distributor") to a maximum of 0.25% of average annual net assets. Amounts
accrued by the Fund are available to reimburse the Distributor for actual
expenditures incurred within a rolling twelve-month period. For the period ended
October 31, 1995, the Fund paid the Distributor $604,411 for reimbursement of
expenses incurred.
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months
ended October 31, 1995, the aggregate cost of purchases and proceeds from sales
of investment securities (excluding all U.S.. Government securities and
short-term securities) were $544,003,590 and $476,586,937, respectively.
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At October 31, 1995, the gross
appreciation of securities in which there was an excess of value over tax cost
amounted to $65,020,505, and the gross depreciation of securities in which there
was an excess of tax cost over value amounted to $11,676,168 resulting in net
appreciation of $53,344,337.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES. Certain of the Fund's officers and
directors are also officers and directors of IFG or ITC.
The Fund has adopted an unfounded noncontributory defined benefit pension
plan covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 25% of the retainer fee at
the time of retirement. Pension expenses for the six-months ended October 31,
1995, included in Directors' Fees and Expenses in the Statement of Operations
were $2,178. Unfunded accrued pension costs of $12,813 and pension liability of
$19,346 are included in prepaid expenses and accrued expenses, respectively, in
the Statement of Assets and Liabilities.
<PAGE>
INVESCO Dynamics Fund, Inc.
Financial Highlights
(For a Fund Share Outstanding throughout Each Period)
<TABLE>
<CAPTION>
Six Months
Ended
October 31 Year Ended April 30
------------ --------------------------------------------------
1995 1995 1994 1993 1992 1991
UNAUDITED
PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value -- Beginning of Period $ 11.38 $10.15 $ 10.89 $9.57 $8.50 $7.39
------------ --------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.02 0.03 (0.02) (0.03) (0.02) 0.05
Net Gains on Securities
(Both Realized and Unrealized) 1.96 1.34 1.99 1.64 2.05 1.64
------------ --------------------------------------------------
Total from Investment Operations 1.98 1.37 1.97 1.61 2.03 1.69
------------ --------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.03 0.00 0.00 0.00 0.05
Distributions from Capital Gains 0.00 0.11 2.71 0.29 0.96 0.53
------------ --------------------------------------------------
Total Distributions 0.00 0.14 2.71 0.29 0.96 0.58
------------ -------------------------------------------------
Net Asset Value -- End of Period $ 13.36 $11.38 $ 10.15 $10.89 $ 9.57 $8.50
============ ==================================================
TOTAL RETURN 17.40%* 13.57% 17.86% 16.80% 23.47% 23.11%
RATIOS
Net Assets -- End of Period
($000 Omitted) $581,553 $421,600 $287,293 $231,100 $153,956 $100,860
Ratio of Expenses to Average Net Assets# 0.58%*@ 1.20% 1.17% 1.20% 1.18% 1.15%
Ratio of Net Investment Income (Loss)
to Average Net Assets# 0.13%* 0.33% (0.37%) (0.38%) (0.17%) 0.59%
Portfolio Turnover Rate 105%* 176% 169% 144% 174% 243%
<FN>
* These amounts are based on operations for the period shown and,
accordingly, are not representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the year
ended April 30, 1995. If such expenses had not been voluntarily absorbed,
ratio of expenses to average net assets would have been 1.22%, and ratio
of net investment income to average net assets would have been 0.31%.
@ Ratio reflects total expenses prior to any expense offset.
</FN>
</TABLE>
<PAGE>
FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- ---------------------------------------------------------------------
International
Latin American Growth 34 IVSLX LatinAmGr
European Small Company 37 IVECX EuroSmCo
European 56 FEURX Europ
Pacific Basin 54 FPBSX PcBas
International Growth 49 FSIGX IntlGr
- ---------------------------------------------------------------------
Sector
Energy 50 FSTEX Enrgy
Environmental Services 59 FSEVX Envirn
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Technology 55 FTCHX Tech
Worldwide Capital Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
- ---------------------------------------------------------------------
Growth, Value
Emerging Growth 60 FIEGX Emgrth
Value Equity 46 FSEQX ValEq
Small Company 74 IDSCX DivSmCo
Dynamics 20 FIDYX Dynm
Growth 10 FLRFX Grwth
- ---------------------------------------------------------------------
Equity-Income
Industrial Income 15 FIIIX IndInc
Utilities 58 FSTUX Util
- ---------------------------------------------------------------------
Balanced/Multiple-Asset
Multi-Asset Allocation 70 IMAAX MulAstAl
Balanced 71 IMABX Bal
Total Return 48 FSFLX TotRtn
- ---------------------------------------------------------------------
Bond
High Yield 31 FHYPX HiYld
Select Income 30 FBDSX SelInc
U.S. Government Securities 32 FBDGX USGvt
Intermediate Government Bond 47 FIGBX IntGov
Short-Term Bond 33 INIBX ShTrBd
- ---------------------------------------------------------------------
Tax-Exempt
Tax-Free Long-Term Bond 35 FTIFX TxFre
Tax-Free Intermediate Bond 36 * *
- ---------------------------------------------------------------------
Money Market
Tax-Free Money Fund 40 FFRXX N/A
Cash Reserves 25 FDSXX N/A
U.S. Government Money Fund 44 FUGXX N/A
* This fund does not meet size requirements to be assigned a ticker symbol in
newspaper listings.
For more information about any of the INVESCO Funds, including management fees
and expenses, please call us at 1-800-525-8085 for a prospectus. Read it
carefully before you invest or send money.
<PAGE>
INVESCO FUNDS
To receive general information and prospectuses
on any of INVESCO's funds or retirement plans,
or to obtain current account or price information,
call toll-free:
1-800-525-8085
To reach PAL(r), your 24-hour Personal Account
Line call: 1-800-424-8085
Or write to:
INVESCO Funds Group, Inc.,(sm) Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, pleas visit one of our
convenient Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center, 7800 East Union Avenue,
Lobby Level
This information must be preceded or accompanied by an effective prospectus.
