The Global Health Sciences Fund
Semi-Annual Report
Table of Contents
- ---------------------------------------------------------------------------
Report of Investment Manager 1
- ---------------------------------------------------------------------------
Statement of Investment Securities 8
- ---------------------------------------------------------------------------
Statement of Assets and Liabilities 16
- ---------------------------------------------------------------------------
Statement of Operations 17
- ---------------------------------------------------------------------------
Statement of Cash Flows 18
- ---------------------------------------------------------------------------
Statement of Changes in Net Assets 19
- ---------------------------------------------------------------------------
Notes to Financial Statements 20
- ---------------------------------------------------------------------------
Quarterly Results of Operations 24
- ---------------------------------------------------------------------------
Financial Highlights 25
- ---------------------------------------------------------------------------
Other Information:
Dividend Reinvestment Plan 26
Annual Shareholders Meeting 27
Miscellaneous 27
- ---------------------------------------------------------------------------
<PAGE>
April 30, 1995
Semi-Annual Report
Manager's Comments
Dear Shareholder:
The outlook for health care has improved dramatically since the middle of 1994.
Health care stocks, accordingly, have displayed strong performance, with the
benchmark S&P Health Care Composite Index registering a 29% gain over this time
period. A variety of factors have fueled this resurgence.
O The most notable has been political. With the death of President Clinton's
health care reform initiative, the clouds that hung over health care equities
for more than two years have finally cleared, and investors once again have
confidence in this sector of the stock market.
O The market "rotation" out of economically sensitive sectors into stable
growth sectors, reflects investors' growing concerns about rising interest
rates and their impact on future economic growth--clearly, health care stocks
have benefitted from this trend.
O The recent slide in the value of the dollar versus other foreign currencies
has given health care companies' earnings a strong boost. This trend should
continue at least through the first half of calendar 1995.
O The acceleration in unit volume growth reported by many health care
providers--we believe this indicates that demand for health care goods and
services is returning to historically consistent levels.
O Consolidation within the health care industry has provided a boost as many
companies attempt to gain economies of scale and product breath.
O The realistic potential for Food and Drug Administration ("FDA") reform--any
shortening of the FDA approval process that does not impact safety and
efficacy bodes well for the health care industry as it would allow companies
to bring new products to the market faster.
PERFORMANCE
While past performance is no guarantee of future results, the net asset value
("NAV") performance and the share price performance of The Global Health
Sciences Fund (the "Fund") were extremely strong during the six month period
ending April 30,1995. During this period, the Fund's NAV and stock price have
outperformed the Dow Jones Industrial Average, the S&P 500 and the S&P Health
Care Composite Index. The Fund's NAV rose 16.6%, while the stock price rose
15.0%. This compares to gains of 12.1% for the Dow Jones Industrial Average,
10.4% for the S&P 500 and 11.6% for the S&P Health Care Composite
1
<PAGE>
Index. Obviously, we are very pleased with both our absolute and relative
performance over this period. Unfortunately, the Fund's stock price continues to
trade at a discount to NAV. At April 30, 1995, the Fund's stock price was
trading at a discount of 20.3%. Fund management has gone to great lengths, over
the last number of months, to get the Fund's "story" out to investors and
brokers. We are hopeful that greater awareness of the Fund, coupled with strong
NAV performance, will help to close the discount.
As displayed in the following graph, since the inception of the Fund (January
24, 1992) its NAV is up 5.7%, versus a 5.8% decline in the S&P Health Care
Composite Index. Although we are pleased with this relative performance, we are
disappointed in the performance of the Fund's share price. The share price of
the Fund has fallen 22.1% since inception, despite the fact that the NAV is
higher than when the Fund was launched. Again, management is mindful of the
under performance in the Fund's share price (and large discount to NAV) and is
working to address this problem.
[GRAPH]
2
<PAGE>
INVESTMENT STRATEGY
The investment themes that have guided the investment process in the past will
prevail going forward. We are constantly looking for companies that have one or
more of the following characteristics:
O Expanding global opportunities
O New technological innovations for unsolved medical needs
O Low cost solutions and services for health care purchasers
O Benefactors of consolidation
In addition to monitoring the specific weighting or exposure of any given
company in the portfolio, we also manage the percentage of the portfolio that is
invested in any given sub-sector of the industry. Fundamentals and valuation
will drive the investment decision process. Clearly, the investment process is
"bottoms up" (company specific analysis), although we utilize macro analysis to
cross-check our thinking.
RECENT CHANGES AND OUTLOOK
As you know, we break down the health care industry into four basic sub-sectors:
biotechnology, health care delivery, medical devices & supplies and
pharmaceuticals. The graph below displays the changes that have occurred during
the past six months.
[CHART]
3
<PAGE>
Biotechnology
The biotechnology sector is currently one of the more attractive sectors in
health care. Nevertheless, investing in biotechnology can be tricky and we hope
to cautiously navigate the Fund's allocation in this group. We look for
companies with strong technology platforms and sufficient cash to fund product
development. With only 14% of the portfolio currently invested in this sector,
we do not anticipate dramatically increasing our weighting in this area over the
near term, we plan a gradual and selective increase in over time.
As a result of the proliferation of initial public offerings of biotech
companies during 1990 and 1991 and the current dearth of capital, there are a
significant number of companies that will either be acquired or flounder. Those
companies with truly innovative research will survive and/or be acquired, as the
large pharmaceutical companies outsource research and development. Companies
with marginal research and development programs are expected to struggle, as
sources of capital continue to dry up. Investors and "funders" of research have
become much more discerning, and marginal participants will be forced to look
for an "exit strategy" or to quickly acquire technology which would enhance
their future prospects. Unfortunately, founders of many biotech companies treat
their company as one of their children, decisions become emotional as opposed to
rational. These are definitely companies we hope to avoid.
Health Care Delivery
As you can see from the graph, we have meaningfully reduced our exposure in this
sub-sector. Last February, we reduced our weighting in health maintenance
organizations ("HMOs") from over 8% of the Fund to 4%. At that time, we had
concerns that the pricing environment would become more difficult. In addition,
we had concerns that medical costs would rise causing margins to decline. We
continue to have this concern. As we now know, this segment was severely
punished in the market during April and May, and in hindsight we should have
completely liquidated the Fund's exposure to HMOs. We are now completely out of
this sub-sector and feel it may be prudent to "stand on the sidelines" for the
time being. We will recommit funds to the HMO sector once fundamentals improve
and/or valuations become more compelling. Aside from HMOs, we are satisfied with
our 24% exposure to the health care delivery area and do not anticipate changing
this in the near future. We believe our substantial positions in Homedco Group,
HBO & Co, PhyCor and Columbia/HCA Healthcare will provide a positive
representation of this sector within the portfolio.
Medical Devices & Supplies
This sub-sector has had a very difficult time over the past few years, an issue
we have discussed in previous reports. We believe the environment has changed
and that fundamentals are improving. As a result, we have meaningfully increased
our weighting in this sector from 16% of total net assets at fiscal year
4
<PAGE>
end 1994, to 34% on April 30,1995. We believe the most important fundamental
factor is that physician practice patterns seem to have changed for the better.
