INVESCO
GLOBAL
HEALTH
SCIENCES
FUND
APRIL 30, 1999
SEMIANNUAL
REPORT
[INVESCO ICON]
INVESCO
<PAGE>
CONTENTS
LETTER FROM THE CHAIRMAN 1
A CONVERSATION WITH PORTFOLIO
MANAGER JOHN SCHROER 3
10 LARGEST COMMON STOCK HOLDINGS 9
FINANCIAL STATEMENTS 9
NOTES TO FINANCIAL STATEMENTS 19
OTHER INFORMATION 24
FINANCIAL HIGHLIGHTS 26
TRUSTEES AND OFFICERS 27
SHAREHOLDER INFORMATION 27
<TABLE>
<CAPTION>
INVESCO GLOBAL HEALTH SCIENCES FUND
- ------------------------------------------------------------------------------------------------
For the 6 Months For the 12 Months Ended 10/31
Ended 4/30/99 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value--Total Return(1)(4) 7.62%(2) 20.74% 18.60% 20.10% 49.52%
Share Price--Total Return(1)(4) 4.73%(2) 40.29% 32.98% 15.25% 47.50%
Total Distributions $3.1524 $3.9248 $4.4727 $0.00 $0.00
Total Net Assets--End of Period (000) $585.2 $586.3 $526.2 $455.8 $379.5
Ratio of Expenses
to Average Net Assets 0.60%(2)(3) 1.21%(3) 1.22%(3) 1.21% 1.33%
Portfolio Turnover Rate 32%(2) 87% 145% 91% 105%
</TABLE>
(1) Past performance is no guarantee of future results.
(2) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(3) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(4) Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results.
(5) Composition of holdings is subject to change.
<PAGE>
LETTER FROM THE CHAIRMAN
[Photograph of Chairman]
Charles W. Brady
Dear Shareholder:
During the past six months, we have enjoyed an almost perfect economic
environment in the United States--one characterized by low inflation, declining
interest rates and moderate growth. America appears to be running full-speed
ahead. With inflation mild and consumer spending strong, consumer cyclical
stocks such as autos, housing, retailing and media have been doing well. Some
investors have shifted into these recovering cyclical stocks from traditional
growth sectors such as health care, telecommunications, services and utilities.
Overseas, battered economies began to recover. Japan appeared to experience
greater stability and Brazil's recession was not as severe as generally feared.
The worldwide recovery has helped multinational companies, which are beginning
to see improving business conditions. In addition, companies are benefiting from
continuous cost-cutting, which was accelerated last year by widespread fear of
catching the "Asian flu."
Over the past few years, investors have enjoyed unusually robust returns, as
domestic equity markets produced above-average results. However, growth stocks
experienced greater volatility in the past six months, as many investors took
capital gains and shifted into cyclical stocks. We continue to view the equity
markets constructively, although investors should be prepared for periods of
increased volatility.
HOW HAS THE FUND PERFORMED?
While past performance is no guarantee of future results, for the six months
ended April 30, 1999, the fund had a total return of 7.62% based on the net
asset value, and a return of 4.73% based on market price. For the three-year
period ended April 30, 1999, the fund had an average annual return of 12.42%
based on net asset value, and 21.54% based on stock price performance.(4)
HOW HAS THE FUND TRADED?
Like most closed-end funds, INVESCO Global Health Sciences Fund has traded at a
discount to net asset value, despite superior NAV performance. The fund's
discount narrowed considerably since the introduction of a managed distribution
policy. Under the managed distribution policy, the fund will pay shareholders a
quarterly distribution of 2.5% of the fund's net asset value, thus creating a
more predictable income stream. This enables us to manage the cash required to
pay distributions, as the amounts are generally smaller and more regular. And
the policy also eliminates the need to raise large one-time distributions at
year-end, generally when other funds are compelled to raise cash, thus creating
selling pressure in the market. While the managed distribution policy seems to
be an effective tool in the reduction of the discount, the announcement of a
rights offering by the fund has increased its near-term stock price volatility.
Graph:
This graph illustrates the monthly discount/premium for the INVESCO
Global Health Sciences Fund for the period from 1/31/95 to 4/30/99.
<PAGE>
WHY IS THE FUND CONDUCTING A RIGHTS OFFERING?
Capital raised through a rights offering will help diversify the portfolio while
allowing shareholders to buy additional shares at a discounted price. New
capital will allow the fund to take advantage of investment opportunities in the
health sciences industry without selling current holdings that the manager wants
to hold because of potential future gains. In addition, the fund has significant
unrealized capital gains. Adjusting current investments could result in
significant capital gain distributions and potential tax liability above and
beyond the annual 10% currently paid to shareholders. Raising additional assets
through a rights offering is a more tax-effective way for the fund to invest.
Thank you for your continued support. We hope that you will take this
opportunity to increase your investment in INVESCO Global Health Sciences Fund.
Sincerely,
/s/ Charles W. Brady
- ---------------------
Charles W. Brady
Chairman
<PAGE>
A CONVERSATION WITH PORTFOLIO MANAGER JOHN SCHROER
[Photograph of Manager]
John Schroer
Q. CAN YOU DISCUSS SOME OF THE FACTORS RESPONSIBLE FOR THE FUND'S PERFORMANCE
DURING THE LAST SIX MONTHS?
The fund has performed well for the past six months, aided by continued low
inflation and strong economic growth. These factors provided a healthy
environment for the health care sector and the stock market in general. But the
fund's results also reflected the growing importance of the health care sector
in the domestic economy.
Q. THE FUND HAS APPROXIMATELY 60% OF ITS ASSETS INVESTED IN LARGE-CAPITALIZATION
PHARMACEUTICAL STOCKS. HOW HAS THIS ALLOCATION CONTRIBUTED TO ITS PERFORMANCE?
