The Global
Health Sciences Fund
Semiannual Report
April 30, 1997
<PAGE>
The Global Health Sciences Fund
Semiannual Report
--------------------------------------------------------------------------
- - Effective July 1, 1997, the Fund's name will change to the INVESCO Global
Health Sciences Fund. The Fund's ticker symbol will remain the same (GHS),
but its location in the daily NYSE stock table will move under the
alphabetical listing "INVESCO..."
- - While past performance is no guarantee of future results, for the six
months ended April 30, 1997, shareholders enjoyed a market price total
return of over 15%.
- - The Global Health Sciences Fund's total assets under management were over
$460 million as of April 30, 1997.
The Global Health Sciences Fund is an aggressive growth closed-end fund
that focuses on health care, a global field of unlimited potential growth.
The Fund is managed by INVESCO, which historically has been an industry
leader in investment management.
==========================================================================
Contents
1 Performance Highlights
2 Letter from the Chairman
4 Report of Investment Manager
12 Ten Largest Common Stock Holdings
13 Statement of Investment Securities
20 Forward Foreign Currency Contracts
20 Summary of Investments by Country
21 Statement of Assets and Liabilities
22 Statement of Operations
23 Statement of Cash Flows
24 Statement of Changes in Net Assets
25 Notes to Financial Statements
30 Financial Highlights
31 Other Information
34 Shareholder Information
34 Trustees and Officers
<PAGE>
Performance Highlights
The Global Health Sciences Fund
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
For the 6 Months
Ended 4/30/1997 Fiscal 1996 Fiscal 1995 Fiscal 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value-
Total Return 3.70%* 20.10% 49.52% 3.82%
Share Price-Total Return 15.22%* 15.25% 47.50% (11.49)%
Total Distributions $4.4727 $ 0.00 $ 0.00 $0.2000
Total Net Assets-
End of Period $ 460.2 $ 455.8 $ 379.5 $ 253.8
Ratio of Expenses to
Average Net Assets 0.59%* 1.21% 1.33% 1.41%
Portfolio Turnover 88%* 91% 105% 121%
Average Commission
Rate Paid $0.0456 $0.0822 - -
=============================================================================================
</TABLE>
*Based on operations for the period shown, and, accordingly, are not
representative of a full year.
Past performance is no guarantee of future results.
GRAPH: The Global Health Sciences Fund
Net Asset Value as of April 30
This bar graph reflects the net asset value of the fund for the periods
ending 4/30/93, 4/30/94, 4/30/95, 4/30/96, 4/30/97
GRAPH: The Global Health Sciences Fund
Stock Price as of April 30
This bar graph reflects the stock price of the fund for the periods
ending 4/30/93, 4/30/94, 4/30/95, 4/30/96, 4/30/97
<PAGE>
Letter From The Chairman
The Global Health Sciences Fund
May 1997
Dear Shareholder:
During the last six months, the investment markets have experienced a great deal
of volatility. A small group of large-cap stocks provided most of the market's
growth during this period. Smaller cap stocks have fared poorly in comparison.
The Global Health Sciences Fund returned 3.70% for the period on a net asset
value basis and 15.22% on a market value basis; while the AMEX Biotech Index had
a negative return of -1.0%. (Past performance is no guarantee of future
results.)
The Global Health Sciences Fund has experienced a discount to NAV during this
period. This is not unusual for closed-end mutual funds as approximately 85% of
these funds have been selling at a market price below their net asset value. For
the six-month period ended April 30, 1997, the discount of The Global Health
Sciences Fund ranged from a high of 23.68% on November 1, 1996, to a low of
14.50% on February 21, 1997. There are many theories why closed-end funds sell
at discounts; concerns about the economy in general, concerns about inflation
and interest rates, or concerns about sector investing, among other things.. The
Board of Trustees has embarked on an aggressive marketing program in an effort
to influence some of those factors. First, effective July 1, 1997, the name of
the Fund will change to the INVESCO Global Health Sciences Fund. The goal of
this change is to improve the Fund's name recognition and highlight our long and
successful record of investing in the health care industry for prospective
investors. Although the Fund's ticker symbol will remain the same (GHS), the
location of the Fund's daily price in the NYSE stock table will move from the
alphabetical listing "Global..." to "INVESCO..." In addition, Molly Cisneros,
Director of Investor Relations, has been assigned to devote full time attention
to the Fund and will lead a proactive effort to help investors and the market
understand the factors influencing the Fund's discount. We plan to enhance our
presence in the financial community, while providing proactive marketing support
for the Fund. This will be done through presentations, seminars and increased
use of the media and the Internet. We believe the steps we are taking can help
change some investor misperceptions and reduce the discount.
One of the most important benefits of the closed-end fund structure is the
ability of such a fund as The Global Health Sciences Fund to hold a sizable
portion of its assets in securities that are not readily marketable. Your Fund
has the ability to invest up to 25% of its assets in private placement
securities. Shareholders have enjoyed above average performance as a result of
these investments. While past performance is no guarantee of future results,
during the three years ended April 30, 1997, the Fund had a return of 29.03% (on
a gross return basis) from restricted securities.
<PAGE>
Your Board of Trustees and the investment management team are working very
hard to provide the best investment returns possible. The Global Health Sciences
Fund is a long-term investment and takes investment positions with that goal in
mind. We are concerned about the discount in share price to net asset value;
however, we believe that our investment strategy will provide excellent returns
for long-term investors.
Sincerely,
/s/ Hubert L. Harris, Jr.
Hubert L. Harris, Jr.
Chairman of the Board
The Global Health Sciences Fund
<PAGE>
Report Of Investment Manager
The Global Health Sciences Fund
April 30, 1997
Dear Shareholder:
Over the last six months, indications of strong growth paired with signs of
subdued inflation have turned the market into a daily tug-of-war between the
bulls and the bears. Over the first four months of 1997, this increased
volatility took the market both to unprecedented heights and to a 9.8%
correction--a breath away from the 10% level that defines a technical
correction.
In this environment, two distinct views on where the economy and stock market
are going have emerged. The bulls suggest that the current economic environment
is a perfect scenario for the stock market, as low inflation, coupled with
strong economic growth, has produced rising corporate profits. To support their
analysis, they point to the strength of the Gross Domestic Product--increasing
at a 3.9% rate in the fourth quarter of 1996 and a 5.6% rate in the first
quarter of 1997. They also look at prices across the economy as measured by the
U.S. government's broadest inflation gauge, the Gross Domestic Product price
deflator, which rose only 1.8% in 1996--the smallest advance since 1964. The
bulls also suggest that 15 years of corporate restructuring, downsizing, and
investing in technology have produced, and will continue to produce, dividends
for U.S. companies.
The bears paint a different picture. They suggest that strong economic growth
combined with unusually low unemployment (the unemployment rate for 1996 was
5.3% and decreased to 4.9% in March 1997, the lowest level since 1973) has
caused tightness in the labor market. They believe this will lead to inflation
and a reduction in corporate profits, with negative consequences for the
economy. Under their scenario, the market is overvalued and the current economic
expansion is about to end.
