-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RaY+WHchKlTmsNbZUnpT9TgAAMiJeKahEqcLAjLxUGKahxB3X+0uLrMIFIdG5EF6 olxOpjXgALaPplLKi57jYw== 0000789940-96-000003.txt : 19960429 0000789940-96-000003.hdr.sgml : 19960429 ACCESSION NUMBER: 0000789940-96-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960426 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESCO VALUE TRUST CENTRAL INDEX KEY: 0000789940 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04595 FILM NUMBER: 96551135 BUSINESS ADDRESS: STREET 1: 7800 EAST UNION AVE CITY: DENVER STATE: CO ZIP: 80237 BUSINESS PHONE: 8005541156 MAIL ADDRESS: STREET 1: P.O. BOX 173706 CITY: DENVER STATE: CO ZIP: 80217-3706 FORMER COMPANY: FORMER CONFORMED NAME: FINANCIAL SERIES TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: INVESCO INSTITUTIONAL SERIES TRUST DATE OF NAME CHANGE: 19910117 FORMER COMPANY: FORMER CONFORMED NAME: SHEARWATER EQUITY INC DATE OF NAME CHANGE: 19870810 N-30D 1 SEMIANNUAL REPORT February 29, 1996 INVESCO VALUE TRUST Value Equity Total Return Intermediate Government Bond INVESCO FUNDS Economic Overview March 1996 1995 was a banner year for U.S. investors. The S&P 500 achieved a total return of 37.44%; only the fourth time in fifteen years the broad market returned over 25%. Fixed-income markets followed suit, with the Lehman Government/Corporate Bond Index gaining 19.24%.(1) In 1996, however, a repeat performance appears unlikely. The strong 1995 results were influenced by a number of positive economic factors. Inflation was low at a mere 2.8%, unemployment was down, and growth in Gross Domestic Product slowed to apparently sustainable levels. In addition, the Federal Reserve Board appeared to take a pro-growth stand, easing rates by .50% during the second half of 1995. So far in 1996, volatility in the financial markets has increased significantly versus last year's historically low levels. While year-to-date the S&P 500 and the Dow Jones Industrial Average have advanced, these positive returns have not come without some pain.(1) As an example of just how volatile the markets have become, the Dow has experienced moves of 50 points or more 24 times during the first two months of 1996 compared to only 29 times for all of 1995. While the general stock market is up, bonds have been another story. In January, the Federal Reserve cut the Federal Funds rate by another 0.25%, providing the impetus for marginally positive returns that month. However, February's unexpectedly strong employment report and the unwinding of arbitrage positions produced negative returns as the 30-year Treasury bond yield increased to the 6.5% level from 6.0% in January. As a result, the Lehman Government/Corporate Bond Index declined 1.51% for the first two months of the year. For the remainder of the year, the markets may continue to experience some short-term gyrations due to the ongoing budget stalemate, the Presidential election, and conflicting signals regarding the direction of the economy. Nevertheless, the markets have experienced such environments before and generally process information quickly and efficiently. We anticipate a slow-growth environment for both the economy and securities markets during the remainder of 1996. R. Dalton Sim Chairman and President INVESCO Trust Company INVESCO Value Trust The line graphs below illustrate the value of a $10,000 investment in each fund, plus reinvested dividends and capital gains, for the indicated periods ended 2/29/96.(2) The charts and other total return figures cited reflect each fund's operating expenses, but the indexes do not have expenses, which would, of course, have lowered their performance. Strategic Overview The Fund's subadvisor, INVESCO Capital Management, applies a unique, value-oriented philosophy: Equities. Unlike many fund managers, we do not evaluate sectors based on a forecast of the economy. Instead, we take a "bottom-up" approach which involves identifying those individual securities which seem most likely to outperform their peers. When evaluating a stock, we focus on its price in relation to its historical earnings power. If the current price is low, and we believe the company has the resources to continue its historical growth rate, the stock is considered attractive -- regardless of its sector. General characteristics of the resulting portfolio usually include a low price/earnings ratio and a higher-than-average yield. Fixed-Income. When managing bond portfolios, we rely on a value methodology based on inflation-adjusted yields. High inflation-adjusted yields relative to the historical average indicate a low risk bond market environment which triggers a lengthening of the portfolio's maturity. Conversely, when inflation-adjusted yields drop below historical averages, a short maturity profile is called for as the environment is considered to be high risk. In these situations, yields are at extremely low levels relative to underlying inflation. As yields drift into a more normal range, we evaluate the current interest rate climate to determine whether any short-term conditions may influence the extent to which we lengthen or shorten the portfolio's maturity in the interim. Combined with the maturity decision is an evaluation of bond market sectors. The relative attractiveness of corporates and mortgages is monitored within an historical context to determine if the yields offered by these securities are attractive versus U.S. Treasuries. This process is very similar to the maturity discipline as significant exposures to these sectors are only justified when sufficiently high yields are offered. Value Equity Fund For its three- and five-year risk-adjusted total returns through 2/29/96, INVESCO Value Equity Fund was awarded four stars by the independent mutual fund service, Morningstar.(3) The peer group for this fund consists of 505 funds in the Growth & Income category. The fund achieved a total return of 14.05% for the six-month period ended 2/29/96,(2) compared to a total return of 15.26% for the S&P 500 for the same period.