SEMIANNUAL REPORT
October 31, 1996
INVESCO
DYNAMICS
FUND,
INC.
A Smart Choice
For Seeking Maximum
Growth Potential
INVESCO FUNDS
<PAGE>
Market Overview November 1996
Overheating -- or headed into a recession? That's the question analysts
have posed all year about the U.S. economy.
During the third quarter of 1996, growth moderated to a "normal/dull"
level of 2.2%. Representing a slowdown from the second quarter's relatively
torrid pace of 4.7%, the current level of economic expansion should be moderate
enough to stave off inflation fears. The rate of increase in wages, benefits,
and prices for consumer and industrial goods has not accelerated over the past
12 months; the Consumer Price Index will likely end 1996 up an annualized rate
of about 3.0% -- in line with the historical average.
The moderate inflation level represents a positive factor for the economy.
At the same time, though, the longevity of the current expansion -- over six
years -- remains a cause for concern; the post-World War II average is only four
and a half years. Negative growth hasn't been experienced since the first
quarter of 1993. If the growth rate again approaches 5%, many economists expect
the Federal Reserve Board to launch a preemptive strike against inflation, with
the concomitant danger of cutting the expansion short.
In mid-autumn, concern about the Fed and the national elections caused a
modest pullback in equity markets. Since then, with the political status quo
generally maintained vis-a-vis the president and Congress, and the economy
slowing on its own, the S&P 500 resumed its upward hike.
1997 is a post-presidential election year, when the stock market has
typically dropped, and volatility may well continue. Currently, valuations for
many individual stocks appear high. Moderate action from the Fed over the winter
- -- an increase of .25% in short-term interest rates, for example -- might be
interpreted by investors in a positive light, with a subsequent calming
influence on price swings. Conversely, heavy-handed measures could be viewed as
likely to trigger a recession, with negative consequences for corporate earnings
estimates -- and stock prices.
INVESCO Dynamics Fund
INVESCO Dynamics Fund
Average Annual Total Return
as of 10/31/96(1)
1 year 20.64%
-----------------------------------------
5 years 17.74%
-----------------------------------------
10 years 15.97%
-----------------------------------------
According to independent fund analyst Lipper Analytical Services, Dynamics
Fund ranked #9 of 55 capital appreciation funds for the 10-year period ended
10/31/96. Over the five-year period, the fund was ranked #11 of 81 funds, and
for the one-year period, #58 of 184 funds.(3)
<PAGE>
For the ten months ended 10/31/96, INVESCO Dynamics Fund achieved a total
return of 14.73%, compared to the S&P 500, which had a total return of 16.63%,
and the S&P MidCap 400, which had a total return of 12.70%. (Of course, past
performance does not guarantee future results.)(1),(2)
Over the past six months, investors have become more concerned about
companies' ability to sustain earnings growth. As a result, high quality growth
names have experienced relatively strong price appreciation. Dynamics Fund has
core investments in this type of stock, particularly in the consumer growth and
technology industries, enabling us to participate in the market advance. While
the July correction hit the retail and technology areas hard, we have maintained
the fund's overweightings in anticipation of a longer-term rebound.
Graph: Dynamics Fund 10-Year Total Return
vs. S&P 500
This line graph 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 10/31/96.
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 ten-year period ended 10/31/96. 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.(1),(2)
Strategic Summary
In pursuing its objective of long-term capital appreciation, Dynamics Fund
utilizes a two-pronged strategy. The fund's core investments are primarily
classic growth stocks in technology, consumer growth, and health care, typically
comprising 40% to 60% of assets. In an "outer ring" are more aggressive holdings
which we expect to hold for a shorter time period, seeking to benefit from
trends which will lead to rapid sales and earnings growth.
Standout performers among our technology holdings include Cisco Systems,
Cognos Inc, and Microsoft Corp. We remain unenthusiastic about most
Internet-related companies, preferring to focus on computer local networks such
as 3Com Corp, as well as entertainment software firms such as Electronic Arts
and Midway Games.