During 1992-93, with the threat of health care reform looming, many physicians
began to practice medicine more conservatively. As a result, hospital admissions
and surgical procedures slowed. About the middle of 1994, hospital admissions
and surgical procedures once again began to increase at a normal pace. The table
below displays industry data compiled by the American Hospital Association
("AHA") and Columbia/HCA Healthcare ("COL").
Growth Rates In
------------------------------------------------------
U.S. Hospital Admissions Surgical Procedures
------------------------ -------------------
Time Period AHA COL AHA COL
- ----------- ---- ---- ---- ----
1Q 1994 .............. 0.2% 1.8% 0.3% N/A
2Q 1994 .............. 1.2% 1.5% 2.5% N/A
3Q 1994 .............. 0.9% 2.3% 2.9% N/A
4Q 1994 .............. 1.3% 2.0% 4.5% N/A
1Q 1995* ............. 2.0% 5.2% 6.5% 7.8%
- ----------
* AHA data is trailing three months, year over year, for the period ending
February 1995.
Based on the data illustrated above, it is clear that the trend in admissions
and surgical procedures has become much more positive. First quarter results
recently reported by Columbia/HCA revealed that its hospital admissions
increased 5.2% versus last year's first quarter growth of 1.8%. Surgical
procedures also displayed strong growth during the first quarter, up 7.8%.
(Unfortunately Columbia/HCA does not have 1994 quarterly data against which to
compare recent results.)
These trends argue for increased demand of medical devices & supplies.
Confirmation of this increased demand has come from reports of accelerated unit
demand by companies manufacturing and selling these products. Recent additions
to the portfolio in this area include: Biomet, Protocol Systems, Puritan
Bennett, and Sofamor/Danek Group.
Pharmaceuticals
We began the fiscal year with 31% of the Fund in pharmaceuticals; currently, 22%
of the Fund is devoted to this sub-sector. The bulk of the reduction has come
from large-capitalization drug companies. We believe selectivity will be crucial
in achieving performance going forward and have narrowed our holdings of large
drug companies from eight to three. We will opportunistically add names as
market conditions warrant. The fundamentals of this area are still weak, with
patent expirations and generic competition prevalent. In addition, large buyers
of drugs (pharmacy benefit management companies, HMOs and large employer groups)
will continue to put pressure on the group. We believe consolidation is
5
<PAGE>
likely to continue, but it will be difficult to predict "who" and "when" because
many of the potential buyers have already made their moves.
Private Placements
Currently 17.9% of the Fund is invested in private placements (please refer to
the Schedule of Restricted Securities on page 14). The breakdown by sectors is
as follows:
Sub-Sector Weight
---------- ------
Biotechnology ..................................... 6.6%
Health Care Delivery .............................. 2.2%
Medical Devices & Supplies ........................ 7.4%
Pharmaceuticals ................................... 1.7%
------
Total ........................................... 17.9%
======
As you are aware, the Fund's prospectus allows up to 25% of its assets to be
invested in private companies. Because of the current state of the financial
markets, we are not likely to invest in any new private companies over the
near-to intermediate-term. If necessary, we will devote the assets under the 25%
private placement cap to support private companies currently owned in the
portfolio.
It is worth mentioning that almost one-quarter of the private placements in the
portfolio are in companies that have subsequently gone public. These positions
are valued at a discount to their public market price since they are not freely
tradable securities (noted in the Schedule of Restricted Securities on page 14).
They will be marked up systematically as they reach full liquidity. During the
last six months, two companies in which we had made private placement
investments have come public--Biocompatibles International PLC and Corvita
Corporation. When the annual report is produced at fiscal year-end we hope to be
able to report that three more private companies, owned by the Fund, have become
public.
Top Ten Holdings
The following table portrays the Fund's top ten holdings. As you can see, these
holdings represent 30% of the Fund, versus 24% at the end of the fiscal year. We
have been slowly reducing the total number of holdings, resulting in more
concentrated investments. For example, we currently hold 45 different public
company names, whereas at last fiscal year end we had 70 names in the portfolio.
6
<PAGE>
Top Ten Holdings as of April 30, 1995
Percent of
Description Shares Net Assets
----------- ------- ----------
Boston Scientific ......................... 436,240 4.0%
HBO & Co .................................. 239,000 3.7%
Sofamor/Danek Group ....................... 385,000 3.2%
Nellcor Inc. .............................. 211,000 3.0%
Mylan Laboratories ........................ 279,000 2.9%
A L Pharma, Class A ....................... 350,000 2.8%
Circa Pharmaceuticals ..................... 339,000 2.8%
Homedco Group ............................. 141,800 2.7%
Amgen Inc ................................. 110,000 2.7%
Biomet Inc ................................ 430,000 2.5%
-----
Total ................................... 30.3%
=====
CONCLUSION
We continue to be enthusiastic about the outlook for investing in the health
care industry. Science and technology continue to move forward and investor
psychology has improved. Valuations of most health care company stocks are still
attractive and we believe the portfolio is positioned to benefit from the
changes that are occurring in health care. We believe that The Global Health
Sciences Fund is the best way to invest in the health care industry. Thank you
for your investment and support.