(1) Graph: This line graph represents a comparison of the value of a $10,000 investment in INVESCO Value Equity Fund to the value of a $10,000 investment in the S&P 500 Index, assuming in each case reinvestment of all dividends and capital gain distributions, for the period from inception (5/86) through 2/29/96. Strategic Overview In managing Value Equity Fund, we employ a methodology that combines value analysis, high quality companies, and broad diversification. Our value analysis includes isolating 250 stocks which appear poised to provide higher-than-average returns. We determine this by using the equity strategy described earlier. These 250 stocks are further narrowed by evaluating each company's current status and analyzing its ability to extend its historical record. Those high quality names which currently meet this criteria, such as McDonald's Corp and Hewlett-Packard Co, are then chosen for the portfolio. Value Equity Fund Average Annualized Total Return as of 2/29/96(2) 1 year 28.35% ----------------------------------- 5 years 14.47% ----------------------------------- Since inception (5/86) 12.64% ----------------------------------- To reduce risk, we maintain a broadly diversified portfolio. Sector weightings are a residual of our stock selection process rather than being determined through a top-down analysis based on an economic forecast. Based on this methodology as of 2/29/96, many of the best values can be found in the consumer cyclical and financial sectors. We are underweighted in the energy, basic materials, and public utility sectors. Fund Management Value Equity Fund is managed by Michael C. Harhai. Mr. Harhai began his investment career in 1972. Before joining INVESCO, he served as a portfolio manager with Citizens & Southern Investment Advisors, Inc., and later as head of the equity/balanced group with Sovran Capital Management Corp. He holds an MBA from the University of Central Florida, and a BA from the University of South Florida. Mr. Harhai is a Chartered Financial Analyst, as is Terry Irrgang, who assists in managing the fund. Mr. Irrgang is a 13-year veteran of the investment business, and holds an MBA from Temple University, as well as a BA from Gettysburg College. Intermediate Government Bond Fund Based on risk-adjusted performance, independent mutual fund analyst Morningstar awarded INVESCO Intermediate Government Bond Fund four stars among 399 Government General Funds measured for the three- and five-year periods ended 2/29/96.(3) The fund had a total return of 3.55% for the six-month period ended 2/29/96,(2) compared to a total return of 3.8% for the Lehman Intermediate Government Bond Index for the same period.(1) Strategic Overview Our "value" methodology means that bonds are also selected using the long-term strategy described earlier, that seeks to project anticipated market reactions based on past performance. In the short-term, our value methodology may cause us to underperform, as we change direction ahead of the market cycle. Employing this same methodology over the longer-term, however, we seek to minimize loss during bear markets and participate strongly in bull market returns for bonds. As of 2/29/96, the fund had an average duration of 4.4 years (excluding cash and equivalents), compared with the Lehman Intermediate Government Bond Index duration of 3.2 years. This current duration strategy is driven by our evaluation that longer maturity bonds continue to provide superior value when compared to inflation-adjusted historical returns. Intermediate Government Bond Fund Average Annualized Total Return as of 2/29/96(2) 1 year 10.94% ----------------------------------- 5 years 8.05% ----------------------------------- Since inception (5/86) 7.28% ----------------------------------- Additionally, we have focused the portfolio almost exclusively on U.S. Treasuries. This allocation is based on our recognition that, while investment grade corporate bonds' and mortgage-backed securities' current returns are somewhat higher than Treasury certificates, they are not high enough to justify the somewhat greater risk they entail. Graph: This line graph represents a comparison of the value of a $10,000 investment in INVESCO Intermediate Government Bond Fund to the value of a $10,000 investment in the Lehman Intermediate Government Bond Index, assuming in each case reinvestment of all dividends and capital gain distributions, for the period from inception (5/86) through 2/29/96. Our historical analysis tells us that, while the bond market has been volatile in recent months, there is still cause for optimism over the long-term. We have maintained an above-average portfolio duration in expectation of capitalizing on continued bond market strength in the wake of gradual Fed easing. However, we are carefully monitoring market activity, and are prepared to act should our models indicate that a change in the long-term trend is imminent. Fund Management Intermediate Government Bond Fund is managed by James O. Baker. Before joining INVESCO, Mr. Baker was associated with Willis Investment Counsel, Morgan Keegan, and Drexel Burnham Lambert. He holds a BA from Mercer University. Ralph H. Jenkins, Jr. assists in managing the fund. He began his investment career in 1969 and is both a Chartered Financial Analyst and Chartered Investment Counselor. He earned his MA at the University of Alabama and a BBC from Auburn University. Total Return Fund For its risk-adjusted performance over the last three- and five-year periods ended 2/29/96, INVESCO Total Return Fund was awarded four stars by the independent mutual fund service, Morningstar; the peer group for this fund consists of 168 funds in the Asset Allocation category.(3) The fund achieved a total return of 10.48% for the six-month period ended 2/29/96.(2) Since the fund holds both stocks and bonds, its performance was below the S&P 500's 15.26% return but well above the 4.13% return for the Lehman Government/Corporate Bond Index.(1) Strategic Overview Total Return Fund seeks to add value in three ways: asset allocation, stock selection, and bond strategy. The fund's objective is to achieve a high total return on investment through capital appreciation and current income by investing in a combination of stocks and bonds. The mix of stocks and bonds is determined by evaluating the relationship of the expected returns from these two asset classes. Over the long-term, stocks generally have provided annual returns 3% greater than bonds. (Of course, past performance is not a guarantee of future results.) When the return premium offered by stocks is 3%, the fund's asset allocation would be 60% stocks and 40% bonds. If stocks are priced to provide returns in excess of 3% over bonds, then stocks usually represent more than 60% of the fund. Alternatively, if stocks offer less than 3% versus bonds, stocks would be less than 60% of the holdings. Total Return Fund generally holds at least 30% in stocks and 30% in bonds, with the remaining 40% allocated according to market conditions. The fund has been weighted more heavily in equities than bonds for more than a year. This focus has proven beneficial to performance, since stocks have clearly outperformed bonds. Consistent with our overall philosophy, stock selection is based upon a "bottom-up, value" process that evaluates a company's historical profitability relative to its current price. The fund's best-performing stock sectors in recent months were consumer staples, capital goods, and energy. Total Return Fund Average Annualized Total Return as of 2/29/96(2) 1 year 25.41% ----------------------------------- 5 years 13.62% ----------------------------------- Since inception (9/87) 12.87% ----------------------------------- At 