The health care area has been somewhat less rewarding of late. We closed
positions in several companies, in favor of a heightened weighting in
biotechnology firms such as Biogen Inc and Gilead Sciences. Stock prices have
been sparked by a good flow of information on positive clinical trials.
Our non-core holdings include retail-focused companies such as American
Stores, Finish Line, Liz Claiborne, NIKE Inc, and Rite Aid. For selected
department and specialty stores, in particular, the near-term outlook is good,
given predictions of a relatively strong holiday season and the continued
potential for teen apparel and footwear.
<PAGE>
At the time of our annual report dated 4/30/96, we had temporarily built
up our weighting in energy companies. Overall, this strategy has worked well due
to advances in exploration, which increases their odds of identifying promising
wells, while lowering costs. Over the past six months, we took profits in some
of these companies and purchased several new names, including Nuevo Energy and
Flores & Rucks.
Our foray into agriculture-related equities fared less well; late in the
spring, we closed our positions in these stocks.
Fund Management
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. Before joining INVESCO in 1992, Tim was an analyst
and portfolio manager with Mississippi Valley Advisors.
(1)Total return assumes reinvestment of dividends and capital gain distributions
for the periods indicated. Past performance is not a guarantee of future
results. Investment return and principal value will fluctuate so that, when
redeemed, an investor's shares may be worth more or less than when purchased.
(2)The S&P 500 is an unmanaged index of common stocks 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.
(3)Rankings provided by Lipper Analytical Services, an independent fund analyst,
are based upon total return performance unadjusted for commissions.
<PAGE>
INVESCO Dynamics Fund, Inc.
Ten Largest Common Stock Holdings
October 31, 1996
Description Value
- ------------------------------------------------------------------------
Toys "R" Us $30,487,500
Fluor Corp 26,200,000
Liz Claiborne 25,045,800
Electronic Arts 24,375,000
Vons Cos 24,254,250
Computer Associates International 23,650,000
Oracle Corp 21,156,250
Finish Line Class A 19,928,250
Microsoft Corp 18,528,750
NIKE Inc Class B 17,662,500
Composition of holdings is subject to change.
<PAGE>
INVESCO Dynamics Fund, Inc.
Statement of Investment Securities
October 31, 1996
UNAUDITED
Country Shares or
Code if Principal
Non US Amount Value
- ------------------------------------------------------------------------------
COMMON STOCKS 95.27%
AUDIO/VIDEO RELATED 0.73%
Granada Group PLC UK 425,000 $6,121,359
-----------
BANKING 1.53%
Banc One 300,000 12,712,500
-----------
BIOTECHNOLOGY 2.40%
Biogen Inc* 100,000 7,450,000
Gilead Sciences* 300,000 7,012,500
Human Genome Sciences* 40,000 1,460,000
INCYTE Pharmaceuticals* 100,000 4,050,000
-----------
19,972,500
-----------
BUILDING & CONSTRUCTION
RELATED 3.15%
Fluor Corp 400,000 26,200,000
-----------
BUSINESS & COMMERCIAL
SERVICES 2.06%
CUC International* 700,000 17,150,000
-----------
CABLE TELEVISION 1.71%
Cox Communications Class A* 350,000 6,475,000
Tele-Communications Inc -
Liberty Media Group Series A* 300,000 7,725,000
-----------
14,200,000
-----------
CHEMICALS 1.62%
Agrium Inc CA 1,007,700 13,477,987
-----------
COMPUTER LOCAL NETWORKS 3.07%
3Com Corp* 250,000 16,906,250
Cisco Systems* 140,000 8,662,500
-----------
25,568,750
-----------
COMPUTER SOFTWARE 16.45%
CAP Gemini Sogeti SA* FR 200,000 9,749,047
Cognos Inc* CA 300,000 9,412,500
Computer Associates International 400,000 23,650,000
Electronic Arts* 650,000 24,375,000
<PAGE>
Epic Design Technology* 100,000 2,450,000
Konami Co Ltd JA 400,000 13,082,496
Microsoft Corp* 135,000 18,528,750