In recent months, many large-capitalization stocks reached record highs.
However, small-capitalization equities did not participate in this upward trend.
In fact, many smaller-cap stock sectors experienced a rolling correction based
on concerns over potential earnings and valuation levels. This was especially
true in the health care sector, as investors' nervousness about rising interest
rates and the sustainability of corporate profits placed a premium on liquidity
and stability of earnings. This caused market leadership to narrow, and resulted
in an increasingly selective health care stock market, in which fewer and fewer
stocks participated in the ascension.
The increased emphasis by investors on earnings and liquidity created a
two-tier health care equity market in which market-leading, large-cap
pharmaceutical companies outperformed small-cap health care companies. These
large-cap pharmaceuticals remain a vital part of our portfolio strategy, and
they have produced strong returns over the last six months. Warner-Lambert Co.
<PAGE>
(our largest holding as of April 30, 1997) has seen significant price
appreciation as its two new drugs, Lipitor and Rezulin, were well received by
the market. Other drug firms that contributed positively to performance over the
last six months were Bristol-Myers Squibb, Merck & Co., and Pfizer Inc. The
pharmaceutical industry represented 49.3% of the overall portfolio of the Fund
as of April 30, 1997.
During the recent market volatility health care stocks were stable relative
to high-growth stocks in other industries. Typically, the health care sector is
seen as a defensive sector within the economy. This is because earnings within
this sector experience less volatility over the business cycle, as many health
care companies provide goods and services that are a necessity (regardless of
the economic conditions). This points out one of the unusual characteristics of
this industry. The health care industry combines defensive
characteristics--which may reduce downside volatility--with dynamic growth
opportunities.
However, as previously noted, many small- to mid-cap health care stocks
experienced a rolling correction within their industries, and a drastic
reduction in value. We feel that the market's fascination with liquidity and
stability of earnings has left many faster-growing, small- to mid-cap health
care stocks severely undervalued. This has created a buying opportunity for the
Fund. We have reduced our positions in some fully valued health care
stocks--realizing significant gains--and replaced these stocks with
faster-growing, undervalued health care stocks. This may benefit the Fund in
both the short and long run.
The Global Health Sciences Fund Performance
While past performance is no guarantee of future results, during recent months,
the Fund experienced strong relative performance, but lagged the broad market.
The Fund had a return of 3.70% (based on net asset value), and a return of
15.22% (based on market price) over the six-month period ended April 30, 1997.
During this period, the Fund outperformed the return of -1.0% for the AMEX
Biotechnology Index, and--based on market price return--significantly
outperformed the 4.83% return for the average open-end mutual fund in the Lipper
Health/Biotechnology category. (Lipper Analytical Services, Inc., is an
independent mutual fund analyst.) The Fund's performance was negatively affected
over the last six months by its exposure to small-cap health care stocks. These
stocks experienced a compression in their price-to-earnings ratios as they fell
out of favor with investors, and we believe they could be presently undervalued.
For the one-year period ended April 30, 1997, the Fund had an average
annualized return of -4.39%, based on net asset value, and a market price return
of 5.88%. The Fund underperformed the average return of 0.88% for open-end
mutual funds in the Lipper Health/Biotechnology category on a net asset value
basis, but outperformed the average return on a market price basis.
<PAGE>
Graph: The Global Health Sciences Fund Net Asset Value and
Stock Price Comparison
This line graph represents a comparison of the value of The Global
Health Sciences Fund's Net Asset Value and Stock Price to the S&P Health
Care Composite's Net Asset Value and Stock Pice -- based on the value of
a $10,000 investment in the Fund in January 1992.
Even in periods of slight underperformance on a net asset value basis, the
Fund provides opportunities for capital appreciation to investors through stock
price movements. This provides investors two potential ways to win when
investing in the Fund. However, over longer time periods there is a higher
correlation between movements in net asset value and stock prices.
For the three-year period ended April 30, 1997, the Fund had an average
annualized return of 23.73% based on net asset value, and a market price return
of 25.12%. This significantly outperformed the average open-end mutual fund
return of 20.38% for the Lipper Health/Biotechnology category--for the same
three-year period.
Capital Gains
On December 23, 1996, the Fund paid its shareholders a capital gain distribution
of $4.4727 per share. The Fund offered shareholders the option to receive this
distribution in cash or in shares, and approximately 70% of shareholders elected
to receive shares. The distribution permitted the Fund to pay out accumulated
value to shareholders without a negative impact on portfolio balance or
holdings. Its strucure allowed the Fund to focus on investments and not cash
flow. This distribution represented an important milestone for the Fund and
increased the outstanding shares to 24,762,567, from 20,507,200.
As of April 30, 1997, the Fund has net realized gains of $1.560 per share. At
this pace, the Fund appears poised for another significant capital gains
distribution for fiscal year 1997. Of course, there is always a chance that
these gains will be used to offset any realized losses--if they should occur.
Underlying Fundamentals of the Health Care Industry
The fundamentals in the health care industry continue to be strong. First,
changing demographics in America--the graying of America--will increase the
demand for health care services for years to come. The oldest baby boomers just
turned 50 this year, and are entering into their peak years for health care
consumption.
Second, emerging and developing countries will likely continue to place a
greater emphasis on health care. This should cause health care spending, as a
percentage of the Gross Domestic Product, to increase in many countries. This
may benefit market-leading health care companies with access to international
markets. Also, many countries are in the process of deregulating--albeit
<PAGE>
slowly--inefficient, highly-regulated government health care programs, and
moving towards innovative, competitive health care systems. This trend should
continue and may have positive results for certain companies in the health care
sector.
Graph:
This graph shows the U.S. population distribution by age group as a
percentage of total population.
Finally, health care technology is growing at an exponential rate. Today's
new wonder drug could be tomorrow's aspirin. Such dynamics allow companies with
innovative technologies to capitalize on opportunities in the market and
potentially realize enormous profits. This reinforces the notion that in-depth,
fundamental research needs to be done on health care companies, since it allows
investors to identify companies that have the potential to produce large returns
in the future.
Outlook for Health Care Subsectors
Pharmaceuticals
Although pharmaceutical stocks already have outperformed the market for close to
three years, we believe that this industry continues to have a dynamic future.
Market-leading companies such as Bristol-Myers Squibb, SmithKline Beecham PLC,
Merck & Co., Pfizer Inc., and Warner-Lambert Co. should benefit from new product
introduction, improving margins, and an improving regulatory environment. The
Food and Drug Administration (FDA) has dramatically cut its approval time for
new drugs. A record 53 drugs were FDA approved during 1996. The FDA's goal of
reviewing 90% of all new drug applications within a year may become a reality in
the near future. This could have a dramatic impact on the industry, as new drugs
drive revenue growth and with higher profitability, earnings growth.
Foreign markets have become a near-term challenge for U.S. drug firms, as the
strong dollar has reduced their foreign revenues. We continue to favor large
pharmaceutical companies and are currently overweighted in this industry.