2/29/96, the fund's fixed-income segment was primarily invested in U.S. Treasuries and investment-grade corporate bonds. Our long maturity profile enhanced performance through 1995. However, volatile fixed-income markets during January and February hampered performance. Like the Value Equity and Intermediate Government Bond Funds, we do not react to short-term market activity in managing Total Return Fund. We believe that, over the long-term, our value approach to blending equity and fixed-income securities may provide conservative investors with potential appreciation combined with reduced volatility. Graph: This line graph represents a comparison of the value of a $10,000 investment in INVESCO Total Return Fund to the value of a $10,000 investment in the S&P 500 Index and Lehman Intermediate Government Bond Index, assuming in each case reinvestment of all dividends and capital gain distributions, for the period from inception (9/87) through 2/29/96. Fund Management Total Return Fund is managed by Edward C. Mitchell, the President of INVESCO Capital Management, Inc. He earned his MBA at the University of Colorado and a BA from the University of Virginia. Mr. Mitchell began his investment career in 1969 and is a Chartered Financial Analyst. He is assisted by David S. Griffin, who began his investment career in 1982. Mr. Griffin is a Chartered Financial Analyst, holds an MBA from the College of William and Mary, and a BA from Ohio Wesleyan University. (1) The S&P 500 and Dow Jones Industrial Average are unmanaged indexes considered representative of the performance of the broad U.S. stock market. The Lehman Government/Corporate Index is an unmanaged index representative of the broad fixed-income market. The Lehman Intermediate Government Bond Index is an unmanaged index representative of the intermediate term government bond market. (2) Total return assumes reinvestment of dividends and capital gain distributions for the periods indicated. Investment return and principal value will fluctuate so that, when redeemed, an investor's shares may be worth more or less than when purchased. Of course, past performance is not a guarantee of future results. (3) Morningstar proprietary ratings reflect historical risk-adjusted performance as of 2/29/96, and are subject to change each month. These ratings are calculated from the fund's 3-, 5-, and 10-year average annual returns (based on available track records) in excess of 90-day Treasury bill returns. The top 10% of funds in an investment category receive 5 stars; the next 22.5% receive 4 stars. INVESCO Value Trust Ten Largest Common Stock Holdings February 29, 1996 Description Value - ------------------------------------------------------------------------------ TOTAL RETURN Fund International Business Machines $12,262,500 Hewlett-Packard Co 11,082,500 Philip Morris 10,890,000 First Chicago NBD 10,843,750 Lilly (Eli) & Co 10,478,600 Dow Chemical 10,432,500 Browning-Ferris Industries 10,368,750 Morgan Stanley Group 10,312,500 Lockheed Martin 10,293,750 Ford Motor 10,156,250 VALUE EQUITY Fund Philip Morris $4,950,000 PepsiCo Inc 4,098,600 Columbia/HCA Healthcare 3,958,425 Lilly (Eli) & Co 3,872,000 Hewlett-Packard Co 3,828,500 Kimberly-Clark Corp 3,818,750 Dun & Bradstreet 3,795,000 Dow Chemical 3,531,000 Pitney-Bowes Inc 3,459,525 Illinois Central Series A 3,352,500 Composition of holdings is subject to change. INVESCO Value Trust Statement of Investment Securities February 29, 1996 UNAUDITED Shares or Principal Description Amount Value - ------------------------------------------------------------------------------ INTERMEDIATE GOVERNMENT BOND Fund FIXED INCOME SECURITIES 88.19% US Government Obligations 82.06% US Treasury Bonds 9.375%, 2/15/2006 $3,000,000 $3,722,808 8.125%, 8/15/2019 3,400,000 3,996,057 US Treasury Notes 8.500%, 7/15/1997 4,000,000 4,165,000 8.500%, 2/15/2000 2,800,000 3,073,000 7.500%, 11/15/2001 1,500,000 1,614,842 6.375%, 7/15/1999 4,500,000 4,601,250 6.375%, 8/15/2002 3,000,000 3,072,183 5.125%, 3/31/1998 5,000,000 4,968,750 US Treasury Security Stripped Interest Payment, Generic Tint Payment, Zero Coupon, 11/15/2004 4,000,000 2,338,836 ------------ TOTAL US GOVERNMENT OBLIGATIONS (Cost $29,939,261) 31,552,726 ------------ US Government Agency Obligations 6.13% Government National Mortgage Association I, Modified Pass-Through Certificates 7.000%, 10/15/2008 721,879 731,970 6.500%, 10/15/2008 803,556 800,204 6.000%, 11/15/2008 844,355 825,795 TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $2,434,964) 2,357,96 ------------ TOTAL FIXED INCOME SECURITIES (Cost $32,374,225) 33,910,695 ------------ SHORT-TERM INVESTMENTS 11.81% US Government Obligations 8.49% US Treasury Notes 7.375%, 5/15/1996 (Cost $3,308,794) 3,250,000 3,265,230 ------------ Repurchase Agreements 3.32% Repurchase Agreement with State Street Bank & Trust Co dated 2/29/1996 due 3/1/1996 at 4.750%, repurchased at $1,275,168 (Collateralized by US Treasury Notes due 5/15/1998 at 6.125%, value $1,304,577) (Cost $1,275,000) 1,275,000 1,275,000 ------------ TOTAL SHORT-TERM INVESTMENTS (Cost $4,583,794) 4,540,230 ------------ TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $36,958,019) (Cost for Income Tax Purposes $36,979,769) $38,450,925 ============ TOTAL RETURN Fund COMMON STOCKS 64.47% AEROSPACE & DEFENSE 2.11% Boeing Co 100,000 8,112,500 Lockheed Martin 135,000 10,293,750 ------------ 18,406,250 ------------ AGRICULTURAL 0.88% Archer-Daniels-Midland Co 400,000 7,700,000 ------------ AUTOMOBILE RELATED 1.16% Ford Motor 325,000 10,156,250 ------------ BANKING 5.00% First Chicago NBD 250,000 10,843,750 First of America Bank 210,000 9,187,500 First Union 150,000 9,075,000 NationsBank Corp 100,000 7,375,000 Wachovia Corp 154,000 7,161,000 ------------ 43,642,250 ------------ CHEMICALS 2.02% Dow Chemical 130,000 10,432,500 Imperial Chemical Industries PLC ADR 130,000 7,231,250 ------------ 17,663,750 ------------ COMPUTER RELATED 4.77% Compaq Computer* 175,000 8,859,375 Computer Associates International 136,500 9,384,375 Hewlett-Packard Co 110,000 11,082,500 International Business Machines 100,000 12,262,500 ------------ 41,588,750 ------------ DIVERSIFIED COMPANIES 5.71% du Pont (E I) de Nemours 110,000 8,415,000 General Electric 127,600 9,633,800 Hanson PLC Sponsored ADR 500,000 7,375,000 Minnesota Mining & Manufacturing 130,000 8,466,250 National Service Industries 200,000 6,975,000 Norsk Hydro A/S Sponsored ADR 100,000 4,262,500 Textron Inc 60,000 4,725,000 ------------ 49,852,550 ------------ FINANCE RELATED 1.86% Deluxe Corp 250,000 8,031,250 Dun & Bradstreet 130,000 8,222,500 ------------ 16,253,750 ------------ FOOD PRODUCTS & BEVERAGES 2.92% Anheuser-Busch Cos 102,700 6,919,412 Heinz (H J) Co 250,000 8,500,000 Unilever NV New York Shrs 75,000 10,087,500 ------------ 25,506,912 ------------ FOOD STORES - WHOLESALE 0.48% SuperValu