Netscape Communications* 180,000 7,965,000
Oracle Corp* 500,000 21,156,250
Square Co Ltd JA 125,000 6,484,100
-----------
136,853,143
-----------
DIVERSIFIED COMPANIES 0.84%
Hutchison Whampoa Ltd HK 1,000,000 6,983,712
-----------
EDUCATION & TRAINING 0.46%
National Education* 234,600 3,812,250
-----------
ELECTRONICS 3.66%
Intel Corp 100,000 10,987,500
Leitch Technology* CA 550,000 11,073,239
Linear Technology 250,000 8,375,000
-----------
30,435,739
-----------
ENGINEERING 1.48%
Foster Wheeler 300,000 12,300,000
-----------
FINANCE RELATED 0.60%
Groupe Axime* FR 47,221 4,964,120
-----------
FOOD PRODUCTS & BEVERAGES 0.19%
Redhook Ale Brewery* 100,000 1,550,000
-----------
GAMING 1.45%
Midway Games* 200,000 4,000,000
Trump Hotels & Casino Resorts* 506,800 8,045,450
-----------
12,045,450
-----------
HOTELS 0.23%
Thistle Hotels PLC
Sponsored ADR*^ UK 70,000 1,909,299
-----------
MEDICAL PRODUCTS 1.46%
IDEC Pharmaceuticals* 300,000 6,487,500
SEQUUS Pharmaceutical* 400,000 5,625,000
-----------
12,112,500
-----------
MEDICAL RELATED - DRUGS 5.18%
Astra AB Series B Shrs SW 250,000 11,425,125
Glaxo Wellcome PLC
Sponsored ADR UK 450,000 14,175,000
Warner-Lambert Co 275,000 17,496,875
-----------
43,097,000
-----------
<PAGE>
METALS & MINING 1.27%
Getchell Gold* 100,000 4,450,000
Titanium Metals* 200,000 6,150,000
-----------
10,600,000
-----------
MOTION PICTURES & TELEVISION 0.52%
Gaylord Entertainment Class A 217,612 4,297,837
-----------
OIL & GAS RELATED 8.33%
Abacan Resource* CA 300,000 2,287,500
Flores & Rucks* 201,400 9,516,150
Nuevo Energy* 350,000 17,456,250
Reading & Bates 300,000 8,625,000
Snyder Oil 400,000 6,100,000
Tejas Gas* 123,750 5,027,344
USX-Marathon Group 350,000 7,656,250
Union Pacific Resources Group 200,000 5,500,000
United Meridian* 151,500 7,139,438
-----------
69,307,932
-----------
PRINTING & PUBLISHING 0.82%
News Corp Ltd ADR AS 300,000 6,787,500
-----------
REAL ESTATE RELATED 0.96%
Filinvest Development*^ RP 3,000,000 1,118,730
Starwood Lodging Trust SBI 153,000 6,885,000
-----------
8,003,730
-----------
RECREATION PRODUCTS 0.44%
WMS Industries* 150,000 3,675,000
-----------
RETAIL 20.80%
American Stores 400,000 16,550,000
Claire's Stores 798,000 13,566,000
Finish Line Class A* 468,900 19,928,250
Nine West Group* 100,000 4,987,500
Price/Costco Inc* 750,000 14,906,250
Rite Aid 300,000 10,200,000
Saks Holding* 160,000 5,600,000
TJX Cos 418,600 16,744,000
Toys "R" Us* 900,000 30,487,500
Vons Cos* 438,000 24,254,250
Wet Seal Class A* 501,500 15,797,250
-----------
173,021,000
-----------
SEMICONDUCTOR EQUIPMENT 0.81%
National Semiconductor* 350,000 6,737,500
-----------
<PAGE>
TELECOMMUICATIONS 5.00%
MFS Communications* 350,000 17,543,750
Newbridge Networks* CA 407,800 12,896,675
NEXTEL Communications Class A* 700,000 11,200,000
-----------
41,640,425
-----------
TEXTILES & APPAREL
MANUFACTURERS 7.01%
Jones Apparel Group* 500,000 15,625,000
Liz Claiborne 592,800 25,045,800
NIKE Inc Class B 300,000 17,662,500
-----------
58,333,300
-----------
TRANSPORTATION 1.04%
Wisconsin Central
Transportation* 240,000 8,640,000
-----------
TOTAL COMMON STOCKS
(Cost $695,810,367) 792,510,533
-----------
PREFERRED STOCKS 0.85%
PRINTING & PUBLISHING 0.85%
News Corp Ltd Sponsored ADR
Representing Ltd Voting
Pfd Shrs (Cost $7,472,760) AS 400,000 7,100,000
-----------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 3.88%
FINANCE RELATED 1.27%
Associates Corp of North America
5.650%, 11/1/1996 10,543,000 10,543,000
-----------
INVESTMENT BROKERS 2.61%
Merrill Lynch & Co
5.280%, 11/1/1996 21,690,000 21,690,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $32,233,000) 32,233,00
-----------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $735,516,127)
(Cost for Income Tax Purposes
$736,230,601) 831,843,533
===========
* Security is non-income producing.