Sincerely,
[Signature]
Barry Kurokawa
Portfolio Manager & Vice President, The Global Health Sciences Fund
Senior Vice President, INVESCO Trust Company
April 1995
7
<PAGE>
The Global Health Sciences Fund
Statement of Investment Securities
April 30, 1995
UNAUDITED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Country,
if
Description Applicable Shares Value
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
& WARRANTS 81.11%
BIOTECHNOLOGY 9.26%
Alexion Pharmaceuticals * + # ............. 312,500 $ 587,500
Alexion Pharmaceuticals Warrants
(Exp 1997) * + ........................... 78,125 0
Amgen Inc * ............................... 110,000 7,995,625
Athena Neurosciences * .................... 330,000 2,268,750
BioCryst Pharmaceuticals * + .............. 166,666 956,246
Cephalon Inc * ............................ 50,000 412,500
Creative BioMolecules * ................... 400,000 950,000
Ecogen Technologies I * + # ............... 60 792,000
Glyko Biomedical Ltd * .................... CA 463,000 289,460
I D Biomedical * .......................... CA 471,920 6,960,820
Incyte Pharmaceuticals * .................. 150,000 2,456,250
Incyte Pharmaceuticals * + ................ 200,000 2,947,500
LXR Biotechnology * # ..................... 425,000 584,375
MedClone Inc Warrants
(Exp 1998) * + ........................... 209,300 0
Pharmos Corp * ............................ 258,334 226,042
Unisyn Technologies * + ................... 20,755 20,755
Unisyn Technologies Warrants
(Exp 2000) * + ........................... 1 0
-----------
27,447,823
-----------
HEALTH CARE DELIVERY 21.82%
American Homepatient * .................... 102,000 3,200,250
Amerisource Health, Class A ............... 50,000 1,106,250
Caremark International .................... 365,000 6,387,500
CliniCom Inc * ............................ 190,000 3,752,500
Columbia/HCA Healthcare ................... 179,100 7,522,200
HBO & Co .................................. 239,000 10,934,250
Homedco Group * ........................... 141,800 8,118,050
Living Centers of America * ............... 85,000 2,411,875
Medical Associates of America * + # ....... 502,935 1
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Country,
if
Description Applicable Shares Value
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH CARE DELIVERY--(continued)
OrNda Healthcorp * ........................ 187,000 $ 3,272,500
PhyCor Inc * .............................. 127,500 4,048,125
Physician Corp of America * ............... 62,000 1,108,250
Renal Treatment Centers * ................. 186,500 4,662,500
Salick Health Care ........................ 137,000 4,726,500
Sun Healthcare Group * .................... 142,000 3,425,750
-----------
64,676,501
-----------
MEDICAL DEVICES & SUPPLIES 29.28%
ATS Medical * ............................. 166,666 1,312,495
ATS Medical Warrants
(Exp 1997) * + ........................... 166,666 0
Baxter International ...................... 182,000 6,324,500
Becton Dickenson & Co ..................... 102,000 5,686,500
Biocompatibles International PLC * + # .... UK 1,600,000 3,417,315
Biomet Inc * .............................. 430,000 7,525,000
Boston Scientific ......................... 436,240 11,887,540
Corvita Corp * + .......................... 217,292 820,599
Corvita Corp Warrants
(Exp 1999) * + ........................... 16,114 0
Diametrics Medical * + .................... 326,221 1,733,049
EP Technologies * ......................... 200,000 1,875,000
Electroscope Inc * + # .................... 150,000 750,000
Electroscope Inc Warrants
(Exp 1996) * + ........................... 40,000 0
Guidant Corp * ............................ 370,000 7,353,750
IDEXX Laboratories * ...................... 142,000 6,106,000
Imatron Inc Warrants
(Exp 1996) * + ........................... 400,000 40,000
Intelligent Surgical Laser Warrants
Class B (Exp 2000) * ..................... 135,000 42,187
Matritech Inc * ........................... 414,900 1,063,181
Nellcor Inc * ............................. 211,000 8,756,500
Orthologic Corp * ......................... 285,714 1,357,142
Protocol Systems * # ...................... 530,000 5,035,000
Puritan Bennett * ......................... 123,500 3,041,188
Sofamor/Danek Group * ..................... 385,000 9,336,250
UroMed Corp * ............................. 20,000 140,000
UroMed Corp * + ........................... 219,467 1,382,642
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Country,
if
Description Applicable Shares Value
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
MEDICAL DEVICES
& SUPPLIES--(continued)
Ventritex Inc * ........................... 75,000 $ 1,125,000
Xillix Technologies * ..................... CA 711,538 680,347
-----------
86,791,185
-----------
PHARMACEUTICALS 20.75%
A L Pharma, Class A ....................... 350,000 8,356,250
American Home Products .................... 75,000 5,784,375
Astra AB Series A Free Shares ............. SW 200,000 5,835,960
Biovail Corp International * .............. CA 322,767 5,446,693
CIMA Labs * + ............................. 333,333 1,462,499
Circa Pharmaceuticals * ................... 339,000 8,263,125
Crown Laboratories * + # .................. 726,458 1,582,298
Dura Pharmaceuticals * .................... 240,000 3,675,000
Ethical Holdings PLC ADS * ................ UK 200,000 1,225,000
Matrix Pharmaceuticals * .................. 295,000 4,351,250
Merck & Co ................................ 125,000 5,359,375
Mylan Laboratories ........................ 279,000 8,579,250
Penederm Inc * ............................ 200,000 950,000
Shaman Pharmaceuticals * .................. 129,670 502,471
Shaman Pharmaceuticals * + ................ 36,997 129,027
-----------
61,502,573
-----------
TOTAL COMMON STOCKS
& WARRANTS
(Cost $199,505,675) ..................... 240,418,082
-----------
PREFERRED STOCKS 12.12%
BIOTECHNOLOGY 4.79%
Alexion Pharmaceuticals, Series A
Pfd * + # ................................ 526,316 1,000,000
Cadus Pharmaceuticals, Series A
Conv Pfd * + # ........................... 2,188,184 2,735,230
Ingenex Inc, Series B Pfd * + ............. 240,000 600,000
MedClone Inc, Series G Conv Pfd * + # ..... 872,096 1,500,005
Oculon Corp, Series III Sr Pfd * + ........ 1,067,962 234,952
Osiris Therapeutics, Series C
Conv Pfd * + ............................. 352,941 1,199,999
Synaptic Pharmaceuticals, Series 3
Conv Pfd * + ............................. 250,000 1,000,000
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Country,
if
Description Applicable Shares Value
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
BIOTECHNOLOGY--(continued)
Titan Pharmaceuticals, Series A Pfd *+ .... 922,617 $ 2,306,542
Unisyn Technologies, Series A
Conv Pfd * + # ........................... 758,258 758,258
Xenometrix Inc,
Series A Pfd * + # ....................... 1,500,000 2,250,000
Series B Pfd * + # ....................... 400,000 600,000
-----------
14,184,986
-----------
HEALTH CARE DELIVERY 2.20%
Med-E-Systems Corp, Series A
Pfd * + # ................................ 485,900 48,590
Med-E-Systems Corp, Series C
Conv Pfd * + # ........................... 200,000 1,500,000
Multum Information Services, Series B
Pfd * + # ................................ 1,000,000 1,750,000
Physicians Online, Series A Pfd * + ....... 2,410 3,220,965
-----------
6,519,555
-----------
MEDICAL DEVICES & SUPPLIES 4.46%
Adeza Biomedical Corp, Series II
Conv Pfd + # ............................. 1,000,000 1,000,000
Cambridge Heart, Series A Conv
Pfd * + # ................................ 1,300,000 1,300,000
Cardiometrics Inc, Series C Conv
Pfd * + .................................. 300,000 1,200,000
Clarus Medical Systems, Series E
Conv Pfd * + # ........................... 400,000 533,320
InterVentional Technologies, Series F
Pfd * + .................................. 250,000 2,125,000
Invision Technologies, Series A
Pfd * + .................................. 400,000 272,000
Janus Biomedical, Series A Conv
Pfd * + # ................................ 400,000 1,000,000
KeraVision Inc, Series E Pfd * + .......... 515,464 1,500,000
Metra Biosystems, Series E Pfd * + ........ 1,262,136 1,300,000
Norian Corp, Series D Pfd * + ............. 2,142,858 1,500,001
ORBTEK, Series A Conv Pfd * + # ........... 714,286 1,500,001
Tetrad Corp, Series B Pfd * + # ........... 1,142,858 100
-----------
13,230,422
-----------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Country, Shares or
if Principal
Description Applicable Amount Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
PHARMACEUTICALS 0.67%
Fuisz Technologies
Series C Conv Pfd * + .................... 89,552 $ 1,499,996
Series D Conv Pfd * + .................... 25,000 500,000
-----------
1,999,996
-----------
TOTAL PREFERRED STOCKS
(Cost $33,670,852) ....................... 35,934,959
-----------
FIXED INCOME SECURITIES 0.17%
BIOTECHNOLOGY 0.02%
MedClone Inc, 10.00% Promissory
Notes, 12/31/1995 + ...................... $ 55,260 55,260
-----------
HEALTH CARE DELIVERY 0.00%
Medical Associates of America,
7.00% Conv Sr Notes,
2/28/1999 + @ ........................... $ 1,689,904 100
-----------
MEDICAL DEVICES & SUPPLIES 0.15%
Clarus Medical Systems,
9.00% Promissory Notes,
3/22/1996 + .............................. $ 108,182 108,182
Tetrad Corp, 10.00% Senior
Subordinated Promissory Notes,
9/14/1995 + .............................. $ 353,000 353,000
-----------
461,182
-----------
TOTAL FIXED INCOME SECURITIES
(Cost $2,206,346) ........................ 516,542
-----------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Country,
if Principal
Description Applicable Amount Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER 6.60%
FINANCE RELATED 6.60%
Beneficial Corp
5.90%, 5/1/1995 .......................... $ 5,594,000 $ 5,594,000
Chevron Oil Finance Co
5.90%, 5/4/1995 .......................... 6,000,000 6,000,000
Sears Roebuck Acceptance Corp
5.93%, 5/2/1995 .......................... 1,200,000 1,200,000
5.93%, 5/3/1995 .......................... 6,762,000 6,762,000
------------
TOTAL COMMERCIAL PAPER
(Cost $19,556,000) ....................... 19,556,000
------------
TOTAL INVESTMENT
SECURITIES AT VALUE (100.00%)
(Cost $254,938,873) ..................... $296,425,583
============
<FN>
ADS American Depository Security
Pfd Preferred stock
Conv Pfd Convertible preferred stock
Sr Pfd Senior preferred stock
* Security is non-income producing.