Inc 130,000 4,192,500 ------------ HEALTH CARE FACILITIES 0.74% Columbia/HCA Healthcare 117,850 6,452,288 ------------ INSURANCE 4.20% American General 225,000 8,184,375 Marsh & McLennan 100,000 9,712,500 Ohio Casualty 236,100 8,794,725 SAFECO Corp 275,000 9,968,750 ------------ 36,660,350 ------------ INVESTMENT BROKERS 1.18% Morgan Stanley Group 220,000 10,312,500 ------------ MACHINERY 0.77% Snap-On Inc 150,000 6,712,500 ------------ MEDICAL RELATED - DRUGS 5.85% Abbott Laboratories 150,000 6,262,500 American Home Products 100,000 9,850,000 Bristol-Myers Squibb 110,000 9,363,750 Lilly (Eli) & Co 173,200 10,478,600 Merck & Co 100,000 6,625,000 Schering-Plough Corp 150,000 8,418,750 ------------ 50,998,600 ------------ METALS 1.05% Phelps Dodge 150,000 9,168,750 ------------ OIL & GAS RELATED 3.10% Amoco Corp 125,000 8,687,500 Repsol SA Sponsored ADR 260,000 9,425,000 Royal Dutch Petroleum 5 Gldr Shrs 65,000 8,953,750 ------------ 27,066,250 ------------ PAPER & PAPER PRODUCTS 1.91% Kimberly-Clark Corp 100,000 7,637,500 Westvaco Corp 310,000 8,990,000 ------------ 16,627,500 ------------ POLLUTION CONTROL RELATED 1.19% Browning-Ferris Industries 350,000 10,368,750 ------------ PRINTING & PUBLISHING 1.00% Gannett Co 127,600 8,676,800 ------------ RETAIL 4.84% K mart Corp 500,000 3,500,000 McDonald's Corp 103,200 5,160,000 Melville Corp 200,000 6,375,000 Penney (J C) Co 185,000 8,787,500 Rite Aid 175,000 5,512,500 Sherwin-Williams Co 150,000 6,356,250 Tandy Corp 150,000 6,562,500 ------------ 42,253,750 ------------ TEXTILES & APPAREL MANUFACTURERS 2.23% Liz Claiborne 200,000 6,275,000 Shaw Industries 400,000 4,550,000 VF Corp 160,000 8,600,000 ------------ 19,425,000 ------------ TOBACCO 2.29% American Brands 200,000 9,075,000 Philip Morris 110,000 10,890,000 ------------ 19,965,000 ------------ TRANSPORTATION 1.83% Caliber System 157,400 6,650,150 Illinois Central Series A 250,000 9,312,500 ------------ 15,962,650 ------------ UTILITIES 5.38% Edison International 500,000 8,750,000 NYNEX Corp 160,000 8,240,000 Telefonica de Espana SA Sponsored ADR 200,000 9,825,000 Telefonos de Mexico SA de CV Sponsored ADR Representing Ord Series L Shrs 300,000 9,150,000 Texas Utilities 190,000 7,671,250 Unicom Corp 104,000 3,328,000 ------------ 46,964,250 ------------ TOTAL COMMON STOCKS (Cost $441,315,103) 562,577,900 ------------ FIXED INCOME SECURITIES 24.24% US Government Obligations 22.37% US Treasury Bond 11.250%, 2/15/2015 450,000 678,375 9.375%, 2/15/2006 17,450,000 21,654,333 9.250%, 2/15/2016 20,000,000 25,887,500 8.125%, 8/15/2019 20,000,000 23,506,220 7.250%, 8/15/2022 20,000,000 21,481,220 6.250%, 8/15/2023 4,750,000 4,522,884 US Treasury Notes 8.750%, 8/15/2000 15,000,000 16,757,790 8.250%, 7/15/1998 8,000,000 8,480,000 8.000%, 8/15/1999 200,000 214,687 8.000%, 5/15/2001 4,100,000 4,499,750 7.875%, 1/15/1998 1,750,000 1,824,375 7.875%, 11/15/1999 7,100,000 7,614,750 6.500%, 8/15/2005 15,000,000 15,351,540 6.375%, 7/15/1999 7,000,000 7,157,500 6.375%, 8/15/2002 15,150,000 15,514,524 5.750%, 8/15/2003 16,500,000 16,237,006 5.625%, 8/31/1997 100,000 100,406 5.625%, 1/31/1998 100,000 100,281 5.500%, 2/28/1999 3,000,000 2,995,308 5.125%, 4/30/1998 150,000 149,062 4.750%, 10/31/1998 300,000 294,000 US Treasury Security Stripped Interest Payment, Generic Tint Payment, Zero Coupon 8/15/2003 250,000 159,697 ------------ TOTAL US GOVERNMENT OBLIGATIONS (Cost $183,541,596) 195,181,208 ------------ US Government Agency Obligations 0.67% Federal National Mortgage Association, Gtd Mortgage Pass-Through Certificates 7.500%, 8/1/2007 1,958,793 2,003,843 Government National Mortgage Association I, Modified Pass-Through Certificates 7.000%, 10/15/2008 1,177,656 1,194,119 7.000%, 12/15/2022 256,092 253,836 6.500%, 10/15/2008 1,205,333 1,200,306 6.000%, 11/15/2008 1,266,533 1,238,693 TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $5,976,150) 5,890,797 ------------ Corporate Bonds 1.20% AEROSPACE & DEFENSE 0.17% Rockwell International, Notes 6.625%, 6/1/2005 1,500,000 1,507,140 ------------ AUTOMOBILE RELATED 0.09% Ford Motor, Notes 7.500%, 11/15/1999 750,000 783,427 ------------ BANKING 0.37% National City Bank, Sub Notes 7.200%, 5/15/2005 2,000,000 2,054,958 NationsBank Corp, Sr Notes 5.375%, 4/15/2000 1,250,000 1,213,950 ------------ 3,268,908 ------------ FINANCE RELATED 0.09% Beneficial Corp Medium-Term Notes, 5.350%, 10/8/1998 800,000 788,167 ------------ FOOD PRODUCTS & BEVERAGES 0.18% PepsiCo Inc, Notes 7.750%, 10/1/1998 1,500,000 1,568,438 ------------ RETAIL 0.09% Wal-Mart Stores, Notes 5.500%, 3/1/1998 750,000 746,933 ------------ UTILITIES 0.21% Duke Power, 1st & Ref Mortgage 7.500%, 4/1/1999 1,000,000 1,040,150 Union Electric, 1st Mortgage 6.750%, 10/15/1999 750,000 765,055 ------------ 1,805,205 ------------ TOTAL CORPORATE BONDS (Cost $10,487,910) 10,468,218 ------------ TOTAL FIXED INCOME SECURITIES (Cost $200,005,656) 211,540,223 ------------ SHORT-TERM INVESTMENTS 11.29% US Government Obligations 0.85% US Treasury Notes 8.000%, 1/15/1997 4,000,000 4,091,244 7.375%, 5/15/1996 3,300,000 3,315,464 ------------ TOTAL US GOVERNMENT OBLIGATIONS (Cost $7,474,031) 7,406,708 ------------ Corporate Bonds 0.33% FINANCE RELATED 0.16% Associates Corp of North America, Notes 4.750%, 8/1/1996 1,200,000 1,196,515 Transamerica Financial, Notes 5.850%, 7/15/1996 150,000 150,150 ------------ 1,346,665 ------------ WASTE MANAGEMENT 0.17% Waste Management, Notes 7.875%, 8/15/1996 1,500,000 1,515,984 ------------ TOTAL CORPORATE BONDS (Cost $2,889,921) 2,862,649 ------------ Commercial Paper 9.37% FINANCE RELATED 3.54% Ford Motor Credit 5.190%, 3/18/1996 1,000,000 997,549 Greenwich Funding 5.250%, 3/25/1996 15,000,000 14,947,500 PACCAR Financial 5.180%, 3/11/1996 5,000,000 4,992,806 Xerox Credit 5.180%, 3/19/1996 10,000,000 9,974,100 ------------ 30,911,955 ------------ PRINTING & PUBLISHING 1.14% Donnelley (R R) & Sons 5.180%, 3/8/1996 10,000,000 9,989,928 ------------ UTILITIES 4.69% GTE North, 5.220%, 3/7/1996 5,000,000 4,995,650 Pacific Gas & Electric 5.170%, 4/5/1996 15,000,000 14,924,604 Southwestern Bell Telephone 5.450%, 3/1/1996 21,000,000 21,000,000 ------------ 40,920,254 ------------ TOTAL COMMERCIAL PAPER (Cost $81,822,137) 81,822,137 ------------ Repurchase Agreements 0.74% Repurchase Agreement with State Street Bank & Trust Co dated 2/29/1996 due 3/1/1996 at 4.750%, repurchased at $6,430,848 (Collateralized by US Treasury Notes due 5/15/1998 at 6.125%, value $6,557,986) (Cost $6,430,000) 6,430,000 6,430,000 ------------ TOTAL SHORT-TERM INVESTMENTS (Cost $98,616,089) 98,521,494 ------------ TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $739,936,848) (Cost for Income Tax Purposes $739,950,173) $872,639,617 ============ VALUE EQUITY Fund COMMON STOCKS 94.90% AEROSPACE & DEFENSE 4.04% Boeing Co 25,000 2,028,125 Lockheed Martin 35,860 2,734,325 Raytheon Co 64,000 3,208,000 ------------ 