^ The following are restricted securites at October 31, 1996:
<PAGE>
Value as
Acquisition Acquisition % of
Description Date Cost Net Assets
- ------------------------------------------------------------------------------
Filinvest Development 10/4/95 $1,514,684 0.13%
Thistle Hotels PLC
Sponsored ADR 10/2/96 1,861,160 0.23
-----------
0.36%
===========
Summary of Investments by Country
% of
Country Investment
Country Code Securities Value
- ------------------------------------------------------------------------------
Australia AS 1.67% $13,887,500
Canada CA 5.91 49,147,901
France FR 1.77 14,713,167
Hong Kong HK 0.84 6,983,712
Japan JA 2.35 19,566,596
Philippines RP 0.14 1,118,730
Sweden SW 1.37 11,425,125
United Kingdom UK 2.67 22,205,658
United States US 83.28 692,795,144
-------------------------
100.00% $831,843,533
=========================
See Notes to Financial Statements
<PAGE>
INVESCO Dynamics Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
UNAUDITED
ASSETS
Investment Securities at Value
(Cost $735,516,127) $831,843,533
Cash 357,499
Foreign Currency (Cost $153,854) 153,909
Receivables:
Investment Securities Sold 22,127,340
Fund Shares Sold 7,740,820
Dividends and Interest 287,751
Prepaid Expenses and Other Assets 140,701
---------------
TOTAL ASSETS 862,651,553
---------------
LIABILITIES
Payables:
Investment Securities Purchased 24,395,663
Fund Shares Repurchased 1,573,072
Accrued Distribution Expenses 181,202
Depreciation on Forward Foreign
Currency Contracts 9,585
Accrued Expenses 33,111
---------------
TOTAL LIABILITIES 26,192,633
---------------
Net Assets at Value $836,458,920
===============
NET ASSETS
Paid-in Capital* $658,359,317
Accumulated Undistributed
Net Investment Loss (726,656)
Accumulated Undistributed Net
Realized Gain on Investment
Securities and Foreign
Currency Transactions 82,500,292
Net Appreciation of Investment
Securities and Foreign
Currency Transactions 96,325,967
---------------
Net Assets at Value $836,458,920
===============
Net Asset Value, Offering and
Redemption Price per Share $14.14
=======
* The Fund has 100 million authorized shares of common stock, par value of $0.01
per share, of which 59,159,482 were outstanding at October 31, 1996.
See Notes to Financial Statements
<PAGE>
INVESCO Dynamics Fund, Inc.