Graph:
This bar graph represents the number of new chemical entities approved
annually from 1986 through 1996.
<PAGE>
<TABLE>
<CAPTION>
FDA Approval Activity on the Rise
- ---------------------------------------------------------------------------------------------
1996 1996 1995 1995 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total New Drugs (NDAs) 147 88 62 70 91 63 64
Total Generic Drugs (ANDAs) 221 268 219 249 229 188 80
Total Biological (PLAs) 24 40 23 51 67 76 85
- ---------------------------------------------------------------------------------------------
Total Application Approved 392 396 304 370 387 327 229
=============================================================================================
</TABLE>
Source: INVESCO and Cowen & Company
Medical Devices and Supplies
We also like large-cap medical device companies which have broad product
portfolios, financial flexibility, strong cash flows, and are better-positioned
to counter generally sluggish pricing trends. Health care providers continue to
exert pressure on medical device suppliers for better pricing, and only a few
situations exist in which pricing is favorable. Within medical supply companies,
we tend to favor firms with new, well-differentiated products as they are
typically the most profitable. Overall, we remain positive about the long-term
fundamentals of this industry.
Companies we favor in this sector include Biocompatibles International PLC
and Guidant Corp. Biocompatibles International PLC, a public company first
acquired by the Fund as a private placement, has a superior biocompatible
coating technology which is used in the cardiovascular and eye care industry.
Its products have been well received by the market, and may be applicable to
many other industries. Guidant Corp. is a market-leading company in the design,
development, and manufacturing of products for use in cardiac rhythm management,
angioplasty devices, coronary artery disease intervention, and other forms of
cardiac surgery.
Biotechnology
Although we remain optimistic about the long-term fundamentals of the
biotechnology industry, near-term results have been disappointing. Continued
lack of earnings visibility and investors' emphasis on liquidity have caused us
to be cautious in our approach to this area. We believe that selected
biotechnology companies may offer exciting rewards for the patient investor, as
technology is growing rapidly within this sector.
Companies we favor in this sector include Cadus Pharmaceutical and Genentech
Inc. Cadus Pharmaceutical, another public company that was purchased by the Fund
as a private placement, uses hybrid yeast cell technology to develop a series of
innovative drug screening and discovery techniques which the company employs in
both research collaborations and internal drug discovery programs. Its business
strategy involves a mixture of partnerships with such companies as Bristol-Myers
Squibb and SmithKline Beecham PLC. Genentech Inc., a market-leading
biotechnology company, makes Activase (a drug that breaks up blood clots after
heart attacks), Protropin and Nutropin (growth hormones), and Pulmozyme (which
<PAGE>
is the first new drug to treat cystic fibrosis in 30 years), along with
other various drugs. The company also has new products in the pipeline which may
enhance its future profitability.
Health Care Delivery
In the current environment, we continue to emphasize providers of health care
information systems. We feel that the underlying fundamentals within this
industry remain strong, as integrated delivery networks and electronic medical
records play an increasing role in the future of health care.
We favor health care information systems companies such as Cerner Corp. and
HBO & Co. Cerner Corp. designs information systems for the health care industry.
Its software allows information to be shared among clinical disciplines and
across multiple facilities. HBO & Co., has established itself as the
market-leading company in selling software and services to the health care
industry. We continue to be excited about both companies.
Discounts on Closed-End Funds
Closed-end funds are now experiencing some of the deepest discounts in their
history. However, the reason to invest in closed-end funds is not their
discounts, but the growth potential of their assets. Other advantages of
investing in a closed-end funds are:
- - They are not forced to liquidate holdings in falling markets, and are
better able to ride out swings in a volatile market.
- - Conversely, there are no inflows during times of exuberance--the Fund may
stay fully invested in times of volatility.
- - They are able to invest more of their assets in private placements.
Private Placements
It is imperative to remember that closed-end funds are a unique investment
vehicle. Our ability to invest more of our assets in private placements (up to
25% of total net assets) gives us a distinct advantage over most open-end mutual
funds. By identifying promising companies through diligent research, before
they become public, we have the ability to invest in superior products and
technology before the general market can value them. These private companies
often provide accelerated returns as compared to public companies.
While past performance is no guarantee of future results, over the six months
ended April 30, 1997, the Fund's restricted securities produced a return of
13.94% (on a gross return basis); over the three-year period ended April 30,
1997, they had an average annualized return of 29.03% (on a gross return basis).
Investing in private companies is a demanding process. We typically examine
200-300 private companies a year. Through a disciplined screening process, we
evaluate everything from management to the potential impact of their products
<PAGE>
on the market. Through extensive analysis, we eventually determine the 10-12
companies per year that we think will provide the best investment opportunities
for the Fund. It is crucial in this process that we identify potentially
profitable companies, since we normally hold these companies through their
initial public offerings.
Due to the Fund's unique investment structure, investors have the potential to
realize greater appreciation in assets--as compared to most open-end health care
mutual funds.
Looking Forward
We intend to continue our strategy that focuses on market-leading pharmaceutical
stocks as our core holdings, with small-cap health care stocks on the periphery.
As valuation levels are compressed further in small-cap health care stocks, we
may selectively increase our weightings. This disciplined approach should help
boost results--although day-to-day volatility may be extreme. However, for the
patient, long-term investor, the health care industry has the potential to
produce dynamic returns.
Sincerely,
/s/ John R. Schroer
John R. Schroer
Senior Vice President
INVESCO Trust Company
Vice President and Portfolio Manager
The Global Health Sciences Fund
April 30, 1997
<PAGE>
Ten Largest Common Stock Holdings
The Global Health Sciences Fund
April 30, 1997
- --------------------------------------------------------------------------------
Percent of
Description Value Net Assets
- --------------------------------------------------------------------------------
Warner-Lambert Co $29,596,000 6.4%
Pfizer Inc 22,560,000 4.9
Bristol-Myers Squibb 22,532,000 4.9
SmithKline Beecham PLC ADR
Representing Ord A Shrs 22,333,125 4.9
Biocompatibles International PLC 22,041,398 4.8
Schering-Plough Corp 22,000,000 4.8
Merck & Co 21,720,000 4.7
Schering AG 21,184,954 4.6
Johnson & Johnson 19,722,500 4.3
American Home Products 16,231,250 3.5
- --------------------------------------------------------------------------------
Total $219,921,227 47.8%
================================================================================
Composition of holdings is subject to change.