7,970,450 ------------ AUTOMOBILE RELATED 2.77% Cooper Tire & Rubber 121,800 3,090,675 Ford Motor 76,000 2,375,000 ------------ 5,465,675 ------------ BANKING 5.09% Boatmen's Bancshares 80,000 3,140,000 First Chicago NBD 60,000 2,602,500 First Union 30,000 1,815,000 Wachovia Corp 53,700 2,497,050 ------------ 10,054,550 ------------ CHEMICALS 2.42% Dow Chemical 44,000 3,531,000 Nalco Chemical 39,000 1,238,250 ------------ 4,769,250 ------------ COMPUTER RELATED 6.91% Automatic Data Processing 40,400 1,565,500 Compaq Computer* 56,000 2,835,000 Computer Associates International 46,500 3,196,875 Hewlett-Packard Co 38,000 3,828,500 International Business Machines 18,000 2,207,250 ------------ 13,633,125 ------------ DIVERSIFIED COMPANIES 5.68% General Electric 42,100 3,178,550 Hanson PLC Sponsored ADR 188,300 2,777,425 Minnesota Mining & Manufacturing 30,000 1,953,750 Textron Inc 42,000 3,307,500 ------------ 11,217,225 ------------ ELECTRICAL EQUIPMENT 1.29% Emerson Electric 32,700 2,546,512 ------------ FINANCE RELATED 1.92% Dun & Bradstreet 60,000 3,795,000 ------------ FOOD PRODUCTS & BEVERAGES 4.67% Anheuser-Busch Cos 23,000 1,549,625 Heinz (H J) Co 52,500 1,785,000 PepsiCo Inc 64,800 4,098,600 Tyson Foods Class A 79,200 1,782,000 ------------ 9,215,225 ------------ FOOD STORES - WHOLESALE 1.07% Fleming Cos 105,500 2,110,000 ------------ HEALTH CARE FACILITIES 2.98% Columbia/HCA Healthcare 72,300 3,958,425 Manor Care 50,000 1,918,750 ------------ 5,877,175 ------------ INSURANCE 8.30% American General 67,000 2,437,125 American International Group 28,500 2,753,812 General Re 18,000 2,589,750 Jefferson-Pilot Corp 43,575 2,423,859 Marsh & McLennan 30,000 2,913,750 SAFECO Corp 90,000 3,262,500 ------------ 16,380,796 ------------ INVESTMENT BROKERS 1.47% Morgan Stanley Group 62,000 2,906,250 ------------ MEDICAL RELATED - DRUGS 10.22% Abbott Laboratories 57,000 2,379,750 American Home Products 26,000 2,561,000 Bristol-Myers Squibb 30,000 2,553,750 Lilly (Eli) & Co 64,000 3,872,000 Merck & Co 48,000 3,180,000 Schering-Plough Corp 47,400 2,660,325 Warner-Lambert Co 30,000 2,966,250 ------------ 20,173,075 ------------ OFFICE EQUIPMENT 1.75% Pitney-Bowes Inc 71,700 3,459,525 ------------ OIL & GAS RELATED 5.85% Amoco Corp 40,000 2,780,000 Exxon Corp 35,275 2,804,362 Repsol SA Sponsored ADR 80,400 2,914,500 Royal Dutch Petroleum 5 Gldr Shrs 22,076 3,040,969 ------------ 11,539,831 ------------ PAPER & PAPER PRODUCTS 3.40% Kimberly-Clark Corp 50,000 3,818,750 Westvaco Corp 100,050 2,901,450 ------------ 6,720,200 ------------ POLLUTION CONTROL RELATED 1.50% WMX Technologies 104,000 2,964,000 ------------ PRINTING & PUBLISHING 1.03% Gannett Co 30,000 2,040,000 ------------ RECREATION SERVICES 1.66% Disney (Walt) Co 50,000 3,275,000 ------------ RETAIL 8.71% Circuit City Stores 108,000 3,199,500 Dillard Department Stores Class A 57,000 1,781,250 Giant Food Class A 64,000 2,104,000 K mart Corp 334,200 2,339,400 McDonald's Corp 67,000 3,350,000 Penney (J C) Co 68,000 3,230,000 Toys "R" Us* 50,000 1,193,750 ------------ 17,197,900 ------------ TEXTILES & APPAREL MANUFACTURERS 1.87% Reebok International Ltd 62,400 1,645,800 Russell Corp 44,700 1,251,600 Shaw Industries 70,100 797,388 ------------ 3,694,788 ------------ TOBACCO 3.42% Philip Morris 50,000 4,950,000 UST Inc 50,800 1,803,400 ------------ 6,753,400 ------------ TRANSPORTATION 1.70% Illinois Central Series A 90,000 3,352,500 ------------ UTILITIES 5.18% CINergy Corp 100,700 3,008,413 DTE Energy 66,500 2,369,063 Southern Co 50,000 1,193,750 Southern New England Telecommunications 46,000 1,880,250 Telefonos de Mexico SA de CV Sponsored ADR Representing Ord Series L Shrs 58,000 1,769,000 ------------ 10,220,476 ------------ TOTAL COMMON STOCKS (Cost $142,962,479) 187,331,928 ------------ SHORT-TERM INVESTMENTS 5.10% Commercial Paper 3.02% UTILITIES 3.02% Pacific Gas & Electric 5.170%, 4/3/1996 (Cost $5,971,565) 6,000,000 5,971,565 ------------ Repurchase Agreements 2.08% Repurchase Agreement with State Street Bank & Trust Co dated 2/29/1996 due 3/1/1996 at 4.750%, repurchased at $4,105,542 (Collateralized by US Treasury Notes due 5/15/1998 at 6.125%, value $4,186,387) (Cost $4,105,000) 4,105,000 4,105,000 ------------ TOTAL SHORT-TERM INVESTMENTS (Cost $10,076,565) 10,076,565 ------------ TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $153,039,044) (Cost for Income Tax Purposes $153,221,345) $197,408,493 ============ * Security is non-income producing. See Notes to Financial Statements INVESCO Value Trust Statement of Assets and Liabilities February 29, 1996 UNAUDITED
Intermediate Government Total Return Value Equity Bond Fund Fund Fund --------------------------------------------------- ASSETS Investment Securities: At Cost~ $36,958,019 $739,936,848 $153,039,044 =================================================== At Value~ 38,450,925 872,639,617 $197,408,493 Cash 3,967 822,347 0 Receivables: Investment Securities Sold 0 890,625 0 Fund Shares Sold 68,174 2,265,274 831,521 Dividends and Interest 343,485 2,745,005 454,708 Prepaid Expenses and Other Assets 16,547 106,498 39,675 --------------------------------------------------- TOTAL ASSETS 38,883,098 879,469,366 198,734,397 --------------------------------------------------- LIABILITIES Payables: Custodian 0 0 4,030 Distributions to Shareholders 7,916 131,110 33,469 Investment Securities Purchased 0 5,844,601 0 Fund Shares Repurchased 81,801 413,127 248,981 Accrued Expenses and Other Payables 6,013 22,929 12,587 --------------------------------------------------- TOTAL LIABILITIES 95,730 6,411,767 299,067 --------------------------------------------------- Net Assets at Value 38,787,368 873,057,599 198,435,330 =================================================== NET ASSETS Paid-in Capital 38,197,598 740,374,084 153,671,847 Accumulated Undistributed Net Investment Income 0 9,106 1,856 Accumulated Undistributed Net Realized Gain (Loss) on Investment Securities and Foreign Currency Transactions (903,136) (28,360) 392,178 Net Appreciation of Investment Securities and Foreign Currency Transactions 1,492,906 132,702,769 44,369,449 --------------------------------------------------- Net Assets at Value 38,787,368 873,057,599 198,435,330 =================================================== Shares Outstanding* 3,045,975 38,527,980 9,145,195 Net Asset Value, Offering and Redemption Price per Share $12.73 $22.66 $21.70 =================================================== ~ Investment securities at cost and value at February 29, 1996 include repurchase agreements of $1,275,000, $6,430,000 and $4,105,000 for Intermediate Government Bond, Total Return and Value Equity Funds, respectively. * The Trust has one class of shares, which may be divided into different series, each representing an interest in a separate Fund. At February 29, 1996, there was an unlimited number of authorized Fund shares.