+ Restricted or illiquid security as of April 30, 1995. See the following
page.
# Security is an affiliated company (See Note 3).
@ Security is a defaulted security with respect to cumulative interest
at April 30, 1995.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Summary of Investments by Country
% of Investment
Country Securities Value
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Canada ................................. CA 4.51% $ 13,377,320
Sweden ................................. SW 1.97% 5,835,960
United Kingdom ......................... UK 1.57% 4,642,315
United States .......................... 91.95% 272,569,988
------- ------------
100.00% $296,425,583
======= ============
</TABLE>
See Notes to Financial Statements
13
<PAGE>
<TABLE>
<CAPTION>
Schedule of Restricted or Illiquid Securities
Fair Value
Date Fair as a % of
Security Name Acquired Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ATS Medical Warrants (Exp 1997) 11/18/1992 $ 0 $ 0 0.00%
Adeza Biomedical Corp, Series II Conv Pfd 12/21/1994 1,000,000 1,000,000 0.34%
Alexion Pharmaceuticals 06/15/1993 1,000,000 587,500 0.20%
Alexion Pharmaceuticals, Series A Pfd 06/15/1993 1,000,000 1,000,000 0.34%
Alexion Pharmaceuticals Warrants (Exp 1997) 06/15/1993 0 0 0.00%
Biocompatibles International PLC 03/03/1993 1,600,000 3,417,315 + 1.15%
BioCryst Pharmaceuticals 11/12/1992 999,999 956,246 + 0.32%
Cadus Pharmaceuticals, Series A Conv Pfd 07/30/1993 1,000,000 2,735,230 0.92%
Cambridge Heart, Series A Conv Pfd 09/29/1993 1,300,000 1,300,000 0.44%
Cardiometrics Inc, Series C Conv Pfd 03/17/1993 1,200,000 1,200,000 0.40%
CIMA Labs 05/07/1992 999,999 1,462,499 + 0.49%
Clarus Medical Systems, Series E Conv Pfd 12/23/1992 2,000,000 533,320 0.18%
Clarus Medical Systems, 9.00%
Promissory Notes, 3/22/1996 11/15/1994 108,182 108,182 0.04%
Corvita Corp 11/05/1992 1,249,996 820,599 + 0.28%
Corvita Corp Warrants (Exp 1999) 11/04/1992 0 0 0.00%
Crown Laboratories 08/20/1993 1,089,698 1,582,298 + 0.53%
Diametrics Medical 12/07/1992 1,999,993 1,733,049 + 0.58%
Ecogen Technologies I 11/16/1992 684,000 792,000 0.27%
Electroscope Inc 04/27/1993 750,000 750,000 0.25%
Electroscope Inc Warrants (Exp 1996) 04/27/1993 0 0 0.00%
Fuisz Technologies, Series C Conv Pfd 09/28/1992 1,499,996 1,499,996 0.51%
Fuisz Technologies, Series D Conv Pfd 08/11/1994 500,000 500,000 0.17%
Imatron Inc Warrants (Exp 1996) 09/11/1992 400,000 40,000 0.01%
Incyte Pharmaceuticals 09/16/1992 1,000,000 2,947,500 + 1.00%
Ingenex Inc, Series B Pfd 09/27/1994 600,000 600,000 0.20%
InterVentional Technologies, Series F Pfd 10/19/1992 2,000,000 2,125,000 0.72%
Invision Technologies, Series A Pfd 09/11/1992 400,000 272,000 0.09%
Janus Biomedical Inc, Series A Conv Pfd 03/04/1994 1,000,000 1,000,000 0.34%
KeraVison Inc, Series E Pfd 11/19/1992 1,500,000 1,500,000 0.51%
MedClone Inc, Series G Conv Pfd 10/21/1993 1,500,005 1,500,005 0.51%
MedClone Inc, 10.00% Promissory
Notes, 12/31/1995 12/06/1994 55,260 55,260 0.02%
MedClone Inc Warrants (Exp 1998) 10/21/1993 0 0 0.00%
Med-E-Systems Corp, Series A Pfd 08/30/1993 48,590 48,590 0.02%
Med-E-Systems Corp, Series C Conv Pfd 01/27/1995 1,500,000 1,500,000 0.51%
Medical Associates of America 02/24/1992 530,491 1 0.00%
Medical Associates of America
7.00%, Conv Sr Notes, 2/28/1999 02/24/1992 1,689,904 100 0.00%
Metra Biosystems, Series E Pfd 01/11/1994 1,300,000 1,300,000 0.44%
Multum Information Services, Series B Pfd 03/25/1993 1,000,000 1,750,000 0.59%
Norian Corp, Series D Pfd 08/05/1992 1,500,001 1,500,001 0.51%
Oculon Corp, Series III Sr Pfd 01/11/1994 1,100,001 234,952 0.08%
ORBTEK, Series A Conv Pfd 05/12/1994 1,500,001 1,500,001 0.51%
Osiris Therapeutics, Series C Conv Pfd 05/24/1994 1,199,999 1,199,999 0.40%
Physicians Online, Series A Pfd 08/30/1993 964,000 3,220,965 1.09%
Shaman Pharmaceuticals 08/25/1992 221,982 129,027 + 0.04%
Synaptic Pharmaceuticals, Series 3 Conv Pfd 01/19/1993 1,000,000 1,000,000 0.34%
Tetrad Corp, Series B Pfd 03/15/1993 1,200,001 100 0.00%
Tetrad Corp, Senior Subordinated
10.00% Promissory Notes, 9/14/1995 03/15/1995 353,000 353,000 0.12%
Titan Pharmaceuticals, Series A Pfd 07/19/1993 2,000,000 2,306,542 0.78%
Unisyn Technologies 12/29/1994 1,000,000 20,755 0.01%
Unisyn Technologies, Series A Conv Pfd 12/27/1994 758,258 758,258 0.26%
Unisyn Technologies Warrants (Exp 2000) 07/27/1994 0 0 0.00%
UroMed Corp 09/15/1993 1,000,002 1,382,642 + 0.47%
Xenometrix Inc, Series A Pfd 07/28/1992 1,500,000 2,250,000 0.76%
Xenometrix Inc, Series B Pfd 12/02/1994 600,000 600,000 0.20%
----------- ----------- ------
$50,403,358 $53,072,932 17.94%
=========== =========== ======
</TABLE>
+-Fair value represents a discount to the security's publicly traded price.