Large pharmaceutical companies remain a dominant theme in the portfolio. To be
successful in an increasingly global marketplace, these companies must be able
to register, market and distribute their pro- ducts worldwide. This requires
substantial capital and resources, more easily available to large-capitalization
companies. These companies must also have the financial capability to dedicate
enormous resources to the research & development of new products, the lifeline
for health care companies. In fact, research and development budgets of phar-
maceutical companies worldwide have more than quadrupled, from $5 billion in
1980 to more than $20 billion in 1998. The earnings outlook for these companies
has dramatically improved as new drugs typically drive revenue and growth
prospects for pharmaceutical companies. For example, Pfizer's new anti-impotence
drug Viagra had worldwide sales of almost $800 million in less than one year.
Graph:
U.S. ANNUAL PHARMACEUTICAL EXPENDITURES BY AGE
This graph shows the expenditures of each age group in the
United States as a percentage.
To meet the growing number of new drug applications, the Food & Drug
Administration (FDA) has streamlined the drug approval process, and new drug
approvals have almost doubled since the 1980s. While the FDA approved only 20
new drugs in 1988, 39 were approved in 1998. A primary driver of new development
is the aging population worldwide, which is enjoying higher life expectancy
resulting from continuing medical and technological advancements. By the year
2020, approximately 25% of the U.S. population is expected to be over the age of
60. Similar trends are expected in both Europe and Japan, the other two largest
markets for the health sciences industry. Over the next 50 years, the U.S.
Bureau of the Census anticipates that the population over age 85 will triple.
Graph:
AGING OF THE POPULATION (ESTIMATED)
% OF POPULATION OVER AGE 60
This graph shows the estimated percentage of the populations in the
U.S., Japan and Europe that will be over the age of 60 in the years
2000 and 2020.
Currently, the over-65 age group is by far the largest consumer of health
products, accounting for more than 50% of annual pharmaceutical expenditures in
the United States. These therapies are generally chronic treatments for
illnesses ranging from cardiovascular disease to depression, and they represent
the largest and most profitable sector of the health care industry. This driver
of volume growth for the industry is likely to continue into the foreseeable
future.
Demographic trends and a strong pipeline of new products fostered by research &
development expenditures, combined with an accelerated regulatory review
process, have given a competitive advantage to large-cap pharmaceutical
companies. Consequently, we remain comfortable with the investments and our
current weighting in this sector.
<PAGE>
Graph:
This graph compares the net asset value and share price value of a
$10,000 investment in the INVESCO Global Health Sciences Fund to the
value of a $10,000 investment in the S&P Health Care Composite
index for the period from fourth quarter 1991 through 4/30/99.
Q. GROWTH IN THE MEDICAL DEVICES SECTOR HAS BEEN ANOTHER CONTRIBUTING FACTOR TO
THE FUND'S PERFORMANCE. WHAT IS YOUR OUTLOOK FOR THIS SECTOR?
Medical device companies continue to provide strong returns for the fund. As
health care systems worldwide are under cost-cutting pressures, there are
exceptional opportunities for companies able to provide products designed to
enhance patient care while reducing long-term costs. Some of the most
significant gains in extending the quality of life have been in the field of
cardiac research. We focus on high barriers to entry and clinically proven
products with high profitability in sub-sectors growing faster than overall
health care spending.
Market-leaders Medtronic, Inc. and Guidant Corp. have experienced tremendous
earnings growth as their products for use in cardiac rhythm management,
angioplasty, coronary artery disease intervention and cardiac surgery have been
well-received by the market. These two companies represent approximately 35% to
40% of the market for cardiac devices, an industry that is growing at a rate of
about 20% a year.
Angioplasty procedures in the United States are growing at a rate of
approximately 10% a year. Due to recent technological improvements, the use of
stents for angioplasty procedures has more than doubled in the last three years.
The size of the stent market in 1998 was approximately $1.3 billion and is
anticipated to grow about 10%, due to increased penetration and number of stents
used per procedure. We remain positive on the medical devices and supplies
subsector. However, stock selection remains key. While Medtronics, Inc., remains
a favorite stock, we have reduced our position since Medtronics merged with
Sofamor/Danek Group, another of our strong holdings, which was sold prior to the
end of the period.
Q. DO YOU SEE OPPORTUNITIES WITHIN THE BIOTECHNOLOGY SECTOR?
Although we remain optimistic about the long-term growth prospects for the
biotechnology sector, the current environment does not favor companies -- other
than Internet-related firms -- in the early stages of product development. In
many cases these firms are years away from profitability. We continue to focus
on companies with later-stage products in development.
Graph:
This graph shows the percentage of the INVESCO Global Health
Sciences Fund's portfolio holdings by the following subsectors:
pharmaceuticals, medical devices and supplies, biotechnology, health
care delivery, short-term and fixed income.
Q. WHAT NEW PRODUCTS ARE COMING TO MARKET THAT OFFER STRONG GROWTH POTENTIAL?
There is a unique class of drugs expected in the second half of 1999 or early
2000 called Cox-2 inhibitors. This new class of drug is one of the most exciting
developments in the treatment of pain and inflammation. Cox-2 inhibitors will
compete against existing non-steroidal anti-inflammatory drugs. Existing drug
therapies that treat these ailments, such as aspirin, naproxen, and ibuprofen,
can interfere with the body's natural mucus lining and may lead to stomach
discomfort and potentially ulcers. However, the Cox-2 inhibitors reduce pain and
inflammation without disturbing this lining. The Cox-2 inhibitor class has the
potential to be a multi-billion dollar market.
The first drug of this class should be Celebrex, developed by Monsanto and
co-promoted with Pfizer Inc. The second Cox-2 inhibitor to reach market should
be Merck's Vioxx.
<PAGE>
Q. THE FUND IS CONDUCTING A RIGHTS OFFERING. HOW WILL THIS AFFECT SHAREHOLDERS?
The fund has enjoyed excellent returns in the past, primarily driven by growth
and returns in the large-cap pharmaceutical stocks, which represent more than
60% of total assets. These positions have proven to be superior vehicles for
growth, and as a result the fund has accumulated significant unrealized capital
gains. Raising new capital in the current market environment will allow greater
flexibility for future investments, without selling current holdings that we
would like to maintain for potential future gains. Thus, we will be able to keep
our low-cost basis and still diversify the portfolio. Of course, past
performance is not a guarantee of future results.