STATEMENT OF OPERATIONS
Six Months Ended October 31, 1996
UNAUDITED
INVESTMENT INCOME
INCOME
Dividends $2,645,525
Interest 1,168,195
Foreign Taxes Withheld (98,648)
---------------
TOTAL INCOME 3,715,072
---------------
EXPENSES
Investment Advisory Fees 2,211,722
Distribution Expenses 974,509
Transfer Agent Fees 913,653
Administrative Fees 63,345
Custodian Fees and Expenses 122,310
Directors' Fees and Expenses 21,087
Professional Fees and Expenses 26,455
Registration Fees and Expenses 66,573
Reports to Shareholders 93,977
Other Expenses 8,318
---------------
TOTAL EXPENSES 4,501,949
Fees and Expenses Paid Indirectly (59,791)
---------------
NET EXPENSES 4,442,158
---------------
NET INVESTMENT LOSS (727,086)
---------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 10,184,245
Change in Net Appreciation of Investment
Securities and Foreign Currency
Transactions 14,309,686
---------------
NET GAIN ON INVESTMENT SECURITIES 24,493,931
---------------
Net Increase in Net Assets
from Operations $23,766,845
===============
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
-------------- -------------
1996 1996
UNAUDITED
OPERATIONS
Net Investment Income (Loss) $(727,086) $921,341
Net Realized Gain on Investment
Securites and Foreign
Currency Transactions 10,184,245 123,157,502
Change in Net Appreciation of
Investment Securities and
Foreign Currency Transactions 14,309,686 54,919,111
-------------- -------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 23,766,845 178,997,954
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (923,230)
In Excess of Net Investment
Income 0 (49,570)
Net Realized Gain on Investment
Securities 0 (76,317,721)
-------------- -------------
TOTAL DISTRIBUTIONS 0 (77,290,521)
-------------- -------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 446,266,711 702,306,362
Reinvestment of Distributions 0 75,476,587
-------------- -------------
446,266,711 777,782,949
-------------- -------------
Amounts Paid for Repurchases
of Shares (411,990,394) (522,674,650)
-------------- -------------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS 34,276,317 255,108,299
-------------- -------------
Total Increase in Net Assets 58,043,162 356,815,732
NET ASSETS
Beginning of Period 778,415,758 421,600,026
-------------- -------------
End of Period (Including
Accumulated Undistributed
Net Investment Income (Loss)
of ($726,656) and $430,
respectively $836,458,920 $778,415,758
============== =============
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 32,908,543 54,748,807
Shares Issued from Reinvestment
of Distributions 0 6,109,290
-------------- -------------
32,908,543 60,858,097
Shares Repurchased (30,935,514) (40,733,273)
-------------- -------------
Net Increase in Fund Shares 1,973,029 20,124,824
============== =============
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"), was incorporated in Maryland. The investment objective of the Fund
is to seek appreciation of capital. The Fund is registered under the Investment
Company Act of 1940 (the "Act") as a diversified, open-end management investment
company.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
A. SECURITY VALUATION- Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales price
in the market where such securities are primarily traded. If last sales prices
are not available, securities are valued at the highest closing bid price
obtained from one or more dealers making a market for such securities or by a
pricing service approved by the Fund's board of directors. Foreign securities
are valued at the closing price on the principal stock exchange on which they
are traded. In the event that closing prices are not available for foreign
securities, prices will be obtained from the principal stock exchange at or
prior to the close of the New York Stock Exchange. Foreign currency exchange
rates are determined daily prior to the close of the New York Stock Exchange. 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 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 dividend if such information is
obtained subsequent to the ex dividend date. Interest income, which may be
comprised of stated coupon rate, market discount and original issue discount, is
recorded on the accrual basis. Cost is determined on the specific identification
basis.
<PAGE>
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. Net realized and
unrealized gain or loss from investments includes fluctuations from
currency exchange rates and fluctuations in market value.
The Fund's use of short-term forward foreign currency contracts may
subject it to certain risks as a result of unanticipated movements in
foreign exchange rates. The Fund does not hold short-term forward foreign
currency contracts for trading purposes. The Fund may hold foreign
currency in anticipation of settling foreign security transactions and not
for investment purposes.
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
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.
<PAGE>
E. FORWARD FOREIGN CURRENCY CONTRACTS - The Fund enters into short-term
forward foreign currency contracts in connection with planned purchases or
sales of securities as a hedge against fluctuations in foreign exchange
rates pending the settlement of transactions in foreign securities. A
forward foreign currency contract is an agreement between contracting
parties to exhcnage 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.
F. EXPENSES - Under an agreement 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. Similarly, Other
Expenses, which include Pricing Expenses, and Transfer Agent Fees are
reduced by credits earned by the Fund from security brokerage transactions
under certain broker/service arrangements with third parties. Such
credits are included in Fees and Expenses Paid Indirectly in the Statement
of Operations.