See Notes to Financial Statements
14
<PAGE>
The Global Health Sciences Fund
Statement of Assets and Liabilities
April 30, 1995
UNAUDITED
ASSETS
Investment Securities at Value
(Cost $254,938,873) ...................................... $296,425,583
Cash ...................................................... 2,240,634
Receivables:
Investment Securities Sold ............................... 10,204,292
Dividends and Interest ................................... 230,560
Prepaid Expenses and Other Assets ......................... 50,751
------------
TOTAL ASSETS .............................................. 309,151,820
------------
LIABILITIES
Payables:
Investment Securities Purchased .......................... 12,876,311
Accrued Advisory Fees ..................................... 242,398
Accrued Administrative Fees ............................... 38,623
Accrued Expenses and Other Payables ....................... 132,623
------------
TOTAL LIABILITIES ......................................... 13,289,955
------------
Net Assets at Value ....................................... $295,861,865
============
NET ASSETS
Paid-in Capital ........................................... $283,604,478
Net Investment Loss ....................................... (845,608)
Accumulated Net Realized Loss on Investments .............. (28,383,716)
Net Unrealized Appreciation of Investments and
Other Assets and Liabilities Denominated in
Foreign Currencies ....................................... 41,486,711
------------
Net Assets at Value ....................................... $295,861,865
============
Shares Outstanding* ....................................... 20,507,200
Net Asset Value per Share ................................. $ 14.43
============
* At April 30, 1995, there was an unlimited number of authorized Fund shares,
par value of $0.01 per share.
See Notes to Financial Statements
15
<PAGE>
The Global Health Sciences Fund
Statement of Operations
For the Six Months Ended April 30, 1995
UNAUDITED
INVESTMENT INCOME
Dividends (Net of Foreign Withholding Taxes of $577) ........ $ 563,052
Interest .................................................... 399,884
-----------
TOTAL INCOME ................................................ 962,936
-----------
EXPENSES
Investment Advisory Fees .................................... 1,334,059
Administrative Fees ......................................... 220,157
Reports to Shareholders ..................................... 90,861
Custody and Accounting Fees ................................. 43,975
Trustees' Fees and Expenses ................................. 26,778
Audit Fees and Expenses ..................................... 24,149
Transfer Agent Fees ......................................... 17,304
NYSE Listing Fees ........................................... 16,037
Insurance Expense ........................................... 14,316
Legal Fees and Expenses ..................................... 9,834
Other Expenses .............................................. 11,074
-----------
TOTAL EXPENSES .............................................. 1,808,544
-----------
NET INVESTMENT LOSS ......................................... (845,608)
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENT SECURITIES
Net Realized Gain on:
Investments ................................................ 21,695,844
Net Change in Unrealized Appreciation of Investments
and Other Assets and Liabilities Denominated in
Foreign Currencies ......................................... 21,177,321
-----------
NET GAIN ON INVESTMENT SECURITIES ........................... 42,873,165
-----------
Net Increase in Net Assets From Operations .................. $42,027,557
===========
See Notes to Financial Statements
16
<PAGE>
The Global Health Sciences Fund
Statement of Cash Flows
For the Six Months Ended April 30, 1995
UNAUDITED
Increase (Decrease) in Cash
Cash Flows Provided by Operating Activities:
Dividends and Interest Received, Net of Foreign
Withholding Taxes ......................................... $ 946,818
Expenses Paid .............................................. (1,822,156)
Purchases of Short-Term Portfolio Investments, Net ......... (10,773,000)
Purchases of Long-Term Portfolio Investments ............... (165,266,477)
Sales of Long-Term Portfolio Investments ................... 179,155,586
Other ...................................................... (27,246)
-------------
Net Cash Flows Provided by Operating Activities ............ 2,213,525
-------------
Net Increase in Cash ........................................ 2,213,525
Cash at Beginning of Period ................................. 27,109
-------------
Cash at End of Period ....................................... $ 2,240,634
=============
Reconciliation of Net Increase in Net
Assets from Operations to Net Cash
Flows Provided by Operating Activities
Net Increase in Net Assets From Operations .................. $ 42,027,557
-------------
Decrease in Investments ..................................... 128,985
Net Realized Gain ........................................... (22,032,315)
Increase in Unrealized Appreciation ......................... (21,177,321)
Increase in Dividends and Interest Receivable ............... (16,118)
Increase in Receivable for Investment Securities Sold ....... (3,663,205)
Increase in Payable for Investment Securities Purchased ..... 6,986,800
Increase in Prepaid Expenses and Other Assets ............... (27,246)
Decrease in Accrued Expenses and Other Payables ............. (13,612)
-------------
Total Adjustments ......................................... (39,814,032)
-------------
Net Cash Flows Provided by Operating Activities ............. $ 2,213,525
=============
See Notes to Financial Statements
17
<PAGE>
The Global Health Sciences Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
April 30, 1995 Ended
(UNAUDITED) October 31, 1994
-------------- ----------------
<S> <C> <C>
OPERATIONS
Net Investment Loss ........................................... $ (845,608) $ (1,753,371)
Net Realized Gain on Investments
and Other Assets and Liabilities
Denominated in Foreign Currencies ............................ 21,695,844 7,605,821
Net Change in Unrealized
Appreciation/Depreciation of
Investments and Other Assets and
Liabilities Denominated in Foreign
Currencies ................................................... 21,177,321 3,518,916
------------ ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS .............................................. 42,027,557 9,371,366
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net Investment Income ......................................... -- (4,101,429)
------------ ------------
Net Increase in Net Assets .................................... 42,027,557 5,269,937
NET ASSETS
Beginning of Period ........................................... 253,834,308 248,564,371
------------ ------------
End of Period ................................................. $295,861,865 $253,834,308
============ ============
</TABLE>
See Notes to Financial Statements
18
<PAGE>
The Global Health Sciences Fund
Notes to Financial Statements--UNAUDITED
Note 1 -- SIGNIFICANT ACCOUNTING POLICIES. The Global Health Sciences Fund (the
"Fund") was organized as a Massachusetts Business Trust on November 18, 1991.