Q. HAS YOUR PRIVATE PLACEMENT STRATEGY CHANGED?
The fund's closed-end structure enables us to invest up to 25% of assets in
private placements or restricted securities. This strategy allows us to examine
cutting-edge technology before the broad market has had a chance to value it,
and also helps us to identify possible future trends within the health care
industry.
We will continue to be extremely selective in choosing private placement
investments. We search for opportunities targeting specific markets driven by
market dynamics. Our selection criterion includes a viable and timely exit
strategy.
Raising capital remains difficult for biotech companies to go public. However,
as valuations for listed companies appreciate, private securities look more
attractive. Therefore, selection becomes key. We have made two Private
Investment in Public Equity (PIPE) deals in the last six months. These
transactions enabled us to purchase stock at a discount to the then current
market price. Key transactions included:
o PIPE transaction with Aradigm Corp. (ARDM)
o PIPE transaction with Triangle Pharmaceuticals (VIRS)
o Additional investment with Genomica Corp.
Investments in private placements remain a core component of our holdings. We
expect to increase assets in private placements over the long-term, since we
believe that these securities provide the potential for significant capital
appreciation. However, until the market environment improves for private
placements, we remain cautious with our investment approach.
We do not expect to significantly alter our investment strategy in the near
future. Neither our investment discipline nor our stock selection process is
expected to change.
The outlook for the health sciences sector remains strong and fundamentals are
expected to remain the same. Demographics and new technology continue to be the
primary drivers: Demographics should continue to expand demand, while new
technologies should drive shareholder value.
Sincerely,
/s/ John R. Schroer
- --------------------------
John R. Schroer
Senior Vice President
INVESCO Funds Group, Inc.
<PAGE>
TEN LARGEST COMMON STOCK HOLDINGS
- ---------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
APRIL 30, 1999
UNAUDITED
PERCENT OF
DESCRIPTION VALUE NET ASSETS
- ---------------------------------------------------------------------------
Medtronic Inc $49,972,320 8.54%
Merck & Co 35,743,200 6.11
Guidant Corp 34,711,653 5.93
Johnson & Johnson 33,364,500 5.70
Warner-Lambert Co 31,307,298 5.35
Bristol-Myers Squibb 30,935,869 5.29
Pharmacia & Upjohn 28,940,800 4.95
Schering-Plough Corp 28,117,875 4.80
Pfizer Inc 28,029,225 4.79
Lilly (Eli) & Co 26,245,472 4.48
===========================================================================
Total $327,368,212 55.94%
===========================================================================
Composition of holdings is subject to change.
STATEMENT OF INVESTMENT SECURITIES
- ---------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
APRIL 30, 1999
UNAUDITED
COUNTRY SHARES OR
CODE IF PRINCILPAL
% DESCRIPTION NON US AMOUNT VALUE
- ---------------------------------------------------------------------------
92.61 COMMON STOCKS & WARRANTS
7.82 BIOTECHNOLOGY
Abgenix Inc(a) 175,000 $2,559,375
Amgen Inc(a) 235,340 14,458,701
Aradigm Corp(a) 380,952 2,309,521
Ecogen Technologies I(a)(b)(e) 60 1
Genentech Inc(a) 34,625 2,930,141
Genomica Corp Warrants(Exp 2003)(a)(b)(c)(e) 76,646 0
GenoPlex Inc Warrants (Exp 2003)(a)(b)(c)(e) 1 0
Gilead Sciences(a) 95,800 4,412,788
MedClone Trust(a)(c)(e) 216,608 0
MedImmune Inc(a) 136,640 7,532,281
Nexstar Pharmaceuticals(a) 200,750 3,475,484
Titan Pharmaceuticals(a) 488,215 1,556,185
Triangle Pharmaceuticals(a) 350,000 5,075,000
Trimeris Inc(a)(e) 100,000 $1,080,000
Xenometrix Inc(a)(b)(e) 229,007 41,221
==========================================================================
45,430,698
0.54 HEALTH CARE DELIVERY
Caresoft Inc Warrants (Exp 2004)(a)(b)(e) 59,460 59
Total Renal Care Holdings(a) 224,000 3,108,000
==========================================================================
3,108,059
<PAGE>
COUNTRY SHARES OR
CODE IF PRINCILPAL
% DESCRIPTION NON US AMOUNT VALUE
- --------------------------------------------------------------------------
22.19 MEDICAL DEVICES & SUPPLIES
Bausch & Lomb 114,200 8,565,000