See Notes to Financial Statements INVESCO Value Trust Statement of Operations Six Months Ended February 29, 1996 UNAUDITED
Intermediate Government Total Return Value Equity Bond Fund Fund Fund --------------------------------------------------- INVESTMENT INCOME INCOME Dividends $0 $6,534,976 $ 2,171,409 Interest 1,299,022 9,092,503 224,943 Foreign Taxes Withheld 0 (109,202) (29,568) --------------------------------------------------- TOTAL INCOME 1,299,022 15,518,277 2,366,784 --------------------------------------------------- EXPENSES Investment Advisory Fees 114,414 2,607,632 648,375 Transfer Agent Fees 70,032 334,184 107,128 Administrative Fees 7,860 59,428 17,967 Custodian Fees and Expenses 7,353 62,982 17,495 Professional Fees and Expenses 6,846 15,936 9,924 Registration Fees and Expenses 12,460 51,563 22,050 Reports to Shareholders 5,320 28,339 9,827 Trustees' Fees and Expenses 4,971 18,175 8,038 Other Expenses 2,147 30,180 7,992 --------------------------------------------------- TOTAL EXPENSES 231,403 3,208,419 848,796 Fees and Expenses Paid Indirectly (3,510) (37,359) (11,407) --------------------------------------------------- NET EXPENSES 227,893 3,171,060 837,389 --------------------------------------------------- NET INVESTMENT INCOME 1,071,129 12,347,217 1,529,395 --------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES Net Realized Gain on Investment Securities and Foreign Currency Transactions 29,460 2,691,013 583,067 Change in Net Appreciation of Investment Securities and Foreign Currency Transactions 223,912 55,786,207 20,200,339 --------------------------------------------------- NET GAIN ON INVESTMENT SECURITIES 253,372 58,477,220 20,783,406 --------------------------------------------------- Net Increase in Net Assets from Operations 1,324,501 70,824,437 22,312,801 ===================================================
See Notes to Financial Statements INVESCO Value Trust Statement of Changes in Net Assets
Intermediate Government Bond Fund Total Return Fund Six Months Year Six Months Year Ended Ended Ended Ended February 29 August 31 February 29 August 31 -------------------------------- -------------------------------- 1996 1995 1996 1995 UNAUDITED UNAUDITED OPERATIONS Net Investment Income $1,071,129 $2,156,239 $12,347,217 $14,983,860 Net Realized Gain (Loss) on Investment Securities and Foreign Currency Transactions 29,460 (915,758) 2,691,013 2,916,413 Change in Net Appreciation of Investment Securitie and Foreign Currency Transactions 223,912 2,538,939 55,786,207 46,627,023 -------------------------------- -------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 1,324,501 3,779,420 70,824,437 64,527,296 -------------------------------- -------------------------------- DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income (1,071,129) (2,147,391) (12,331,584) (14,983,860) In Excess of Net Investment Income 0 0 0 (20,316) Net Realized Gain on Investment Securities 0 0 (4,352,077) (787,737) -------------------------------- -------------------------------- TOTAL DISTRIBUTIONS (1,071,129) (2,147,391) (16,683,661) (15,791,913) -------------------------------- -------------------------------- FUND SHARE TRANSACTIONS Proceeds from Sales of Shares 10,718,935 27,363,047 320,936,208 326,800,315 Reinvestment of Distributions 1,018,010 2,080,851 16,396,245 15,396,556 -------------------------------- -------------------------------- 11,736,945 29,443,898 337,332,453 342,196,871 Amounts Paid for Repurchases of Shares (10,542,293) (25,597,128) (81,884,120) (120,228,352) -------------------------------- -------------------------------- NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 1,194,652 3,846,770 255,448,333 221,968,519 -------------------------------- -------------------------------- Total Increase in Net Assets 1,448,024 5,478,799 309,589,109 270,703,902 NET ASSETS Beginning of Period 37,339,344 31,860,545 563,468,490 292,764,588 -------------------------------- -------------------------------- End of Period 38,787,368 37,339,344 873,057,599 563,468,490 ================================ ================================ Accumulated Undistributed (Over distributed) Net Investment Income Included in Net Assets at End of Period 0 0 9,106 (6,527) FUND SHARE TRANSACTIONS Shares Sold 832,776 2,246,918 14,609,468 16,593,356 Shares Issued from Reinvestment of Distributions 79,184 170,015 732,748 786,039 -------------------------------- -------------------------------- 911,960 2,416,933 15,342,216 17,379,395 Shares Repurchased (819,828) (2,082,218) (3,706,825) (6,275,356) -------------------------------- -------------------------------- Net Increase in Fund Shares 92,132 334,715 11,635,391 11,104,039 ================================ ================================
See Notes to Financial Statements INVESCO Value Trust Statement of Changes in Net Assets (Continued)
Value Equity Fund Six Months Year Ended Ended February 29 August 31 -------------------------------- 1996 1995 UNAUDITED OPERATIONS Net Investment Income $1,529,395 $2,846,758 Net Realized Gain on Investment Securities and Foreign Currency Transactions 583,067 5,886,502 Change in Net Appreciation of Investment Securities and Foreign Currency Transactions 20,200,339 14,593,965 -------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 22,312,801 23,327,225 -------------------------------- DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income (1,540,155) (2,834,142) Net Realized Gain on Investment Securities (3,086,951) (7,116,877) -------------------------------- TOTAL DISTRIBUTIONS (4,627,106) (9,951,019) -------------------------------- FUND SHARE TRANSACTIONS Proceeds from Sales of Shares 88,453,410 98,871,021 Reinvestment of Distributions 4,526,262 9,797,324 -------------------------------- 92,979,672 108,668,345 Amounts Paid for Repurchases of Shares (65,400,926) (80,723,493) -------------------------------- NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 27,578,746 27,944,852 -------------------------------- Total Increase in Net Assets 45,264,441 41,321,058 NET ASSETS Beginning of Period 153,170,889 111,849,831 -------------------------------- End of Period 198,435,330 153,170,889 ================================ Accumulated Undistributed Net Investment Income Included in Net Assets at End of Period 1,856 12,616 FUND SHARE TRANSACTIONS Shares Sold 4,212,615 5,496,357 Shares Issued from Reinvestment of Distributions 215,301 573,039 -------------------------------- 4,427,916 6,069,396 Shares Repurchased (3,124,817) (4,400,997) -------------------------------- Net Increase in Fund Shares 1,303,099 1,668,399 ================================
See Notes to Financial Statements INVESCO Value Trust Notes to Financial Statements UNAUDITED NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Value Trust (the "Trust") was organized under the laws of the Commonwealth of Massachusetts and presently consists of three separate Funds: Intermediate Government Bond Fund, Total Return Fund and Value Equity Fund. The investment objectives of the Funds are to achieve a high total return on investments through capital appreciation and current income. The Trust is registered under the Investment Company Act of 1940 (the "Act") as a diversified, open-end management investment company. The following is a summary of significant accounting policies consistently followed by the Trust 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 revenues 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 Trust's trustees. Debt securities are valued at evaluated bid prices as determined by a pricing service approved by the Trust's 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 Trust's 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. B. REPURCHASE AGREEMENTS -- Repurchase agreements held by the Trust are fully collateralized by U.S. Government securities and such collateral is in the possession of the Trust's custodian. The collateral is evaluated daily to ensure its market value exceeds the current market value of the repurchase agreements including accrued interest. C. 