The Fund is registered under the Investment Company Act of 1940 (the "Act") as a
diversified, closed-end management investment company. Prior to commencing
investment operations on January 24, 1992, the Fund had no operations other than
the sale to INVESCO Trust Company (the "Investment Adviser") of 7,200 shares of
beneficial interest for $100,440 on January 13, 1992. Organizational costs of
approximately $34,800 have been deferred and are being amortized on a
straight-line basis over a 60-month period from the date the Fund commenced
operations.
The following is a summary of significant accounting policies consistently
followed by the Fund.
A. SECURITY VALUATION -- Securities traded on national securities exchanges or
NASDAQ National Market Systems are valued at the last sale price on that
exchange where such securities are primarily traded. If last sale prices are
not available, securities are valued at their highest closing bid prices (or,
for debt securities, yield equivalent thereof) obtained from one or more
dealers making markets for such securities or by a pricing service approved
by the Fund's board of trustees. Values of foreign securities are determined
as of the time that trading of such securities is completed each day,
generally at various times prior to the close of the New York Stock Exchange.
If market quotations or pricing service valuations are not readily available,
securities (including restricted securities) are valued at fair value as
determined in good faith by or under the supervision of the Fund's board of
trustees in accordance with procedures established by the Fund's board of
trustees. The Fund has demand registration rights for all restricted
securities held at April 30, 1995, which can be exercised upon the
registration of a qualifying public offering by each company in the future.
The Fund may incur registration costs associated with these public offerings.
There is no assurance such offerings will occur. Short-term securities are
stated at amortized cost (which approximates market value) if maturity is 60
days or less. Assets and liabilities initially expressed in terms of foreign
currency are translated into U.S. dollars at the prevailing market rates as
quoted by one or more banks or dealers on the date of valuation. The cost of
securities is translated into U.S. dollars at the rates of exchange
prevailing when such securities were acquired. Income and expenses are
translated into U.S. dollars at rates of exchange prevailing when accrued.
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. Interest income is recorded on
19
<PAGE>
the accrual basis. The Fund amortizes premiums and accretes discounts on
securities purchased over the life of the respective security as adjustments
to interest income. Cost is determined on the specific identification basis.
The foreign currency portion of realized gains (losses) on the sale of
foreign securities is included in net realized gain (loss) on investments.
The Fund may have elements of risk due to concentrated investments in
specific industries or 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 possible
imposition of adverse foreign governmental laws or currency exchange
restrictions.
Restricted securities 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 generally is 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 a 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 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 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 income is shown net of foreign
withholding taxes in the accompanying financial statements.
At October 31, 1994, the Fund had capital loss carryforwards of
$21,468,763 and $28,311,058 available as a reduction, to the extent provided
in the regulations, of any future net capital gains realized before the end
of fiscal years 2000 and 2001, respectively. To the extent that these losses
are used to offset future capital gains, such gains will not be distributed
to shareholders.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to
shareholders are recorded by the Fund on the ex-dividend/distribution date.
The amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within
20
<PAGE>
the capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions
which exceed net investment income and net realized capital gains for
financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income and net realized capital gains.
To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in
capital.
E. SHORT SALES -- Short sales are transactions in which the Fund
sells a security it does not own in anticipation of an expected decline in
the price of that security. The Fund is obligated to replace the borrowed
security. A separate asset account is created for the proceeds retained by
the broker, and an offsetting liability account is established until the
short sale is closed. The liability account is marked-to-market to reflect
the current value of the securities sold short. At April 30, 1995, the Fund
did not have any short sales outstanding.
Although the Fund's potential for gain as a result of a short sale is
limited to the price at which it sold the security short less the cost of
borrowing the security, its potential for loss is theoretically unlimited
because there is no limit to the replacement cost of the borrowed security.
F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities
denominated in a particular currency. The Fund's custodian will place and
maintain cash not available for investment or U.S. government securities in a
separate account of the Fund having a value equal to the aggregate amount of
the Fund's commitments under forward foreign currency contracts entered into
with respect to position hedges. At April 30, 1995, the Fund did not have any
forward foreign currency contracts outstanding.
Note 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Trust Company serves
as the Fund's investment adviser. The Investment Adviser is responsible for the
management of the assets of the Fund. As compensation for its services to the
Fund, the Investment Adviser receives an investment advisory fee. The fee is
calculated at the annual rate of 1.00% of the Fund's ending weekly net assets
and is paid monthly.
Mitchell Hutchins Asset Management Inc. (the "Administrator") has an
Administration Agreement ("Administration Agreement") with the Fund. Under the
terms of the Administration Agreement, the Administrator provides certain
administrative services to the Fund. Fees for these services are determined
monthly at the annual rate of 0.20% of the Fund's ending weekly net assets up to
21
<PAGE>
$62.5 million, 0.18% of the Fund's ending weekly net assets in excess of $62.5
million but not in excess of $125 million, 0.15% of the Fund's ending weekly net
assets in excess of $125 million and up to $250 million and 0.10% of the Fund's
ending weekly net assets in excess of $250 million, with a minimum annual fee of
$125,000.
Note 3 -- AFFILIATED TRANSACTIONS. For the six months ended April 30, 1995,
PaineWebber Incorporated (an affiliate of the Administrator) earned $56,017 in
commissions for brokerage transactions.
Certain of the Fund's officers and trustees are also officers and trustees
of INVESCO Trust Company and/or INVESCO Funds Group, Inc.
An affiliated company represents ownership by the Fund of at least 5% of
the voting securities of the issuer during the period, as defined in the Act. A
summary of the transactions with affiliates during the six months ended April
30, 1995, is as follows:
<TABLE>
<CAPTION>
Purchases Sales Realized
---------------- --------------- Gain Dividend
Affiliate Shares Cost Shares Cost (Loss) Income
--------- ------ ---- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Adeza Biomedical Corp,
Series II Conv Pfd ............. 1,000,000 $1,000,000 -- -- -- $ 0
Alexion Pharmaceuticals,
Series A Pfd ................... 526,316 1,000,000 -- -- -- 0
Crown Laboratories .............. -- -- 100,000 $150,001 ($97,335) 0
Med-E-Systems Corp,
Series C Conv Pfd .............. 200,000 1,500,000 -- -- -- 0
ORBTEK, Series A
Conv Pfd ....................... 238,096 500,002 -- -- -- 0
Protocol Systems ................ 530,000 5,207,040 -- -- -- 0
-------- ----
($97,335) $ 0
======== ====
</TABLE>
Note 4 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months ended
April 30, 1995, the aggregate cost of purchases and proceeds from sales of
investments (excluding short-term securities) were $172,253,277 and
$182,818,791, respectively. There were no purchases or sales of U.S. Government
securities.
Note 5 -- UNREALIZED APPRECIATION AND DEPRECIATION. For U.S. federal income tax
purposes, the cost of securities at April 30, 1995 was substantially the same as
the cost of securities for financial statement purposes. Net unrealized
appreciation of $41,486,710 was composed of gross appreciation of $58,575,485
for those investment securities having an excess of value over tax cost, and
gross depreciation of $17,088,775 for those investment securities having an
excess of tax cost over value.