Baxter International 49,200 3,099,600
Biomet Inc 164,400 6,740,400
Boston Scientific(a) 405,300 17,250,581
Cambridge Heart(a) 67,563 523,613
Clarus Medical Systems Warrants
(Exp 2000)(a)(b)(c)(e) 2,224 0
Fidus Medical Technology Warrants
(Exp 2001)(a)(b)(e) 1,000,000 1,000
Guidant Corp 646,550 34,711,653
Medtronic Inc 694,663 49,972,320
Nanogen Inc(a) 416,666 3,281,245
Novoste Corp(a) 83,800 1,864,550
SOMNUS Medical Technologies(a)(b) 990,000 2,908,125
VidaMed Inc Warrants (Exp 2000)(a)(c)(e) 263,158 0
=========================================================================
128,918,087
62.06 PHARMACEUTICALS
Abbott Laboratories 492,800 23,870,000
Allergan Inc 113,700 10,218,787
American Home Products 370,100 22,576,100
Bristol-Myers Squibb 486,700 30,935,869
Glaxo Wellcome PLC Sponsored ADR
Representing 2 Ord Shrs 325,150 18,939,988
Johnson & Johnson 342,200 33,364,500
Lilly (Eli) & Co 356,475 26,245,472
Merck & Co(d) 508,800 35,743,200
Novartis AG Registered Shrs(a) SZ 4,640 6,805,333
Pfizer Inc(d) 243,600 28,029,225
Pharmacia & Upjohn 516,800 28,940,800
Roche Holdings AG Non-Voting Shrs(a) SZ 1,000 11,783,251
Schering-Plough Corp 582,000 28,117,875
Shire Pharmaceuticals Group PLC(a) UK 61,125 447,799
SmithKline Beecham PLC Sponsored ADR
Representing 5 Ord Shrs 353,450 23,217,247
Warner-Lambert Co 460,825 31,307,298
===========================================================================
360,542,744
TOTAL COMMON STOCKS & WARRANTS (Cost $401,715,793) $537,999,588
===========================================================================
6.55 PREFERRED STOCKS
3.10 BIOTECHNOLOGY
Exelixis Pharmaceuticals,
Series C, Pfd(a)(e) 1,125,000 3,375,000
Genomica Corp
Series A, Pfd(a)(b)(e) 2,490,075 1,792,854
Series B, Pfd(a)(b)(e) 1,899,865 1,367,903
GenoPlex Inc, Series A, Pfd(a)(b)(e) 610,520 610,521
Ingenex Inc, Series B, Pfd(a)(e) 103,055 62,864
MedClone Trust, Series G, Conv Pfd(a)(e) 872,096 113,372
Ontogeny Inc, Series E, Pfd(a)(e) 1,000,000 3,000,000
Orchid Biocomputer, Series C,
Conv Pfd(a)(b)(e) 450,450 5,000,000
Osiris Therapeutics, Series C, Conv Pfd(a)(e) 352,941 1,199,999
Physiome Sciences, Series B, Pfd(a)(b)(e) 909,090 1,499,999
===========================================================================
18,022,512
<PAGE>
COUNTRY SHARES OR
CODE IF PRINCILPAL
% DESCRIPTION NON US AMOUNT VALUE
- ---------------------------------------------------------------------------
0.68 HEALTH CARE DELIVERY
Caresoft Inc
Series A, Pfd(a)(b)(e) 540,541 1,000,001
Series B, Pfd(a)(b)(e) 119,320 507,110
Physicians Online
Series A, Pfd(a)(b)(e) 361,500 1,955,715
Series C, Pfd(a)(b)(e) 55,558 500,022
===========================================================================
3,962,848
2.77 MEDICAL DEVICES & SUPPLIES
Adeza Biomedical, Series II, Conv Pfd(a)(e) 416,666 1,216,665
Aerogen Inc, Series D, Pfd(a)(e) 1,142,858 2,000,001
Clarus Medical Systems
Series I, Pfd(a)(b)(e) 106,664 533,320
Series II, Pfd(a)(b)(e) 77,239 386,196
Fidus Medical Technology,
Series F, Pfd(a)(b)(e) 1,500,000 3,000,000
Instrumentation Metrics, Series C,
Conv Pfd(a)(b)(e) 500,000 5,057,500
InterVentional Technologies,
Series F, Pfd(a)(e) 250,000 1,375,000
Janus Biomedical, Series A, Conv Pfd(a)(b)(e) 400,000 1
Masimo Corp, Series C, Pfd(a)(e) 125,000 1,000,000
Norian Corp, Series D, Pfd(a)(e) 267,857 1,499,999
==========================================================================
16,068,682
TOTAL PREFERRED STOCKS (Cost $39,943,254) 38,054,042
==========================================================================
0.06 FIXED INCOME SECURITIES
0.06 HEALTH CARE DELIVERY
Physicians Online, Bridge Notes, 11.000%
10/31/2000(a)(b)(e) (Cost $337,390) $337,390 $337,390
==========================================================================
0.78 SHORT-TERM INVESTMENTS
0.78 CORPORATE BONDS
0.78 AUTOMOBILES
General Motors Acceptance, Notes
4.942%, 5/3/1999 (Cost $4,540,000) $4,540,000 4,540,000
==========================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $446,536,437)
(Cost for Income Tax Purposes $447,546,677) $580,931,020
==========================================================================
(a) Security is non-income producing.
(b) Security is an affiliated company (See Notes).
(c) Security has no market value at April 30, 1999.
(d) Security has been designated as collateral for Short Sales.