<PAGE>
Statement of Investment Securities
The Global Health Sciences Fund
April 30, 1997
Unaudited
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Country Shares or
Code if Principal
Description Non-U.S. Amount Value
- ---------------------------------------------------------------------------------------------
Common Stocks & Warrants 78.30%
Biotechnology 8.82%
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alexion Pharmaceuticals*~ 435,526 $ 3,534,537
Alexion Pharmaceuticals
Warrants (Exp 1997)*@~ 31,250 0
Arris Pharmaceutical* 232,000 2,494,000
Cadus Pharmaceutical*~ 729,395 7,567,473
Cambridge NeuroScience* 75,000 628,125
Creative BioMolecules* 535,000 4,045,937
Ecogen Technologies I*^~ 60 1
Genentech Inc* 135,000 7,914,375
ID Biomedical* CA 640,000 2,200,000
INCYTE Pharmaceuticals* 136,200 5,788,500
MedClone Inc Warrants (Exp 1999)*^@ 209,300 0
Neose Technologies* 165,000 2,000,625
PathoGenesis Corp* 91,900 2,412,375
Sepracor Inc* 75,000 1,462,500
Synaptic Pharmaceuticals*^ 125,000 1,531,250
Titan Pharmaceuticals*^ 488,215 1,098,484
Unisyn Technologies*^~ 20,754 20,754
Unisyn Technologies Warrants
(Exp 2001)*^@~ 333,773 0
Vical Inc* 136,700 1,435,350
Xenometrix Inc*^~ 261,007 1,409,438
------------
45,543,724
------------
Health Care Delivery 5.53%
- ---------------------------------------------------------------------------------------------
Advanced Health*^~ 612,999 9,516,809
Cerner Corp* 162,100 2,613,862
Coventry Corp* 513,600 6,644,700
HBO & Co 183,200 9,801,200
Medical Associates of America*^ 502,935 1
------------
28,576,572
------------
<PAGE>
Medical Devices & Supplies 15.08%
- ---------------------------------------------------------------------------------------------
ATS Medical Warrants (Exp 1997)*^@ 166,666 0
Biocompatibles International PLC*^ UK 960,000 22,041,398
Cambridge Heart*~ 36,000 342,000
Cambridge Heart*^~ 650,000 5,557,500
Cardiometrics Inc* 200,000 1,212,500
Clarus Medical Systems Warrants
(Exp 2000)*^@~ 2,224 0
Electroscope Inc*^~ 380,000 876,375
Emisphere Technologies* 289,200 4,193,400
Guidant Corp 200,000 13,650,000
IDEC Pharmaceuticals* 200,000 3,550,000
Johnson & Johnson 322,000 19,722,500
KeraVision Inc* 206,185 1,752,573
Matritech Inc* 194,900 962,319
Metra Biosystems* 210,356 804,612
OrbTek Inc*^ 88,385 216,844
OrbTek Inc Warrants (Exp 2001)*^@ 250,000 0
Total Renal Care Holdings* 87,000 2,794,875
Ventana Medical Systems* 15,400 152,075
------------
77,828,971
------------
Pharmaceuticals 48.87%
- ---------------------------------------------------------------------------------------------
Abbott Laboratories 250,000 15,250,000
American Home Products 245,000 16,231,250
Amylin Pharmaceuticals* 38,550 395,137
Bristol-Myers Squibb 344,000 22,532,000
CIMA Labs* 333,333 1,666,665
Crown Laboratories* 410,558 261,731
Fuisz Technologies Ltd* 961,555 724,769
Glaxo Wellcome PLC Sponsored ADR UK 350,000 13,781,250
Inhale Therapeutic Systems* 108,550 2,008,175
Lilly (Eli) & Co 53,000 4,657,375
Merck & Co 240,000 21,720,000
Novartis AG++ SZ 9,200 12,125,961
Pfizer Inc 35,000 22,560,000
Roche Holding AG++ SZ 1,100 9,294,824
Sanofi SA++ FR 150,000 14,006,882
Schering AG++ GM 221,000 21,184,954
Schering-Plough Corp 5,000 22,000,000
SmithKline Beecham PLC ADR
Representing Ord A Shrs UK 277,000 22,333,125
Warner-Lambert Co 302,000 29,596,000
------------
252,330,098
-----------
Total Common Stocks & Warrants (Cost $328,971,242) 404,279,365
- ---------------------------------------------------------------------------------------------
<PAGE>
Preferred Stocks 5.80%
Biotechnology 1.68%
- ---------------------------------------------------------------------------------------------
Exelixis Pharmaceuticals, Series C Pfd*^~ 1,125,000 2,250,000
Ingenex Inc, Series B Pfd*^ 103,055 600,000
MedClone Inc, Series G Conv Pfd*^ 872,096 1
Ontogeny Inc, Series E Pfd*^~ 1,000,000 2,500,000
Osiris Therapeutics, Series C Conv Pfd*^ 352,941 1,199,999
Unisyn Technologies
Series A Conv Pfd*^~ 58,258 758,258
Series B Conv Pfd*^~ 499,500 499,500
Series C Conv Pfd*^~ 696,710 870,887
------------
8,678,645
------------
Health Care Delivery 1.22%
- ---------------------------------------------------------------------------------------------
Multum Information Services
Series B Conv Pfd*^~ 1,000,000 2,570,000
Physicians Online
Series A Conv Pfd*^~ 361,500 3,220,965
Series C Conv Pfd*^~ 55,558 500,022
------------
6,290,987
------------
Medical Devices & Supplies 2.90%
- ---------------------------------------------------------------------------------------------
Adeza Biomedical, Series II Conv Pfd*^~ 41,666,667 1,216,667
Clarus Medical Systems
Series I Conv Pfd*^~ 106,664 533,320
Series II Conv Pfd*^~ 77,239 386,195
InterVentional Technologies,
Series F Pfd*^ 250,000 2,125,000
Janus Biomedical, Series A Conv Pfd*^~ 400,000 1,000,000
Nanogen Inc, Series C Pfd*^ 625,000 2,500,000
Norian Corp, Series D Pfd*^ 267,857 1,500,001
OrbTek Inc, Series A Conv Pfd*^ 714,286 1,500,001
SOMNUS Medical Technologies,
Series B Pfd*^~ 1,000,000 4,200,000
------------
14,961,184
------------
Total Preferred Stocks
(Cost $26,062,190) 29,930,816
- ---------------------------------------------------------------------------------------------
<PAGE>
Fixed Income Securities 0.54%
Biotechnology 0.01%
- ---------------------------------------------------------------------------------------------
MedClone Inc, Promissory Notes
10.000%, 6/30/1996*^** 55,260 1
10.000%, 12/31/1996*^** 55,260 1
7.000%, 4/30/1997*^< 41,445 41,445
------------
41,447
------------
Health Care Delivery 0.00%
- ---------------------------------------------------------------------------------------------
Medical Associates of America
Conv Sr Notes, 7.000%, 2/28/1999*^> 1,689,904 100
------------
Medical Devices & Supplies 0.53%
- ---------------------------------------------------------------------------------------------
OrbTek Inc, Conv Promissory Notes, 10.000%
6/30/2000*^ 500,000 500,000
11/22/2000*^ 1,000,000 1,000,000
11/24/2000*^+ 1,000,000 1,000,000
OrbTek Inc, Secured Promissory Notes
Zero Coupon, 11/24/2000*^ 250,000 250,000
------------
2,750,000
------------
Total Fixed Income Securities (Cost $4,439,904) 2,791,547
- ---------------------------------------------------------------------------------------------
Other Securities 0.44%
Medical Devices & Supplies 0.06%
- ---------------------------------------------------------------------------------------------
Axogen Ltd Units*
(Each unit consists of 1 shr of
cmn stock and 1 wrnt of Elan Corp
represented by 1 ADR) BD 11,400 290,700
Pharmaceuticals 0.38%
- ---------------------------------------------------------------------------------------------
Spiros Development Units*^~
(Each unit consists of 1 callable
shr of cmn stock and 1 Series S
wrnt to buy 2.40 shrs of Dura
Pharmaceuticals cmn stock) 66,667 1,957,476
------------
Total Other Securities (Cost $2,205,210) 2,248,176
- ---------------------------------------------------------------------------------------------
<PAGE>
Short-Term Investments 14.92%
- ---------------------------------------------------------------------------------------------
Corporate Bonds 0.19%
Medical Devices & Supplies 0.19%
- ---------------------------------------------------------------------------------------------
OrbTek Inc, Secured Conv Promissory Notes
Zero Coupon, 12/31/1997*^ (Cost $1,151,965) 1,000,000 1,000,000
- ---------------------------------------------------------------------------------------------
Commercial Paper 14.73%
Finance Related 14.73%
- ---------------------------------------------------------------------------------------------
American General Finance, 5.400%, 5/5/1997 13,170,000 13,170,000
Associates Corp of North America, 5.600%, 5/1/1997 26,000,000 26,000,000
General Motors Acceptance, 5.410%, 5/1/1997 22,245,000 22,245,000
Sears Roebuck Acceptance, 5.440%, 5/2/1997 14,630,000 14,630,000
------------
Total Commercial Paper (Cost $76,045,000) 76,045,000
- ---------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $77,196,965) 77,045,000
- ---------------------------------------------------------------------------------------------
Total Investment Securities At Value 100.00%
(Cost $438,875,511#) 516,294,904
=============================================================================================
</TABLE>
* Security is non-income producing.