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 Trust is informed of the dividend if such information is obtained subsequent to the ex dividend date. Interest income, which may be comprised of stated coupon rate, market discount and original issue discount, is recorded on the accrual basis. Discounts 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. Investments in securities of governmental agencies may only be guaranteed by the respective agency's limited authority to borrow from the U.S. Government and may not be guaranteed by the full faith and credit of the United States. The Trust may have elements of risk due to concentrated investments in foreign issuers located in a specific country. Such concentrations may subject the Trust 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. D. FEDERAL AND STATE TAXES -- The Trust 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. At August 31, 1995, Intermediate Government Bond Fund had $411,995 in net capital loss carryovers which expire in the year 2003. Intermediate Government Bond Fund incurred and elected to defer post-October 31 net capital losses of $524,072 to the year ended August 31, 1996. To the extent future capital gains are offset by capital loss carryovers and deferred post-October 31 losses, such gains will not be distributed to shareholders. Dividends paid by the Trust 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. E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- For Total Return and Value Equity Funds, dividends and distributions to shareholders are recorded on the ex dividend/distribution date. All of Intermediate Government Bond Fund's net investment income is distributed to shareholders by dividends declared daily and paid monthly. Reinvestment of dividends is effected at the month-end net asset value. The Trust 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 mortgage- backed securities, market discounts, foreign currency transactions, nontaxable dividends, net operating losses and expired capital loss carryforwards. F. EXPENSES -- Each of the Funds bears expenses incurred specifically on its behalf and, in addition, each Fund bears a portion of general expenses, based on the relative net assets of each Fund. Under an agreement between each Fund and the Trust's Custodian, agreed upon Custodian Fees and Expenses are reduced by credits granted by the Custodian from any temporarily uninvested cash. Similarly, Other Expenses, which include Pricing Expenses, are reduced by credits earned by each Fund from security brokerage transactions under certain broker/services arrangements with third parties. Such credits are included in Fees and Expenses Paid Indirectly in the Statement of Operations. For the six months ended February 29, 1996, Fees and Expenses Paid Indirectly consisted of the following: Custodian Fees Other Fund and Expenses Expenses - ------------------------------------------------------------------------ Intermediate Government Bond Fund $3,510 $ 0 Total Return Fund 36,512 847 Value Equity Fund 10,238 1,169 NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc. ("IFG") serves as the Trust's investment adviser. As compensation for its services to the Trust, 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 each Fund's average net assets as follows: AVERAGE NET ASSETS ---------------------------------- $0 to $500 Million Over $500 to $1 $1 Fund Million Billion Billion - ----------------------------------------------------------------------------- Intermediate Government Bond Fund 0.60% 0.50% 0.40% Total Return Fund 0.75% 0.65% 0.50% Value Equity Fund 0.75% 0.65% 0.50% In accordance with a Sub-Advisory Agreement between IFG and INVESCO Capital Management, Inc. ("ICM"), an affiliate of IFG, investment decisions of the Trust are made by ICM. Fees for such sub- advisory services are paid by IFG. In accordance with an Administrative Agreement, each Fund pays IFG an annual fee of $10,000, plus an additional amount computed at an annual rate of 0.015% of average net assets to provide administrative, accounting and clerical services. The fee is accrued daily and paid monthly. IFG receives a transfer agent fee at an annual rate of $14.00 for Total Return and Value Equity Funds, and $20.00 for Intermediate Government Bond Fund per shareholder account, or per participant in an omnibus account. IFG may pay such fee for participants in omnibus accounts to affiliates or third parties. The fee is paid monthly at one-twelfth of the annual fee and is based upon the actual number of accounts in existence during each month. NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months ended February 29, 1996, the aggregate cost of purchases and proceeds from sales of investment securities (excluding all U.S. Government securities and short-term securities) were as follows: Fund Purchases Sales - ------------------------------------------------------------------------ Total Return Fund $175,589,709 $ 8,600,180 Value Equity Fund 29,297,386 11,707,317 The aggregate cost of purchases and proceeds from sales of U.S. Government securities were as follows: Fund Purchases Sales - ------------------------------------------------------------------------ Intermediate Government Bond Fund $ 4,801,105 $ 2,975,551 Total Return Fund 53,645,092 540,639 NOTE 4 -- APPRECIATION AND DEPRECIATION. At February 29, 1996, the gross appreciation of securities in which there was an excess of value over tax cost, the gross depreciation of securities in which there was an excess of tax cost over value and the resulting net appreciation by Fund were as follows:
Gross Gross Net Fund Appreciation Depreciation Appreciation - --------------------------------------------------------------------------------------------- Intermediate Government Bond Fund $1,605,388 $ 134,232 $1,471,156 Total Return Fund 141,663,306 8,973,862 132,689,444 Value Equity Fund 47,648,479 3,461,331 44,187,148
NOTE 5 - TRANSACTIONS WITH AFFILIATES. Certain of the Trust's officers and trustees are also officers and directors of IFG or ICM. The Trust has adopted an unfunded noncontributory defined benefit pension plan covering all independent trustees of the Trust 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 25% of the retainer fee at the time of retirement. Pension expenses for the six months ended February 29, 1996, included in Trustees' Fees and Expenses in the Statement of Operations, and unfunded accrued pension costs and pension liability included in Prepaid Expenses and Accrued Expenses, respectively, in the Statement of Assets and Liabilities were as follows:
Unfunded Pension Accrued Pension Fund Expenses Pension Costs Liability - --------------------------------------------------------------------------------------------- Intermediate Government Bond Fund $202 $834 $1,739 Total Return Fund 2,776 5,774 15,077 Value Equity Fund 824 3,046 6,544
NOTE 6 -- LINE OF CREDIT. The Trust has available a Redemption Line of Credit Facility ("LOC"), from a consortium of national banks to be used for temporary or emergency purposes to fund redemptions of investor shares. The LOC permits borrowings to a maxium of 10% of the Net Assets at Value of each respective Fund. Each Fund agrees to pay annual fees and interest on the unpaid principal balance based on prevailing market rates as defined in the agreement. For the six months ended February 29, 1996, there were no such borrowings. INVESCO Value Trust Financial Highlights (For a Fund Share Outstanding Throughout Each Period)