(e) The following are restricted securities at April 30, 1999:
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
SCHEDULE OF RESTRICTED OR ILLIQUID SECURITIES
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACQUISITION ACQUISITION FAIR VALUE AS A
DESCRIPTION DATE(S) COST FAIR VALUE % OF NET ASSETS
- -----------------------------------------------------------------------------------------------------
Adeza Biomedical, Series II, Conv Pfd 12/21/1994 $999,998 $1,216,665 0.21%
Aerogen Inc, Series D, Pfd 8/25/1998 2,000,001 2,000,001 0.34
Caresoft Inc
Series A, Pfd 7/21/1997 1,000,001 1,000,00 10.17
Series B, Pfd 4/30/1999 507,110 507,110 0.09
Warrants (Exp 2004) 2/25/1999 59 59 0.00
Clarus Medical Systems
Series I, Pfd 12/13/1992 2,000,000 533,320 0.09
Series II, Pfd 11/9/1994-
2/9/1996 386,196 386,196 0.07
Warrants (Exp 2000) 5/2/1992 0 0 0.00
Ecogen Technologies I 11/16/1992-
1/28/1994 684,000 1 0.00
Exelixis Pharmaceuticals, Series C, Pfd 4/9/1997 2,250,000 3,375,000 0.58
Fidus Medical Technology
Series F, Pfd 8/14/1998 3,000,000 3,000,000 0.51
Warrants (Exp 2001) 8/14/1998 1,000 1,000 0.00
Genomica Corp
Series A, Pfd 10/6/1997 $1,500,000 $1,792,854 0.31
Series B, Pfd 10/9/1998-
12/16/1998 1,367,903 1,367,903 0.23
Warrants (Exp 2003) 10/9/1998 0 0 0.00
GenoPlex Inc
Series A, Pfd 9/15/1997 610,521 610,521 0.10
Warrants (Exp 2003) 6/25/1998 0 0 0.00
Ingenex Inc, Series B, Pfd 9/27/1994 600,000 62,864 0.01
Instrumentation Metrics,
Series C, Conv Pfd 2/25/1998 5,057,500 5,057,500 0.86
InterVentional Technologies,
Series F Pfd 10/19/1992 2,000,000 1,375,000 0.23
Janus Biomedical, Series A, Conv Pfd 3/2/1994 1,000,000 1 0.00
Masimo Corp, Series C, Pfd 10/7/1998 1,000,000 1,000,000 0.17
MedClone Trust 9/30/1997 151,965 0 0.00
MedClone Trust, Series G, Conv Pfd 10/21/1993-
7/20/1994 1,500,005 113,372 0.02
Norian Corp, Series D, Pfd 8/5/1992 1,499,999 1,499,999 0.26
Ontogeny Inc, Series E, Pfd 3/13/1997 2,500,000 3,000,000 0.51
Orchid Biocomputer, Series C, Conv Pfd 3/27/1998 5,000,000 5,000,000 0.85
Osiris Therapeutics, Series C, Conv Pfd 5/26/1994 1,199,999 1,199,999 0.21
Physicians Online
Bridge Notes, 11.000%, 10/31/2000 6/10/1998 337,390 337,390 0.06
Series A, Pfd 8/30/1993 964,000 1,955,715 0.33
Series C, Pfd 2/29/1996 500,022 500,022 0.09
Physiome Sciences, Series B, Pfd1 1/7/1997 1,499,999 1,499,999 0.26
Trimeris Inc(a) 6/27/1997 637,499 1,080,000 0.18
VidaMed Inc Warrants (Exp 2000) 9/22/1997 0 0 0.00
Xenometrix Inc(a) 7/28/1992-
12/2/1994 1,750,571 41,221 0.01
=================================================================================================
$43,505,738 $39,513,713 6.75%
=================================================================================================
</TABLE>
(a) Fair value represents 90% of the security's publicly traded value.
<PAGE>
- -------------------------------------------------------------------------------
SHORT SELLS
- -------------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
OPEN AT APRIL 30, 1999
CURRENT
MARKET UNREALIZED
SECURITY SHARES PROCEEDS VALUE APPRECIATION
- -------------------------------------------------------------------------------
Elan Corp PLC Sponsored ADR
Representing Ord Shrs 63,200 $4,688,363 $3,254,800 $1,433,563
Monsanto Co 100,000 4,567,648 4,525,000 42,648
===============================================================================
163,200 $9,256,011 $7,779,800 $1,476,211
===============================================================================
- -------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY
- -------------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
APRIL 30, 1999
% OF
COUNTRY INVESTMENT
COUNTRY CODE SECURITIES VALUE
- -------------------------------------------------------------------------------
Switzerland (not including ADR's) SZ 3.20% $18,588,584
United Kingdom (not including ADR's UK 0.08 447,799
United States (includes ADR's) US 96.72 561,894,637
===============================================================================
100.00% $580,931,020
===============================================================================
See Notes to Financial Statements
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS
INVESCO GLOBAL HEALTH SCIENCES FUND
APRIL 30, 1999
UNAUDITED
ASSETS
Investment Securities at Value(Cost $446,536,437) $580,931,020
Cash 6,234
Foreign Currency (Cost $94,815) 94,590
Receivables:
Investment Securities Sold 11,175,781
Dividends and Interest 749,789
Prepaid Expenses and Other Assets 32,126
================================================================
TOTAL ASSETS 592,989,540
================================================================
LIABILITIES
Payable for Securities Sold Short 7,779,800
Accrued Expenses 19,602
================================================================
TOTAL LIABILITIES 7,799,402
================================================================
NET ASSETS AT VALUE $585,190,138
================================================================
NET ASSETS AT VALUE
Paid-in Capital(a) $435,979,297
Accumulated Undistributed Net Investment Loss (455,329)
Accumulated Undistributed Net Realized Gain
on Investment Securities, Foreign Currency
Transactions and Short Sale Transactions 13,790,032
Net Appreciation of Investment Securities
and Foreign Currency Transactions 135,876,138
================================================================
NET ASSETS AT VALUE $585,190,138
================================================================
NET ASSET VALUE PER SHARE $ 19.40
================================================================
(a)The Fund has an unlimited number of authorized shares of common stock, par
value of $0.01 per share, of which 30,156,115 were outstanding at
April 30, 1999.