@ Security has no market value at April 30, 1997.
~ Security is an affiliated company (See Note 5).
+ Security is a payment-in-kind (PIK) bond. PIK bonds may make interest
payments in additional securities.
** Securities are defaulted securities with respect to cumulative interest
payments of $1,367 and $290, respectively at April 30, 1997. The security has
been devalued to $1.
< Security is a defaulted security.
> Security is a defaulted security with respect to cumulative interest payments
of $59,147 at April 30, 1997. The security has been devalued to $100.
# Also represents cost for income tax purposes.
++ Security has been designated as collateral for forward foreign currency
contracts.
^ The following are restricted securities at April 30, 1997:
<PAGE>
<TABLE>
<CAPTION>
Schedule of Restricted or Illiquid Securities
- ------------------------------------------------------------------------------------------------
Fair Value
Date as a % of
Security Name Acquired Cost Fair Value Net Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ATS Medical Warrants
(Exp 1997) 11/18/1992 $ 0 $ 0 0.00%
Adeza Biomedical,
Series II Conv Pfd 12/21/1994 1,000,000 1,216,667 0.26
Advanced Health 1/27/1995 1,548,590 9,516,809(d) 2.07
Biocompatibles
International PLC 3/5/1993-
5/23/1996 875,457 22,041,398 4.79
Cambridge Heart 9/29/1993 1,300,000 5,557,500(d) 1.21%
Clarus Medical Systems
Series I Conv Pfd 12/23/1992 533,320 533,320 0.12
Series II Conv Pfd 12/23/1992-
2/9/1996 386,195 386,195 0.08
Warrants (Exp 2000) 12/23/1992 0 0 0.00
Ecogen Technologies I 11/16/1992-
1/28/1994 684,000 1 0.00
Electroscope Inc 4/27/1993-
3/21/1996 990,000 876,375(d) 0.19
Exelixis Pharmaceuticals,
Series C Pfd 4/9/1997 2,250,000 2,250,000 0.49
Ingenex Inc, Series B
Pfd 9/27/1994 600,000 600,000 0.13
InterVentional
Technologies
Series F Pfd 10/19/1992 2,000,000 2,125,000 0.46
Janus Biomedical,
Series A Conv Pfd 3/2/1994 1,000,000 1,000,000 0.22
MedClone Inc
Promissory Notes,
10.000%
6/30/1996 6/29/1995 55,260 1 0.00
12/31/1996 12/6/1994-
6/29/1995 55,260 1 0.00
4/30/1997 3/24/1997 41,445 41,445 0.01
Series G Conv Pfd 10/21/1993-
7/15/1994 1,500,005 1 0.00
Warrants (Exp 1999) 7/15/1994 0 0 0.00
Medical Associates
of America 2/24/1992-
8/31/1992 530,491 1 0.00
Medical Associates
of America
Conv Sr Notes, 7.000%,
2/28/1999 2/24/1992-
2/28/1994 1,689,904 100 0.00
<PAGE>
Multum Information Services
Series B Conv Pfd 3/25/1993 1,000,000 2,570,000 0.56
Nanogen Inc, Series C Pfd 12/19/1996 2,500,000 2,500,000 0.54
Norian Corp, Series D Pfd 8/5/1992 1,500,001 1,500,001 0.33
Ontogeny Inc, Series E Pfd 3/13/1997 2,500,000 2,500,000 0.54
OrbTek Inc 1/9/1997 216,849 216,844 0.05
OrbTek Inc
Conv Promissory Notes,
10.000%
6/30/2000 6/30/1995 500,000 500,000 0.11%
11/22/2000 11/24/1995 1,000,000 1,000,000 0.22
11/24/2000 11/24/1995-
4/29/1996 1,000,000 1,000,000 0.22
Secured Promissory Notes
Zero Coupon, 11/24/2000 10/4/1996 250,000 250,000 0.05
Secured Conv
Promissory Notes
Zero Coupon,
12/31/1997 2/14/1997 1,000,000 1,000,000 0.22
Series A Conv Pfd 5/12/1994 1,500,001 1,500,001 0.33
Warrants (Exp 2001) 10/4/1996-
2/14/1997 0 0 0.00
Osiris Therapeutics,
Series C Conv Pfd 5/24/1994-
12/23/1994 1,199,999 1,199,999 0.26
Physicians Online
Series A Conv Pfd 8/30/1993 964,000 3,220,965 0.70
Series C Conv Pfd 2/29/1996 500,022 500,022 0.11
SOMNUS Medical
Technologies
Series B Pfd 9/11/1996 3,000,000 4,200,000 0.91
Spiros Development
Units 12/29/1995 2,000,010 1,957,476 0.42
Synaptic
Pharmaceuticals 1/19/1993 1,000,000 1,531,250 0.33
Titan Pharmaceuticals 7/19/1993 2,000,000 1,098,484(d) 0.24
Unisyn Technologies 2/28/1994 999,961 20,754 0.00
Unisyn Technologies
Series A Conv Pfd 12/27/1994 758,258 758,258 0.16
Series B Pfd 2/6/1996 499,500 499,500 0.11
Series C Pfd 4/25/1997 870,888 870,887 0.19
Warrants (Exp 2001) 7/27/1994 0 0 0.00
Xenometrix Inc 7/20/1992-
2/21/1996 2,099,978 1,409,438(b) 0.31
--------------------------------------------
$45,889,395 $77,948,693 16.94%
=============================================================================================
</TABLE>
(a) Fair value represents 75% of the security's publicly traded value.