22
<PAGE>
The Global Health Sciences Fund
Quarterly Results of Operations
UNAUDITED
<TABLE>
<CAPTION>
Net Realized
and Unrealized
Gain (Loss) on
Net Investment and
Investment Investment Foreign Currency
Income Income (Loss) Transactions
----------------- ------------------ ------------------
Total Per Total Per Total Per
Quarter Ended (000) Share (000) Share (000) Share
- ------------- ------ ------ ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
January 31, 1995 ..... $ 332 $0.016 ($ 783) ($0.038) $16,035 $0.782
April 30, 1995 ....... 631 0.031 (62) (0.003) 26,838 1.308
------ ------ ------ ------ -------- -------
Totals .............. $ 963 $0.047 ($ 845) ($0.041) $42,873 $2.090
====== ====== ====== ====== ======== =======
January 31, 1994 ..... $ 593 $0.029 ($ 256) ($0.012) $22,626 $1.103
April 30, 1994 ....... 295 0.014 (605) (0.030) (17,076) (0.832)
July 31, 1994 ........ 336 0.017 (687) (0.033) (15,086) (0.736)
October 31, 1994 ..... 531 0.026 (205) (0.010) 20,661 1.007
------ ------ ------ ------ -------- -------
Totals .............. $1,755 $0.086 ($1,753) ($0.085) $11,125 $0.542
====== ====== ====== ====== ======== =======
January 31, 1993 ..... $1,067 $0.052 $ 215 $0.010 $ 6,525 $0.318
April 30, 1993 ....... 793 0.039 16 0.001 (37,236) (1.815)
July 31, 1993 ........ 4,883 0.238 4,105 0.200 (3,912) (0.191)
October 31, 1993 ..... 823 0.040 (136) (0.006) 21,253 1.036
------ ------ ------ ------ -------- -------
Totals .............. $7,566 $0.369 $4,200 $0.205 ($13,370) ($0.652)
====== ====== ====== ====== ======== =======
<CAPTION>
Net Increase
(Decrease) in
Net Assets Market Price
from Operations on NYSE
------------------- ------------------
Total Per
Quarter Ended (000) Share High Low
------- ------ ------- -------
<S> <C> <C> <C> <C>
January 31, 1995 .......... $15,252 $0.744 $10.625 $ 9.375
April 30, 1995 ............ 26,776 1.305 12.000 10.625
------- ------
Totals ................... $42,028 $2.049
======= ======
January 31, 1994 .......... $22,370 $1.091 $12.000 $10.500
April 30, 1994 ............ (17,681) (0.862) 11.625 9.875
July 31, 1994 ............. (15,773) (0.769) 10.875 9.375
October 31, 1994 .......... 20,456 0.997 10.750 9.500
------- ------
Totals ................... $ 9,372 $0.457
======= ======
January 31, 1993 .......... $ 6,740 $0.328 $12.500 $10.750
April 30, 1993 ............ (37,220) (1.814) 11.375 9.625
July 31, 1993 ............. 193 0.009 11.000 9.750
October 31, 1993 .......... 21,117 1.030 11.875 9.375
------- ------
Totals ................... ($ 9,170) ($0.447)
======= ======
</TABLE>
23
<PAGE>
The Global Health Sciences Fund
Financial Highlights
Selected data for a share outstanding throughout each of the periods is
presented below:
<TABLE>
<CAPTION>
For the Six For the Year Ended For the Period
Months Ended October 31, January 24, 1992*
April 30, 1995 ----------------------- through
(UNAUDITED) 1994 1993 October 31, 1992
-------------- --------- --------- -----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 12.378 $ 12.121 $ 12.643 $ 13.950
--------- --------- --------- ---------
Net Investment Income (Loss) ........ (0.041) (0.085) 0.205 0.071
Net Realized and Unrealized Gain
(Loss) on Investment and Foreign
Currency Transactions .............. 2.090 0.542 (0.652) (1.345)
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets
from Operations .................... 2.049 0.457 (0.447) (1.274)
--------- --------- --------- ---------
Dividends from Net Investment Income -- (0.200) (0.075) --
--------- --------- --------- ---------
Offering Costs Charged to Paid-In
Capital ............................ -- -- -- (0.033)
--------- --------- --------- ---------
Net Asset Value, End of Period ...... $ 14.427 $ 12.378 $ 12.121 $ 12.643
========= ========= ========= =========
Market Value, End of Period ......... $ 11.500 $ 10.000 $ 11.500 $ 11.500
========= ========= ========= =========
Total Investment Return (1) ......... 15.00%(2) (11.49%) 0.67% (17.56%)(2)
========= ========= ========= =========
Ratios/Supplemental Data:
Net Assets, End of Period
(000 omitted) ...................... $295,862 $253,834 $248,564 $259,279
Ratio of Expenses to Average
Net Assets ......................... 1.36%** 1.41% 1.39% 1.35%**
Ratio of Net Investment Income (Loss)
to Average Net Assets .............. (0.63%)** (0.70%) 1.74% 0.72%**
Portfolio Turnover Rate ............. 68% 121% 226% 215%
</TABLE>
- ----------
* Commencement of investment operations
** Annualized
(1) Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day and a sale at the current market
price on the last day of each period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at
prices obtained under the Fund's dividend reinvestment plan. Total
investment return does not reflect sales charges or brokerage commissions.
(2) Total investment return for a period of less than one year is not
annualized.
24
<PAGE>
The Global Health Sciences Fund
Other Information
Dividend Reinvestment Plan
Shareholders of the Fund who have Shares registered directly in their own
names automatically participate in the Fund's Dividend Reinvestment Plan (the
"Plan"), unless and until an election is made to withdraw from the Plan as
herein provided. State Street Bank and Trust Company (the "Agent") acts as agent
under the Plan on behalf of participating shareholders. Shareholders who do not
wish to have distributions automatically reinvested should so notify the Fund
c/o State Street Bank and Trust Company, P.O. Box 366, Boston, Massachusetts
02101. Under the Plan, all of the Fund's dividends and capital gains and other
distributions to shareholders will be reinvested in full and fractional Shares
as described below. A shareholder who owns Shares registered in his broker's or
nominee name, and whose broker does not provide facilities for a dividend
reinvestment program, may be required to have his Shares registered in his own
name in order to participate in the Plan. Shareholders wishing to participate in
the Plan whose Shares are held in the name of a broker or nominee should consult
their brokers as to how to accomplish dividend reinvestment.
Whenever the Fund declares an income dividend or a capital gains or other
distribution (collectively, "Dividends"), non-participants in the Plan will
receive cash and participants in the Plan will receive the equivalent in Shares.
The Shares will be acquired by the Agent for the participant's account,
depending upon the circumstances described below, either (i) through receipt of
additional unissued but authorized Shares ("Newly Issued Shares") or (ii) by the
purchase of outstanding Shares on the open market ("Open-Market Purchases") on
the New York Stock Exchange or elsewhere.