See Notes to Financial Statements
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
SIX MONTHS ENDED APRIL 30, 1999
UNAUDITED
INVESTMENT INCOME
INCOME
Dividends $ 2,701,446
Interest 189,189
Other Income 306,901
Foreign Taxes Withheld (42,294)
=================================================================
TOTAL INCOME 3,155,242
=================================================================
EXPENSES
Investment Advisory Fees 2,919,119
Administrative Fees 295,908
Custodian Fees and Expenses 67,090
NYSE Listing Fee 22,653
Professional Fees and Expenses 19,400
Transfer Agent Fees 38,399
Trustees' Fees and Expenses 49,679
Reports to Shareholders 199,218
Other Expenses 776
=================================================================
TOTAL EXPENSES 3,612,242
Fees and Expenses Paid Indirectly (1,671)
=================================================================
NET EXPENSES 3,610,571
=================================================================
NET INVESTMENT LOSS (455,329)
=================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 32,145,104
Foreign Currency Transactions (448,524)
Short Sale Transactions (524,945)
=================================================================
Total Net Realized Gain 31,171,635
=================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 16,575,084
Foreign Currency Transactions (1,650,157)
=================================================================
Total Net Appreciation 14,924,927
=================================================================
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 46,096,562
=================================================================
Net Increase in Net Assets from Operations $45,641,233
=================================================================
See Notes to Financial Statements
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
SIX MONTHS ENDED APRIL 30, 1999
UNAUDITED
INCREASE (DECREASE) IN CASH
- -----------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Dividends and Interest Received,
Net of Foreign Withholding Taxes $2,719,670
Expenses Paid (3,587,091)
Sales Net of Purchases of Short-Term
Portfolio Investments 29,564,000
Purchases of Long-Term Portfolio Investments (179,514,536)
Sales of Long-Term Portfolio Investments 211,890,868
Proceeds of Securities Sold Short 11,252,944
Purchases of Short Sale Securities (25,815,323)
Other 9,711
=================================================================
Net Cash Flows from Operating Activities 46,520,243
=================================================================
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Distributions Paid to Common Shareholders (46,713,929)
=================================================================
Effect of Exchange Rate Changes on Cash (224)
=================================================================
Net Decrease in Cash (193,910)
Cash at Beginning of Year 294,734
=================================================================
Cash and Foreign Cash at End of Year $100,824
=================================================================
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM OPERATIONS
TO NET CASH FLOWS FROM OPERATING ACTIVITIES
Net Increase in Net Assets from Operations 45,641,233
=================================================================
Increase in Investments 67,943,415
Net Realized Gain (31,171,635)
Increase in Appreciation of Investment
Securities (14,924,927)
Decrease in Receivable for Investment
Securities Sold 12,438,418
Decrease in Payable for Investment
Securities Purchased (16,885,901)
Decrease in Depreciation of Foreign
Currency Transactions (130,878)
Increase in Dividends and Interest Receivable (435,572)
Decrease in Prepaid Expenses and Other Assets 9,711
Increase in Accrued Expenses and Other Payables (15,963,621)
=================================================================
Total Adjustments 879,010
=================================================================
Net Cash Flows From Operating Activities $46,520,243
=================================================================
See Notes to Financial Statements
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
SIX MONTHS ENDED YEAR ENDED
APRIL 30 OCTOBER 31
- -------------------------------------------------------------------------------
1999 1998
UNAUDITED
OPERATIONS
Net Investment Loss $(455,329) $(949,824)
Net Realized Gain on Investment Securities,
Foreign Currency Transactions and Short
Sale Transactions 31,171,635 108,304,943
Change in Net Appreciation of Investment
Securities and Foreign Currency
Transactions 14,924,927 2,843,293
===============================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 45,641,233 110,198,412
===============================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (88,899,429) (100,476,287)
===============================================================================
FUND SHARE TRANSACTIONS
Reinvestment of Distributions 42,185,500 50,326,101
===============================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,072,696) 60,048,226
NET ASSETS
Beginning of Period 586,262,834 526,214,608
===============================================================================
End of Period $585,190,138 $586,262,834
===============================================================================
FUND SHARE TRANSACTIONS
Shares Issued from Reinvestment of Distributions
and Net Increase in Fund Shares 2,343,639 3,049,909
==============================================================================
See Notes to Financial Statements
<PAGE>
- -------------------------------------------------------------------------------
INVESCO NOTES TO FINANCIAL STATEMENTS -
INVESCO GLOBAL HEALTH SCIENCES FUNDS, INC.
- -------------------------------------------------------------------------------
UNAUDITED
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO 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. 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 a 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.
Assets and liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers on the date of valuation.
B. REPURCHASE AGREEMENTS -- Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Fund's custodian. The collateral is evaluated daily to ensure
its market value exceeds the current market value of the repurchase agreements
including accrued interest. In the event of default on the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the other party to the agreement, realization and/or retention of
the collateral or proceeds may be subject to legal proceedings.
<PAGE>
C. OPTIONS -- The Fund may hold options for investment purposes with the intent
to hedge the portfolio against ongoing exposure to market value and interest
rate fluctuations. The use of such instruments may involve certain risks as a
result of unanticipated movements in the market. A lack of correlations between
the value of an instrument underlying an option and the asset being hedged, or
expected adverse price movements could render the Fund's hedging strategy
unsuccessful. In addition, there can be no assurance that a liquid secondary
market will exist for any option purchased or sold. The Fund will realize a gain
or loss upon the expiration or closing of the option transaction. When an option
is exercised, the proceeds on sales for a written call option, the purchase cost
for a written put option, or the cost of the security for a purchased put or
call option is adjusted by the amount of premium received or paid. Options
written are reported as a liability in the Statement of Assets and Liabilities
and are marked-to-market on a daily basis. Realized gains or losses on purchased
option transactions are included in Net Realized Gain (Loss) on Investment
Securities in the Statement of Operations.
D. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security transactions
are accounted for on the trade date and dividend income is recorded on the ex
dividend date. Certain dividends from foreign securities will be recorded as
soon as the Fund is informed of the dividend if such information is obtained
subsequent to the ex dividend date. Interest income, which may be comprised of
stated coupon rate, market discount, original issue discount and amortized
premium, is recorded on the accrual basis. Income and expenses on foreign
securities are translated into U.S. dollars at rates of exchange prevailing when
accrued. 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 cost of foreign securities
is translated into U.S. dollars at the rates of exchange prevailing when such
securities are acquired.
The Fund may have elements of risk due to concentrated investments in specific
industries or foreign issuers located in a specific country. Such concentrations
may subject the Fund to additional risks resulting from future political or
economic conditions and/or possible impositions of adverse foreign governmental
laws or currency exchange restrictions. Net realized and unrealized gain or loss
from investment securities includes fluctuations from currency exchange rates
and fluctuations in market value.
The Fund's use of short-term forward foreign currency contracts may subject it
to certain risks as a result of unanticipated movements in foreign exchange
rates. The Fund does not hold short-term forward foreign currency contracts for
trading purposes. The Fund may hold foreign currency in anticipation of settling
foreign security transactions and not for investment purposes.
The Fund's use of short sell instruments may involve certain risks as a result
of unanticipated movements in the market. Although the potential for gain is
limited to the difference between the price at which the Fund sold the security
short and the cost of borrowing the security, its potential for loss could be
unlimited because there is no limit to the replacement cost of the borrowed
security.