(b) Fair value represents 80% of the security's publicly traded value.
(c) Fair value represents 85% of the security's publicly traded value.
(d) Fair value represents 90% of the security's publicly traded value.
<PAGE>
Forward Foreign Currency Contracts
The Global Health Sciences Fund
Open at April 30, 1997
- --------------------------------------------------------------------------------
Currency Currency Unrealized
Currency/Value Date Units Sold Value (US$) Gain/Loss
- --------------------------------------------------------------------------------
French Franc
5/14/1997 56,000,000 $10,180,469 $285,427
6/10/1997 4,000,000 700,217 6,255
German Mark
5/14/1997 26,000,000 15,997,916 480,160
Swiss Franc
6/9/1997 25,000,000 16,897,953 (82,282)
-----------------------------
$43,776,555 $689,560
================================================================================
Summary of Investments by Country
The Global Health Sciences Fund
April 30, 1997
- --------------------------------------------------------------------------------
% of
Country Investment
Country Code Securities Value
- --------------------------------------------------------------------------------
Bermuda BD 0.06% $ 290,700
Canada CA 0.43 2,200,000
France FR 2.71 14,006,882
Germany GM 4.10 21,184,954
Switzerland SZ 4.15 21,420,785
United Kingdom UK 11.26 58,155,773
United States US 77.29 399,035,810
--------------------------
100.00% $516,294,904
================================================================================
See Notes to Financial Statements
<PAGE>
Statement of Assets and Liabilities
The Global Health Sciences Fund
April 30, 1997
Unaudited
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Investment Securities at Value (Cost $438,875,511) $516,294,904
Receivables:
Investment Securities Sold 4,325,222
Dividends and Interest 656,800
Appreciation on Forward Foreign Currency Contracts 689,460
Prepaid Expenses and Other Assets 35,500
--------------
Total Assets 522,001,886
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payables:
Custodian 315,611
Investment Securities Purchased 61,396,771
Accrued Expenses and Other Payables 113,737
--------------
Total Liabilities 61,826,119
- --------------------------------------------------------------------------------
Net Assets at Value $460,175,767
================================================================================
Net Assets
- --------------------------------------------------------------------------------
Paid-in Capital* $343,884,586
Accumulated Undistributed Net Investment Income 180,406
Accumulated Undistributed Net Realized Gain on
Investment Securities and Foreign Currency
Transactions 38,002,007
Net Appreciation of Investment Securities
and Foreign Currency Transactions 78,108,768
--------------
Net Assets at Value $460,175,767
================================================================================
Net Asset Value per Share $18.58
================================================================================
* The Fund has an unlimited number of authorized shares of common stock, par
value of $0.01 per share, of which 24,762,567 were outstanding at April 30,
1997.
See Notes to Financial Statements
<PAGE>
Statement of Operations
The Global Health Sciences Fund
Six Months Ended April 30, 1997
UNAUDITED
- --------------------------------------------------------------------------------
Investment Income
- --------------------------------------------------------------------------------
Income
Dividends $ 1,975,707
Interest 916,263
Foreign Taxes Withheld (83,442)
--------------
Total Income 2,808,528
- --------------------------------------------------------------------------------
Expenses
Investment Advisory Fees 2,261,495
Administrative Fees 125,000
Custodian Fees and Expenses 57,089
NYSE Listing Fee 23,840
Organization Expenses 1,592
Professional Fees and Expenses 150,474
Transfer Agent Fees 18,108
Trustees' Fees and Expenses 29,000
Other Expenses 18,506
--------------
Net Expenses 2,685,104
- --------------------------------------------------------------------------------
Net Investment Income 123,424
- --------------------------------------------------------------------------------
Realized And Unrealized Gain (Loss)On Investment Securities
- --------------------------------------------------------------------------------
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 38,034,688
Change in Net Depreciation of Investment Securities
and Foreign Currency Transactions (4,337,776)
--------------
Net Gain On Investment Securities 33,696,912
- --------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $33,820,336
================================================================================
See Notes to Financial Statements
<PAGE>
Statement of Cash Flows
The Global Health Sciences Fund
Six Months Ended April 30, 1997
UNAUDITED
- --------------------------------------------------------------------------------
Increase (Decrease) in Cash
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Dividends and Interest Received,
Net of Foreign Withholding Taxes 2,425,202
Expenses Paid (2,644,316)
Purchases Net of Sales of Short-Term
Portfolio Investments (27,278,472)
Purchases of Long-Term Portfolio Investments (327,360,941)
Sales of Long-Term Portfolio Investments 383,140,920
Other 26,012
--------------
Net Cash Flows from Operating Activities 28,308,405
--------------
Cash Flows Used for Financing Activities:
Distributions Paid to Common Shareholders (29,486,861)
--------------
Net Decrease in Cash (1,178,456)
--------------
Cash at Beginning of Year 862,845
--------------
Cash at End of Year $ (315,611)
================================================================================
Reconciliation of Net Increase in Net Assets from
Operations to Net Cash Flows from Operating Activities
- --------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $ 33,820,336
--------------
Decrease in Investments (26,743,319)
Net Realized Gain (38,034,688)
Increase in Depreciation of Investment Securities 4,337,776
Decrease in Receivable for Investment Securities Sold (2,805,672)
Increase in Payable for Investment Securities Purchased 58,050,068
Increase in Dividends and Interest Receivable (249,296)
Increase in Prepaid Expenses and Other Assets (26,012)
Increase in Accrued Expenses and Other Payables (40,788)
--------------
Total Adjustments (5,511,931)
--------------
Net Cash Flows From Operating Activities $ 28,308,405
================================================================================
See Notes to Financial Statements
<PAGE>
Statement of Changes in Net Assets
The Global Health Sciences Fund
- --------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 1997 October 31, 1996
- --------------------------------------------------------------------------------
Operations UNAUDITED
- --------------------------------------------------------------------------------
Net Investment Income (Loss) $ 123,424 $ (1,982,188)
Net Realized Gain on Investment
Securities and Foreign
Currency Transactions 38,034,688 97,041,210
Change in Net Depreciation of
Investment Securities and
Foreign Currency Transactions (4,337,776) (18,719,794)
---------------------------------------
Net Increase in Net Assets
from Operations 33,820,336 76,339,228
- --------------------------------------------------------------------------------
Distributions To Shareholders from
Net Realized Gain on Investment
Securities (91,697,472) 0
---------------------------------------
Fund Share Transactions
Reinvestment of Distributions $ 062,210,611 0
---------------------------------------
Total Increase in Net Assets 4,333,475 76,339,228
- --------------------------------------------------------------------------------
Beginning of Period 455,842,292 379,503,064
---------------------------------------
End of Period (Including Accumulated
Undistributed Net Investment
Income of $180,406 and $56,982
respectively) $ 460,175,767 $455,842,292
================================================================================
Fund Share Transactions
- --------------------------------------------------------------------------------
Shares Issued from Reinvestment
of Distributions and Net Increase
in Fund Shares 4,255,367 0
================================================================================
See Notes to Financial Statements
<PAGE>
Notes to Financial Statements
The Global Health Sciences Fund
UNAUDITED
- --------------------------------------------------------------------------------
NOTE 1 - Organization And Significant Accounting Policies.