If on the payment date for a Dividend the net asset value per share is
equal to or less than the market price per Share plus estimated brokerage
commissions (such condition being referred to herein as "Market Premium"), the
Agent will purchase from the Fund Newly Issued Shares on behalf of the
participant at a price per Share equal to the greater of the net asset value per
Share or 95% of the then current market price per Share. This discount from the
current market price reflects savings in underwriting and other costs which the
Fund would otherwise incur to raise additional capital.
If on the payment date for a Dividend the net asset value is greater than
the market value (such condition being referred to herein as "Market Discount"),
the Agent will endeavor to invest the Dividend amount in Shares acquired on
behalf of the participant in Open-Market Purchases. In the event of a Market
Discount on the payment date, the Agent will have up to 30 days after the
payment date to invest the Dividend amount in Shares acquired in Open-Market
Purchases.
Registered shareholders who acquire their Shares in open-market
transactions and who do not wish to have their Dividends automatically
25
<PAGE>
reinvested should so notify the Fund in writing. If a shareholder has not
previously elected to receive cash Dividends and the Agent does not receive
notice of an election to receive cash Dividends from any shareholder prior to
the record date of any Dividends, the Shareholder will automatically receive
such Dividends in additional Shares.
Participants in the Plan may withdraw from the Plan by giving written
notice to the Agent at least 30 days prior to the applicable Dividend payment
date. When a participant withdraws from the Plan, or upon termination of the
Plan as provided below, certificates for whole Shares credited to his account
under the Plan will, upon request, be issued. Whether or not a participant
requests that certificates for whole Shares be issued, a cash payment will be
made for any fraction of a Share credited to such account.
The Agent will maintain all shareholder accounts in the Plan and furnish
written confirmations of all transactions in the accounts, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Agent in non-certificated form in the
name of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan. Each participant, nevertheless, has the right to
receive certificates for whole Shares owned by such participant. The Agent will
distribute all proxy solicitation materials to participating shareholders.
In the case of shareholders, such as banks, brokers or nominees, which hold
Shares for others who are the beneficial owners participating in the Plan, the
Agent will administer the Plan on the basis of the number of Shares certified
from time to time by the shareholder as representing the total amount of Shares
registered in the shareholder's name and held for the account of beneficial
owners participating in the Plan.
There will be no charge to participants for reinvesting Dividends other
than their share of brokerage commissions discussed below. The Agent's fees for
administering the Plan and handling the reinvestment of Dividends will be paid
by the Fund. Each participant's account will be charged a pro-rata share of
brokerage commissions incurred with respect to the Agent's Open-Market Purchases
in connection with the reinvestment of Dividends. Brokerage charges for
purchasing small amounts of Shares for individual accounts through the Plan are
expected to be less than the usual brokerage charges for such transactions
because the Agent will be purchasing Shares for all the participants in blocks
and prorating the lower commission that may be attainable.
The automatic reinvestment of Dividends will not relieve participants of
any income tax which may be payable on such Dividends. In the case of non-U.S.
participants whose Dividends are subject to United States income tax withholding
and in the case of any participants subject to 30% federal backup withholding,
the Agent will reinvest Dividends after deduction of the amount required to be
withheld.
26
<PAGE>
The Fund reserves the right to amend or terminate the Plan by written
notice to participants. All correspondence concerning the Plan should be
directed to the Agent at the address referred to in the first paragraph of this
section.
Annual Shareholders Meeting
The Fund's annual meeting of shareholders was held on April 19, 1995.
Shareholders voted to re-elect Dan J. Hesser and Larry Soll, Ph.D. as Trustees
and ratified the appointment of Price Waterhouse LLP as the Fund's independent
accountant. The resulting vote count for each proposal is listed below:
1. Election of Two Trustees:
Dan J. Hesser For: 11,970,775,519
Withheld Authority: 261,882,352
Larry Soll, Ph.D. For: 12,047,165,697
Withheld Authority: 185,432,174
2. Ratification of Appointment of Price Waterhouse LLP as the Fund's Independent
Accountant:
For: 12,100,624,747
Against: 62,389,662
Abstain: 69,583,462
In addition to Messrs. Hesser and Soll, the following persons continue to
serve as Trustees of the Fund: Mr. Charles W. Brady, Mr. Fred A. Deering, Mr.
A.D. Frazier, Jr., Mr. R. Dalton Sim and Mr. John W. McIntyre.
Miscellaneous
Since October 31, 1994, there were (i) no material changes in the Fund's
investment objectives or policies, (ii) no changes to the Fund's charter or
by-laws, and (iii) no material changes in the principal risk factors associated
with investment in the Fund. Mr. R. Dalton Sim continues to serve as President
and Trustee of the Fund and Mr. Barry Kurokawa continues to have primary
responsibility for the day-to-day management of the Fund's portfolio.
Mr. Kurokawa joined INVESCO Trust Company in early 1992. In addition to Mr.
Kurokawa's responsibilities as portfolio manager, he also manages The INVESCO
Strategic Health Sciences Portfolio. Mr. Kurokawa has been an officer of The
Global Health Sciences since he joined INVESCO.
Mr. Kurokawa received his BS degree from California State University, Los
Angeles in 1980, and earned his MBA in Finance from Loyola Marymount University
in 1984. He began his investment management career in 1984 with the Bank of
California as a research analyst. He was eventually given additional
responsibilities as portfolio manager to one of the bank's commingled common
trust funds. In 1987, Mr. Kurokawa joined Trust Company of the West in Los
Angeles as a senior research analyst with analytical responsibilities in the
health care and railroad industries.
27
<PAGE>
The Global Health Sciences Fund
- -------------------------------------------------------------------------------
Charles W. Brady Chairman of the Board of Trustees
R. Dalton Sim President and Trustee
Barry Kurokawa Vice President
Fred A. Deering Trustee
A.D. Frazier, Jr. Trustee
Dan J. Hesser Trustee
John W. McIntyre Trustee
Larry Soll, Ph.D. Trustee
Glen A. Payne Secretary
Ronald L. Grooms Treasurer, Chief Financial and Accounting Officer
C. William Maher Assistant Treasurer
Investment Adviser
- -------------------------------------------------------------------------------
INVESCO Trust Company
7800 East Union Avenue
Suite 800
Denver, Colorado 80237
Administrator
- -------------------------------------------------------------------------------
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
Custodian
- -------------------------------------------------------------------------------
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Shareholder Servicing Agent
- -------------------------------------------------------------------------------
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
Independent Accountants
- -------------------------------------------------------------------------------
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Counsel
- -------------------------------------------------------------------------------
Kirkpatrick & Lockhart
1800 M Street, N.W.
South Lobby, 9th Floor
Washington, D.C. 20036
To receive information on the Dividend Reinvestment Plan, call toll-free:
1-800-451-6788
To obtain current Net Asset Values, call toll-free: 1-800-528-8765
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. It is not a prospectus, circular
or representation intended for use in the purchase or sale of shares of the Fund
or of any securities mentioned in this report.
Text Printed On Recycled Paper