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, 1999, 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>
E. 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.
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
withholding taxes. Dividend and interest income is shown gross of foreign
withholding taxes in the accompanying financial statements.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to
shareholders are recorded by the Fund on the ex dividend/distribution date. The
Fund distributes 2.5% of net asset value to its shareholders quarterly with an
additional year-end distribution depending on the amount of the Fund's yearly
net realized capital gains, 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, non taxable
dividends, net operating losses and expired capital loss carryforwards.
G. 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
security sold short and is presented in the Statement of Assets and Liabilities.
At April 30, 1999, the Fund had outstanding short sells. Short sells 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 value of the short sell.
H. 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.
I. CASH FLOWS -- The cash amount shown in the Statement of Cash Flows is the
amount reported as cash in the Statement of Assets and Liabilities and
represents cash on hand in its custodian bank and does not include any
short-term investments at April 30, 1999.
J. EXPENSES -- Under an agreement between the Fund and the Fund's custodian,
agreed upon Custodian Fees and Expenses are reduced by credits granted by the
custodian from any temporarily uninvested cash. Such credits are included in
Fees and Expenses Paid Indirectly in the Statement of Operations.
<PAGE>
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Fund's investment adviser. As compensation for its
services to the Fund, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee is based on the annual
rate of 1.00% on the first $500 million of ending daily net assets and 0.90% on
ending daily net assets in excess of $500 million.
In accordance with an Administrative Agreement, the Fund pays IFG a fee based on
the annual rate of 0.10% on ending daily net assets 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, 1999, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were $162,628,635 and $199,633,170, respectively.
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At April 30, 1999, the gross
appreciation of securities in which there was an excess of value over tax cost
amounted to $145,527,510 and the gross depreciation of securities in which there
was an excess of tax cost over value amounted to $12,143,167, resulting in net
appreciation of $133,384,343.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES AND AFFILIATED COMPANIES. Certain of the
Fund's officers and trustees are also officers and directors of IFG.
The Fund has adopted an unfunded defined benefit deferred compensation plan
covering all independent trustees of the Fund who will have served as an
independent trustee for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 50% of the sum of the
retainer fee at the time of retirement plus the annual meeting fee.
Pension expenses for the six months ended April 30, 1999, included in Trustees'
Fees and Expenses in the Statement of Operations were $22,835. Unfunded accrued
pension costs of $0 and pension liability of $22,835 are included in Prepaid
Expenses and Accrued Expenses, respectively, in the Statement of Assets and
Liabilities.
Certain independent trustees have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as trustees of the Fund. The deferred
amounts may be invested in the shares of the Trust.
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 during the six months ended April 30, 1999, in which
the issuer was an affiliate of the Fund, is as follows:
<PAGE>
REALIZED
PURCHASES SALES GAIN
------------- ------------ ON INVESTMENT VALUE
AFFILIATE SHARES COST SHARES COST SECURITIES AT 4/30/99
- -------------------------------------------------------------------------------
Caresoft Inc
Series A, Pfd -- -- -- -- -- $1,000,001
Series B, Pfd 119,320 $507,110 -- -- -- 507,110
Warrants (Exp 2004) 59,460 59 -- -- -- 59
Clarus Medical Systems
Series I, Pfd -- -- -- -- -- 533,320
Series II, Pfd -- -- -- -- -- 386,196
Warrants (Exp 2000) -- -- -- -- -- 0
Ecogen Technologies I -- -- -- -- -- 1
Fidus Medical Technology
Series F, Pfd -- -- -- -- -- 3,000,000
Warrants (Exp 2001) -- -- -- -- -- 1,000
Genomica Corp
Series A, Pfd -- -- -- -- -- 1,792,854
Series B, Pfd 1,388,889 1,000,000 -- -- -- 1,367,903
Warrants (Exp 2003) -- -- -- -- -- 0
GenoPlex Inc
Series A, Pfd -- -- -- -- -- 610,521
Warrants (Exp 2003) -- -- -- -- -- 0
Instrumentation Metrics
Series C, Conv Pfd -- -- -- -- -- 5,057,500
Janus Biomedical
Series A, Conv Pfd -- -- -- -- -- 1
Orchid Biocomputer
Series C, Conv Pfd -- -- -- -- -- 5,000,000
Physicians Online
Bridge Notes, 11.000%
10/31/2000 -- -- -- -- -- 337,390
Series A, Pfd -- -- -- -- -- 1,955,715
Series C, Pfd -- -- -- -- -- 500,022
Physiome Sciences
Series B, Pfd -- -- -- -- -- $1,499,999
SOMNUS Medical
Technologies -- -- 10,000 $30,000 $19,998 2,908,125
Xenometrix Inc -- -- 32,000 349,407 342,153 41,221
===============================================================================
$26,498,938
===============================================================================
Options associated with securities may be included in sales figures.
No dividend income was received from any affiliated companies.
NOTE 6 -- RIGHTS OFFERING. On May 12, 1999, the Board of Trustees of the Fund
approved a plan to offer to existing shareholders additional shares of
beneficial interest. Shareholders of record on May 25, 1999 were issued one
non-transferable right for every five shares owned, entitling shareholders the
opportunity to subscribe for one share for each right held at an estimated
subscription price of $15.26 per share (net of estimated sales commissions of
$0.59 per share). Offering costs are estimated to be approximately $600,000, of
which $100,000 is payable to PaineWebber Inc., the underwriter, as reimbursement
for its expenses. Shareholders who exercise all of the rights issued to them are
entitled to subscribe for shares which are not otherwise subscribed for by
others in the primary subscription. If sufficient shares are not available to
honor all over-subscriptions, the Fund may, at its discretion, issue up to an
additional 25% of the shares available pursuant to the offer in order to honor
these over-subscriptions. If all rights are exercised, the dilutive effect of
the primary rights offering on net asset value per share is estimated at $0.58
per share; and if all the over allotment rights are also exercised the dilutive
effect is estimated to be $0.70 per share.