For the six months ended October 31, 1996, Fees and Expenses Paid
Indirectly consisted of $59,266, $313 and $212 included in Custodian Fees
and Expenses, Transfer Agent Fees and Other Expenses, respectively.
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% on 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 at an annual rate of $20.00 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 annual average net assets. Amounts
accrued by the Fund are available to reimburse the Distributor for actual
expenditures incurred within a rolling twelve-month period. For the six
<PAGE>
months ended October 31, 1996, the Fund paid the Distributor $945,068 for
reimbursement of expenses incurred.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months ended
October 31, 1996, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were $715,881,189 and $669,177,244, respectively. There were no
purchases or sales of U.S. Government securities.
NOTE 4 - APPRECIATION AND DEPRECIATION. At October 31, 1996, the gross
appreciation of securities in which there was an excess of value over tax
cost amounted to $118,547,774 and the gross depreciation of securities in which
there was an excess of tax cost over value amounted to $22,934,842, resulting in
net appreciation of $95,612,932.
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 unfunded deferred compensation plan covering all
independent directors of the Fund who will have served as an independent
director for at least five years at the time of retirement. Benefits under this
plan were based on an annual rate equal to 25% of the retainer fee at the time
of retirement. As of July 1, 1996, benefits are based on an annual rate of 40%
of the retainer fee at the time of retirement.
Pension expenses for the six months ended Octbober 31, 1996, included in
Directors' Fees and Expenses in the Statement of Operations were $3,002.
Unfunded accrued pension costs of $8,454 and pension liability of $23,198 are
included in Prepaid Expenses and Accrued Expenses, respectively, in the
Statement of Assets and Liabilities.
NOTE 6 - LINE OF CREDIT. The Fund has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 5% of the Net Assets at Value of the Fund. The Fund
agrees to pay annual fees and interest on the unpaid principal balance based on
prevailing market rates as defined in the agreement. For the six months ended
October 31, 1996, there were no such borrowings.
<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
------------- -----------------------------------------------------------
1996 1996 1995 1994 1993 1992
UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $13.61 $11.38 $10.15 $10.89 $9.57 $8.50
------------- -----------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss) (0.01) 0.02 0.03 (0.02) (0.03) (0.02)
Net Gain on Securities
(Both Realized and
Unrealized) 0.54 3.94 1.34 1.99 1.64 2.05
------------- -----------------------------------------------------------
Total from Investment
Operations 0.53 3.96 1.37 1.97 1.61 2.03
------------- -----------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.00 0.02 0.03 0.00 0.00 0.00
Distributions from
Capital Gains 0.00 1.71 0.11 2.71 0.29 0.96
------------- -----------------------------------------------------------
Total Distributions 0.00 1.73 0.14 2.71 0.29 0.96
------------- -----------------------------------------------------------
Net Asset Value -
End of Period $14.14 $13.61 $11.38 $10.15 $10.89 $9.57
============= ===========================================================
TOTAL RETURN 3.89%* 36.32% 13.57% 17.86% 16.80% 23.47%
RATIOS
Net Assets -End of Period
($000 Omitted) $836,459 $778,416 $421,600 $287,293 $231,100 $153,956
Ratio of Expenses to
Average Net Assets# 0.58%*@ 1.14%@ 1.20% 1.17% 1.20% 1.18%
Ratio of Net Investment
Income (Loss) to Average
Net Assets# (0.09%)* 0.16% 0.33% (0.37%) (0.38%) (0.17%)
Portfolio Turnover Rate 91%* 196% 176% 169% 144% 174%
Average Commission
Rate Paid^^ $0.0967* - - - - -
</TABLE>
<PAGE>
+ Distributions in excess of net investment income for the year ended April 30,
1996, aggregated less than $0.01 on a per share basis.
* 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 is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
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
You can find us on the World Wide Web:
http://www.invesco.com
Or write to:
INVESCO Funds Group, Inc.(SM), Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, please 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.