Six Months Period Ended Year Ended Ended February 29 August 31 August 31 Year Ended December 31 ------------- ------------------------------ -------------------------------- 1996 1995 1994 1993^ 1992 1991 1990 UNAUDITED Intermediate Government Bond Fund PER SHARE DATA Net Asset Value - Beginning of Period $12.64 $12.16 $13.25 $12.68 $12.89 $12.13 $12.07 ------------- ------------------------------ -------------------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.36 0.73 0.70 0.48 0.90 0.89 1.00 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 0.09 0.48 (0.75) 0.57 (0.16) 0.77 0.05 ------------- ------------------------------ -------------------------------- Total from Investment Operations 0.45 1.21 (0.05) 1.05 0.74 1.66 1.05 ------------- ------------------------------ -------------------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income+ 0.36 0.73 0.70 0.48 0.90 0.90 0.99 Distributions from Capital Gains 0.00 0.00 0.34 0.00 0.05 0.00 0.00 ------------- ------------------------------ -------------------------------- Total Distributions 0.36 0.73 1.04 0.48 0.95 0.90 0.99 ------------- ------------------------------ -------------------------------- Net Asset Value - End of Period $12.73 $12.64 $12.16 $13.25 $12.68 $12.89 $12.13 ============= ============================== ================================ TOTAL RETURN 3.55%* 10.36% (0.37%) 8.38%* 6.03% 14.16% 9.08% RATIOS Net Assets - End of Period ($000 Omitted) $38,787 $37,339 $31,861 $39,384 $29,649 $24,385 $18,380 Ratio of Expenses to Average Net Asset # 0.60%*@ 1.20% 1.07% 0.96%~ 0.97% 0.93% 0.85% Ratio of Net Investment Income to Average Net Assets# 2.80%* 6.04% 5.58% 5.48%~ 6.38% 7.28% 8.16% Portfolio Turnover Rate 8%* 92% 49% 34%* 93% 51% 31% ^ From January 1, 1993 to August 31, 1993, the Fund's new fiscal year-end. + Distributions in excess of net investment income for the year ended August 31, 1994, aggregated less than $0.01 on a per share basis. * Based on operations for the period shown and accordingly, are not representative of a full year. # Various expenses of the Fund were voluntarily absorbed by IFG for the year ended December 31, 1990. If such expenses had not been voluntarily absorbed, ratio of expenses to average net assets would have been and 0.96% and and ratio of net investment income to average net assets would have been 8.05%. @ Ratio is based on Total Expenses of the Fund, which is before any expense offset arrangements. ~ Annualized
INVESCO Value Trust Financial Highlights (Continued) (For a Fund Share Outstanding Throughout Each Period)
Six Months Period Ended Year Ended Ended February 29 August 31 August 31 Year Ended December 31 ------------- ------------------------------ -------------------------------- 1996 1995 1994 1993^ 1992 1991 1990 UNAUDITED Total Return Fund PER SHARE DATA Net Asset Value - Beginning of Period $20.95 $18.54 $18.27 $17.18 $16.43 $14.21 $15.08 ------------- ------------------------------ -------------------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.35 0.72 0.69 0.40 0.66 0.71 0.74 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 1.84 2.46 0.60 1.09 0.93 2.78 (0.80) ------------- ------------------------------ -------------------------------- Total from Investment Operations 2.19 3.18 1.29 1.49 1.59 3.49 (0.06) ------------- ------------------------------ -------------------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income+ 0.35 0.72 0.60 0.40 0.65 0.72 0.75 In Excess of Net Investment Income 0.00 0.00 0.09 0.00 0.00 0.00 0.00 Distributions from Capital Gains 0.13 0.05 0.17 0.00 0.19 0.55 0.06 In Excess of Capital Gains 0.00 0.00 0.16 0.00 0.00 0.00 0.00 ------------- ------------------------------ -------------------------------- Total Distributions 0.48 0.77 1.02 0.40 0.84 1.27 0.81 ------------- ------------------------------ -------------------------------- Net Asset Value - End of Period $22.66 $20.95 $18.54 $18.27 $17.18 $16.43 $14.21 ============= ============================== ================================ TOTAL RETURN 10.48%* 17.54% 7.22% 8.72%* 9.84% 24.96% (0.35%) RATIOS Net Assets - End of Period ($000 Omitted) $873,058 $563,468 $292,765 $220,224 $137,196 $82,219 $54,874 Ratio of Expenses to Average Net Assets 0.44%*@ 0.95% 0.96% 0.93%~ 0.88% 0.92% 1.00% Ratio of Net Investment Income to Average Net Assets 1.70%* 3.97% 3.31% 3.51%~ 4.06% 4.62% 5.22% Portfolio Turnover Rate 1%* 30% 12% 19%* 13% 49% 24% ^ From January 1, 1993 to August 31, 1993, the Fund's new fiscal year-end. + Distributions in excess of net investment income for the year ended August 31, 1995, aggregated less than $0.01 on a per share basis. * Based on operations for the period shown and, accordingly, are not representative of a full year. @ Ratio is based on Total Expenses of the Fund, which is before any expense offset arrangements. ~ Annualized
INVESCO Value Trust Financial Highlights (Continued) (For a Fund Share Outstanding Throughout Each Period)
Six Months Period Ended Year Ended Ended February 29 August 31 August 31 Year Ended December 31 ------------- ------------------------------ -------------------------------- 1996 1995 1994 1993^ 1992 1991 1990 UNAUDITED Value Equity Fund PER SHARE DATA Net Asset Value - Beginning of Period $19.53 $18.12 $17.79 $16.91 $16.57 $13.88 $15.30 ------------- ------------------------------ -------------------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.18 0.39 0.36 0.24 0.36 0.40 0.44 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 2.55 2.58 1.20 0.88 0.45 4.54 (1.33) ------------- ------------------------------ -------------------------------- Total from Investment Operations 2.73 2.97 1.56 1.12 0.81 4.94 (0.89) ------------- ------------------------------ -------------------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.18 0.39 0.31 0.24 0.34 0.40 0.47 In Excess of Net Investment Income 0.00 0.00 0.04 0.00 0.00 0.00 0.00 Distributions from Capital Gains 0.38 1.17 0.88 0.00 0.13 1.85 0.06 ------------- ------------------------------ -------------------------------- Total Distributions 0.56 1.56 1.23 0.24 0.47 2.25 0.53 ------------- ------------------------------ -------------------------------- Net Asset Value - End of Period $21.70 $19.53 $18.12 $17.79 $16.91 $16.57 $13.88 ============= ============================== ================================ TOTAL RETURN 14.05%* 17.84% 9.09% 6.65%* 4.98% 35.84% (5.80%) RATIOS Net Assets - End of Period ($000 Omitted) $198,435 $153,171 $111,850 $81,914 $78,609 $39,741 $29,825 Ratio of Expenses to Average Net Assets# 0.49%*@ 0.97% 1.01% 1.00%* 0.91% 0.98% 1.00% Ratio of Net Investment Income to Average Net Assets# 0.88%* 2.17% 1.80% 2.07% 2.19% 2.39% 3.00% Portfolio Turnover Rate 7%* 34% 53% 35%* 37% 64% 23% ^ From January 1, 1993 to August 31, 1993, the Fund's new fiscal year-end. * Based on operations for the period shown and accordingly, are not representative of a full year. # Various expenses of the Fund were voluntarily absorbed by IFG for the year ended December 31, 1990. If such expenses had not been voluntarily absorbed, ratio of expenses to average net assets would have been 1.04% and ratio of net investment income to average net assets would have been 2.96%. @ Ratio is based on Total Expenses of the Fund, which is before any expense offset arrangements. ~ Annualized
INVESCO FUNDS To receive general information and prospectuses on any of INVESCO's funds or retirement plans, or to obtain current account or price information, call toll-free: 1-800-525-8085 To reach PAL(R), your 24-hour Personal Account Line call: 1-800-424-8085 Or write to: INVESCO Funds Group, Inc.,(SM) Distributor Post Office Box 173706 Denver, Colorado 80217-3706 If you're in Denver, pleas visit one of our convenient Investor Centers: Cherry Creek, 155-B Fillmore Street; Denver Tech Center 7800 East Union Avenue, Lobby Level This information must be preceded or accompanied by an effective prospectus. -----END PRIVACY-ENHANCED MESSAGE-----