<PAGE>
- -------------------------------------------------------------------------------
OTHER INFORMATION
- -------------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
UNAUDITED
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)
- -------------------------------------------------------------------------------
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
November 14, 1997 December 19, 1997 -- $2.8470 --
May 15, 1998 June 3, 1998 -- $0.5389 --
August 7, 1998 August 25, 1998 -- $0.5389 --
November 13, 1998 December 18, 1998 -- $2.2689 $0.3615
February 5, 1999 February 24, 1999 -- $0.3280* $0.1940*
May 7, 1999 May 26, 1999 -- -- $0.4850*
* It is believed that the source of the distribution is capital gains, however,
the final source of such gains cannot be determined until shortly after the
Fund's fiscal year-end, October 31, 1999.
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/her broker's
or nominee name, and whose broker does not provide facilities for a dividend
reinvestment program, may be required to have his/her Shares registered in
his/her 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") in cash, non-participants in the Plan
will receive cash and participants in the Plan will receive the equivalent in
Shares. Whenever the Fund declares Dividends in additional unissued but
authorized shares ("Newly Issued Shares") non-participants in the Plan will
receive Newly Issued Shares and participants in the Plan will receive shares. In
either instance, the Shares received by Plan participants will be acquired by
the Agent for the participant's account, depending upon the circumstances
described below, either (i) through receipt of 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. Open-Market Purchases will be made
only in the event that the Fund declares an income dividend or a capital gain or
other distribution payable only in cash.
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
<PAGE>
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 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 Dividend 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/her 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 shareholders 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.
MISCELLANEOUS
For the period ended April 30, 1999, there were no changes to the Fund's charter
or by-laws and no material changes in the principal risk factors associated with
investment in the Fund. There were no material changes in the Fund's investment
objectives or policies other than adoption of the fixed distribution policy. The
policy requires the Fund to make quarterly distributions at a rate of 2.5% of
NAV -- 10% annually -- to Fund shareholders. Mr. Charles W. Brady was selected
to serve as Chairman of the Board of Trustees and Mr. Mark Williamson was
selected to serve as President and Chief Operating Officer of the Fund. Mr.
Hubert L. Harris, Jr. resigned as a Fund Trustee, and Mr. Dan J. Hesser resigned
as President.
<PAGE>
Mr. Schroer joined INVESCO Funds Group, Inc. ("IFG") in 1992 and became a Senior
Vice President of IFG 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 the Trust Company of the West in Los Angeles as
Assistant Vice President with analytical responsibilities in the health care
industry.
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS
ENDED
APRIL 30 YEAR ENDED OCTOBER 31
- ------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
UNAUDITED
PER SHARE DATA
Net Asset Value -- Beginning
of Period $21.080 $21.250 $22.230 $18.506 $12.378 $12.121
===============================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Loss (0.015) 0.000 (0.071) (0.097) (0.107) (0.085)
Net Gains on Securities
(Both Realized and
Unrealized) 1.487 3.755 3.564 3.821 6.235 0.542
===============================================================================
TOTAL FROM INVESTMENT
OPERATIONS 1.472 3.755 3.493 3.724 6.128 0.457
===============================================================================
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.000 0.000 0.000 0.000 0.000 0.200
Distributions from
Capital Gains 3.152 3.925 4.473 0.000 0.000 0.000
===============================================================================
TOTAL DISTRIBUTIONS 3.152 3.925 4.473 0.000 0.000 0.200
===============================================================================
Net Asset Value-
End of Period $19.400 $21.080 $21.250 $22.230 $18.506 $12.378
===============================================================================
Share Price-
End of Period $17.313 $19.500 $17.313 $17.000 $14.750 $10.000
===============================================================================
TOTAL RETURN(a) 4.73%(b) 40.29% 32.98% 15.25% 47.50% (11.49%)
RATIOS
Net Assets-
End of Period
($000 Omitted) $585,190 $586,263 $526,215 $455,842 $379,503 $253,834
Ratio of Expenses to
Average Net Assets 0.60%(b)(c) 1.21%(c) 1.22%(c) 1.21% 1.33% 1.41%
Ratio of Net Investment
Loss to Average
Net Assets (0.08%)(b) (0.17%) (0.15%) (0.44%) (0.72%) (0.70%)
Portfolio Turnover Rate 32% (b) 87% 145% 91% 105% 121%
(a)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.
(b)Based on operations for the period shown and, accordingly, are not
representative of a full year.
(c)Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
TRUSTEES AND OFFICERS
TRUSTEES
Charles W. Brady
Chairman of the Board of Directors
Fred A. Deering
Trustee
John W. McIntyre
Trustee
Larry Soll, Ph.D.
Trustee
OFFICERS
Mark H. Williamson
President & Chief Operating Officer
John R. Schroer
Vice President
Glen A. Payne
Secretary
Ronald L. Grooms
Treasurer, Principal Financial
& Accounting Officer
SHAREHOLDER INFORMATION
INVESTMENT ADVISER
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, Colorado 80237
ADMINISTRATOR
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, Colorado 80237
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
SHAREHOLDER SERVICING AGENT
Boston Equiserve, Inc.
150 Royall Street
Mail Stop 45-02-62
Canton, Massachusetts 02021
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
950 Seventeenth Street
Denver, Colorado 80202
COUNSEL
Kirkpatrick & Lockhart
1800 M Street, N.W.
South Lobby, 9th Floor
Washington, D.C. 20036
For information about Global Health Sciences Fund or current net asset values,
please call toll-free, 1-800-528-8765, or visit our Web site at
www.ghs.invesco.com
For questions on dividend reinvestment, please call toll-free, 1-800-426-5523
<PAGE>
[GLOBAL HEALTH ICON]
INVESCO GLOBAL HEALTH SCIENCES FUND
INVESCO Funds Group, Inc.
7800 East Union Avenue
Suite 1100
Denver, Colorado 80237