The Global Health Sciences Fund (the "Fund") was organized as a
Massachusetts Business Trust on November 18, 1991 and commenced investment
operations on January 24, 1992. Effective April 30, 1997, the Fund changed its
name to INVESCO Global Health Sciences Fund. The investment objective of the
Fund is to seek capital appreciation through investments in the health sciences
related business sectors. The Fund is registered under the Investment Company
Act of 1940 (the "Act") as a diversified, closed-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 trustees.
Debt securities are valued at evaluated bid prices as determined by a pricing
service approved by the Fund's board of trustees. If evaluated bid prices are
not available, debt securities are valued by averaging the bid prices obtained
from one or more dealers making a market for such securities.
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 trustees. Restricted securities are valued in accordance with
procedures established by the Fund's board of trustees.
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.
<PAGE>
Assets and liabilities initially expressed in terms of foreign currencies
are translated into U.S. dollars at the prevailing market rates as quoted by one
or more banks or dealers on the date of valuation. The cost of securities is
translated into U.S. dollars at the rates of exchange prevailing when such
securities were acquired. Income and expenses are translated into U.S. dollars
at the 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. Certain dividends from foreign securities will be
recorded as soon as the Fund is informed of the dividend if such information is
obtained subsequent to the ex dividend date. Interest income, which may be
comprised of stated coupon rate, market discount, original issue discount and
amortized premium, is recorded on the accrual basis. Discounts and premiums on
debt securities purchased are amortized over the life of the respective security
as adjustments to interest income. Cost is determined on the specific
identification basis.
The Fund may have elements of risk due to concentrated investments in
specific industries or foreign issuers located in a specific country. Such
concentrations may subject the Fund to additional risks resulting from future
political or economic conditions and/or possible impositions of adverse foreign
governmental laws or currency exchange restrictions. Net realized and unrealized
gain or loss from investments includes fluctuations from currency exchange rates
and fluctuations in market value.
The Fund's use of short-term forward foreign currecny contracts may subject
it to certain rises 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.
The net position of such forward contracts is presented in the Statement of
Assets and Liabilities and may have additional elements of risk which may not
necessarily be reflected.
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. The Fund has demand registration rights for certain restricted securities
held at April 30, 1997, 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.
<PAGE>
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.
Net capital loss carryovers utilized in 1996 amounted to $3,103,499. To the
extent future capital gains are offset by capital loss carryovers, such gains
will not be distributed to shareholders.
Dividends paid by the Fund from net investment income and distributions of
net realized short-term capital gains are, for federal income tax purposes,
taxable as ordinary income to shareholders.
Investment income received from foreign sources may be subject to foreign
witholding taxes. Dividend and interest income is shown gross of foreign
witholding 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 market
discounts, amortized premiums, foreign currency transactions, nontaxable
dividends, net operating losses and expired capital loss carryforwards.
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 exchange an amount of
currency at some future time at an agreed upon rate. These contracts are
marked-to-market daily and the related appreciation or depreciation of the
contracts is presented in the Statement of Assets and Liabilities.
At April 30, 1997, the Fund had outstanding forward foreign currency
contracts. Unrealized gain or loss on forward foreign currency contracts is
calculated daily as the difference between the contract exchange rate and the
closing forward rate applied to the face amount of the contract.
Forward foreign currency contracts held by the Fund are fully collateralized
by other securities which are notated in the Statement of Investment Securities
and such collateral is in the possession of the Fund's custodian. The collateral
is evaluated daily to ensure its market value exceeds the current market value
of the forward foreign currency contract.
<PAGE>
NOTE 2 - Investment Advisory And Other Agreements.
INVESCO Trust Company ("ITC") serves as the Fund's investment adviser. As
compensation for its services to the Fund, ITC 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 1.00% of ending weekly net assets.
In accordance with an Administrative Agreement, the Fund pays INVESCO Funds
Group, Inc. ("IFG") an annual fee of $250,000 to provide administrative,
accounting and clerical services. The fee is accrued daily and paid monthly.
NOTE 3 - Purchases And Sales Of Investment Securities.
For the six months ended April 30, 1997, the aggregate cost of purchases and
proceeds from sales of investment securities (excluding all U.S. Government
securities and short-term securities) were $385,411,009 and $385,946,592,
respectively.
There were no purchases or sales of U.S. Government securities.
NOTE 4 - Appreciation And Depreciation.
At April 30, 1997, the gross appreciation of securities in which there was an
excess of value over tax cost amounted to $95,138,658 and the gross depreciation
of securities in which there was an excess of tax cost over value amounted to
$17,719,265, resulting in net appreciation of $77,419,393.
NOTE 5 - Transactions With Affiliates And Affiliated Companies. Certain of the
Fund's officers and trustees are also officers and directors of ITC or IFG.
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, 1997, in which the issuer was an affiliate of the Fund, is as follows on the
next page:
<PAGE>
<TABLE>
<CAPTION>
Purchases Sales Realized Gain Value
--------------------- ------------------ (Loss) on at
Affiliate Shares Cost Shares Cost Investments 4/30/97
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adeza Biomedical
Series II, Conv Pfd - - - - - $ 1,216,667
Advanced Health - - - - - 9,516,809
Alexion Pharmaceuticals - - - - - 3,534,537
Alexion Pharmaceuticals
Warrants - - - - - 0
Cadus Pharmaceutical - - - - - 7,567,473
Cambridge Heart - - - - - 5,899,500
Clarus Medical Systems
Series I, Conv Pfd - - - - - 533,320
Series II, Conv Pfd - - - - - 386,195
Warrants - - - - - 0
Ecogen Technologies I - - - - - 1
Electroscope Inc - - - - - 876,375
Exelixis Pharmaceuticals
Series C, Pfd 1,125,000 $2,250,000 - - - 2,250,000
Janus Biomedical
Series A, Conv Pfd - - - - - 1,000,000
Multum Information Services
Series B, Conv Pfd - - - - - 2,570,000
Ontogeny Inc, Series E Pfd 1,000,000 2,500,000 - - - 2,500,000
Physicians Online
Series A, Conv Pfd - - - - - 3,220,965
Series C, Conv Pfd - - - - - 500,022
SOMNUS Medical Technologies
Series B, Pfd 1,000,000 3,000,000 - - - 4,200,000
Spiros Development Units - - - - - 1,957,476
Unisyn Technologies - - - - - 20,754
Unisyn Technologies
Series A, Conv Pfd - - - - - 758,258
Series B, Conv Pfd - - - - - 499,500
Series C, Conv Pfd 696,710 870,888 - - - 870,887
Warrants - - - - - 0
Xenometrix Inc - - - - - 1,409,438
- ---------------------------------------------------------------------------------------------------------------------------
$51,288,177
===========================================================================================================================
</TABLE>
No dividend income was received from any affiliated companies.
<PAGE>
Financial Highlights
The Global Health Sciences Fund
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Six Months Period
Ended Ended
April 30 Year Ended October 31 October 31
---------- -----------------------------------------------------
1997 1996 1995 1994 1993 1992^
- ---------------------------------------------------------------------------------------------------------------------------
Per Share Data UNAUDITED
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value-
Beginning of Period $ 22.230 $ 18.506 $ 12.378 $ 12.121 $ 12.643 $ 13.950
-------------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) 0.005 (0.097) (0.107) (0.085) 0.205 0.071
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) 0.818 3.821 6.235 0.542 (0.652) (1.345)
-------------------------------------------------------------------------------------
Total from Investment
Operations 0.823 3.724 6.128 0.457 (0.447) (1.274)
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends from
Net Investment Income 0.000 0.000 0.000 0.200 0.075 0.000
Distributions from
Capital Gains 4.473 0.000 0.000 0.000 0.000 0.000
Offering Costs Charged to
Paid-In Capital 0.000 0.000 0.000 0.000 0.000 0.033
-------------------------------------------------------------------------------------
Total Distributions 4.473 0.000 0.000 0.200 0.075 0.033
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 18.580 $ 22.230 $ 18.506 $ 12.378 $ 12.121 $ 12.643
===========================================================================================================================
Share Price, End of Period $ 15.000 $ 17.000 $ 14.750 $ 10.000 $ 11.500 $ 11.500
===========================================================================================================================
Total Return> 15.22%* 15.25% 47.50% (11.49%) 0.67% (17.56%)*
- ---------------------------------------------------------------------------------------------------------------------------
<PAGE>
Ratios
Net Assets-End of Period
($000 Omitted) $ 460,176 $ 455,842 $ 379,503 $ 253,834 $ 248,564 $ 259,279
Ratio of Expenses
to Average Net Assets 0.59%* 1.21% 1.33% 1.41% 1.39% 1.35%~
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.03%* (0.44%) (0.72%) (0.70%) 1.74% 0.72%~
Portfolio Turnover Rate 88%* 91% 105% 121% 226% 215%*
Average Commission
Rate Paid^^ $ 0.0456* $ 0.0822 - - - -
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
^ From January 24, 1992, commencement of operations, to October 31, 1992.
> 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.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
~ Annualized
^^ The Average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
Other Information
The Global Health Sciences Fund
UNAUDITED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and Capital Gains Distribution History
- ---------------------------------------------------------------------------------------------------------------------------
Net Investment Long-Term Short-Term
Income Capital Gains Capital Gains
Ex Date Payable Date (per share) (per share) (per share)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 24, 1992 January 15, 1993 $0.075 - -
December 23, 1993 January 14, 1994 $0.200 - -
November 29, 1996 December 23, 1996 - $3.8925 $0.5802
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 gain 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.
<PAGE>
If on the payment date for a Dividend the net asset value per Share is
greater than the market price per Share (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
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 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 providing 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. 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 as 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.
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.
<PAGE>
Annual Shareholders Meeting
The Fund's annual meeting of shareholders was held on February 3, 1997.
Shareholders voted to approve a new investment advisory agreement similar in
form and terms to the existing agreement between the Fund and INVESCO Trust
Company, re-elect Hubert L. Harris, Jr. and John W. McIntyre as Trustees and
ratify the appointment of Price Waterhouse LLP as the Fund's independent
accountants. The resulting vote count for each proposal is listed below:
1. Approval of new Advisory Agreement:
For: 12,689,322
Against: 599,031
Abstain: 223,727
Broker Non-Vote: 3,079,259
2. Election of two Trustees:
Hubert L. Harris, Jr. For: 16,001,523
Withheld Authority: 589,817
John W. McIntyre For: 16,022,140
Withheld Authority: 569,200
3. Ratification of Appointment of Price Waterhouse LLP as the Fund's
Independent Accountants:
For: 16,188,965
Against: 229,683
Abstain: 172,690
In addition to Messrs. Harris and McIntyre, the following persons serve as
Trustees of the Fund: Mr. Fred A. Deering and Dr. Larry Soll.
Miscellaneous
For the six months ended April 30, 1997, 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. Hubert L. Harris, Jr. was
selected to serve as Chairman of the Board of Trustees and Mr. Dan J. Hesser
was selected to serve as President and Chief Operating Officer of the Fund.
Mr. Schroer joined INVESCO Trust Company ("ITC") in 1992 and became a Senior
Vice President of ITC in 1996. In addition to Mr. Schroer's responsibilities
as portfolio manager of the Fund, he also manages the INVESCO Strategic Health
Sciences Fund. Mr. Schroer has been an officer of The Global Health Sciences
Fund since January 1996.
Mr. Schroer received his B.S. and M.B.A. degrees from the University of
Wisconsin-Madison. He began his investment management career in 1990 with the
Trust Company of the West as an investment analyst. He was eventually given
additional responsibilities by Trust Company of the West in Los Angeles as
Assistant Vice President with analytical responsibilities in the health care
industry.
<PAGE>
Shareholder Information
Investment Adviser Shareholder For Information about
INVESCO Trust Company Servicing Agent The Global Health
7800 East Union Avenue Boston Equiserve, Inc. Sciences Fund or current
Suite 1100 150 Royall Street net asset values, please
Denver, CO 80237 Mail Stop 45-02-62 call toll-free 1-800-528-8765
Canton, MA 02021
Administrator For questions on dividend
INVESCO Funds Independent reinvestment, please call
Groups, Inc. Accountants toll-free 1-800-426-5523
7800 East Union Avenue Price Waterhouse LLP
Suite 800 950 Seventeenth Street
Denver, CO 80237 Denver, CO 80202
Custodian Counsel
State Street Bank and Kirkpatrick & Lockhart
Trust Company 1800 M Street, N.W.
225 Franklin Street South Lobby, 9th Floor
Boston, MA 02110 Washington, D.C. 20036
Trustees and Officers
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Trustees Officers
Hubert L. Harris Dan J. Hesser
Chairman of the Board of President and Chief
Trustees Operating Officer
Fred A. Deering John Schroer
Trustee Vice President
John W. McIntyre Glen A. Payne
Trustee Secretary
Larry Soll, Ph.D. Ronald L. Grooms
Trustee Treasurer, Chief The Global
Financial and Health Sciences Fund
Accounting Officer INVESCO Trust Company
7800 East Union Avenue
Suite 1100
Denver, Colorado 80237
