-----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, MlobEmi/xjtzTwjsUZfaW/ohG6oN96LU2P8KxH+E0Aa79NqkcBwwECkpNoW2f9yf w7FIe5c7tUsAB4dIH7mvvA== 0000789940-97-000003.txt : 19970423 0000789940-97-000003.hdr.sgml : 19970423 ACCESSION NUMBER: 0000789940-97-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970421 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: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04595 FILM NUMBER: 97583957 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 28, 1997 INVESCO VALUE FUNDS Intermediate Government Bond Total Return Value Equity INVESCO FUNDS Market Overview March 1997 Fueled by a stronger-than-expected economy and improving corporate earnings, the stock market catapulted to new highs over the last six months. During the fourth quarter of 1996, the growth rate (as measured by the Gross Domestic Product) accelerated to a revised level of 3.9%. This surpassed most analysts' expectations, as the expansion had slowed to a rate of 2.2% in the previous quarter. The vibrant economy has rekindled fears that tightness in the labor market could lead to renewed inflation. However, gains in productivity thus far have offset wage increases and allowed companies to maintain profit margins without raising prices. This has helped keep inflation under control. In fact, the consumer price index rose just 0.1% in the month of January (the smallest gain since June 1996) and finished 1996 at an annualized rate of 3.3% - -- in line with historical averages. The U.S. trade gap hit an eight-year high in 1996, primarily driven by a stronger dollar; this has negative consequences for domestic exporters. As their products become more expensive in foreign markets, profit margins and future earnings may decrease. In addition, the phenomenal appreciation of large-capitalization stocks, predicated on a nearly perfect investment environment, may have created unwarranted expectations by many investors when compared to historical averages. In the middle of March, the investment environment shifted as increased consumer spending reignited fears of inflation. Consequently, the Federal Reserve Board increased short-term interest rates by 0.25%. This preemptive strike against wage and price hikes was the first rate increase in more than two years, and led to increased negative sentiment in the market, producing a sharp 5% to 10% pullback in many stocks. A moderate inflation level represents a positive factor for the economy. At the same time, though, the longevity of the current expansion -- over six years -- remains a cause for concern; the post-World War II average is only four and a half years. Negative growth hasn't been experienced since the first quarter of 1993. If the growth rate does not slow, many economists expect the Fed to continue raising short-term interest rates, with the concomitant danger of cutting the expansion short. In fact, despite the positive economic growth and inflation news, concerns over inflation, interest rates, and the possibility of continued Fed intervention led to extreme volatility in bond prices. This volatility, coupled with a change in the risk/reward relationship for most bonds, caused nervousness for most fixed-income investors. Many took on considerably more risk for less reward as spreads narrowed between the yields on junk bonds and government bonds. This spread has fallen to a little more than three percentage points from almost five percentage points in late 1995, and compared to historic measurements, it is well below its long-term average. INVESCO Value Funds The line graphs on the following pages illustrate the value of a $10,000 investment in each of the INVESCO Value Funds, plus reinvested dividends and capital gain distributions, for the 10-year period ended 2/28/97 (or for Total Return Fund, from inception through 2/28/97). The charts and other total return figures cited reflect the funds' operating expenses, but the indexes do not have expenses, which would, of course, have lowered their performance.(2) Composition of holdings is subject to change. Intermediate Government Bond Fund For the six-month period ended 2/28/97, INVESCO Intermediate Government Bond Fund had a total return of 3.49%, compared to a total return of 4.20% for the Lehman Intermediate Government Bond Index. (Of course, past performance is not a guarantee of future results.)(1),(2) Volatility in the fixed-income market has continued over the last six months, which means the fund's investment strategy has been highly influenced by interest rate movements and maturity strategies. The fund primarily invests in obligations of the U.S. government and its agencies which mature in three to five years. Due to the fund's very narrow focus and our value investment methodology, the fund may overperform or underperform in short market cycles. However, we seek to minimize the loss of capital in bear markets, while fully participating in bull markets. Over the last six months, we have positioned the fund somewhat defensively in response to the volatile interest rate environment. The duration of the fund as of 2/28/97 was 2.74 years, reflecting our cautious approach. We continue to be heavily weighted in government bonds and have limited exposure to "plain vanilla" mortgage-backed securities. Looking forward, we plan to maintain this strategy, as volatility will likely continue in the fixed-income market. We also believe that there is a possibility that the Fed may further tighten credit availability as a preemptive strike against inflation; a shorter duration may help cushion the fund against a rise in interest rates. Intermediate Government Bond Fund Average Annual Total Return as of 2/28/97(2) 1 year 3.07% ----------------------------------------- 5 years 6.45% ----------------------------------------- 10 years 6.93% ----------------------------------------- Graph: Intermediate Government Bond Fund Total Return This line graph compares 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 ten year period ended 2/28/97. Fund Management Intermediate Government Bond Fund is managed by James O. Baker. Before joining INVESCO, Jim was associated with Willis Investment Counsel, Morgan Keegan, and Drexel Burnham Lambert. A Chartered Financial Analyst, 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 the six-month period ended 2/28/97, INVESCO Total Return Fund had a total return of 13.93%, compared to a total return of 22.52% for the S&P 500, and 5.24% for the Lehman Government/Corporate Bond Index. The fund outperformed its peer group during the one-year period ended 2/28/97 with a total return of 15.56%, compared to the average fund return of 13.86% for the Lipper Flexible Portfolio objective. (Lipper Analytical Services, Inc., is an independent mutual fund analyst, which tracks fund performance unadjusted for commissions. Of course, past performance is not a guarantee of future results.)(1),(2) Total Return Fund seeks to add value in three ways: asset allocation, stock selection, and bond strategy. For example, the average historical spread of returns between bonds and stocks is three percent. If the spread is out-of-line with this historical relationship, then the fund's asset mix is adjusted to reflect the current environment. A mix of 60% stocks and 40% bonds is considered a neutral position; presently, our asset mix slightly favors stocks, with an allocation between bonds and stocks of 29% and 62%, respectively. During the last six months, the fund made no major changes in its economic sector weightings. Currently, the equity portfolio is underweighted in capital goods and overweighted in consumer discretionary. We feel that many companies in the consumer discretionary sector are presently undervalued by investors. Over the winter, we made minor changes to the fixed-income portion of the portfolio. In regard to duration, we have kept the fund's fixed-income portion of the portfolio at a constant level of roughly four and half years (measured without cash and cash equivalents). This is slightly shorter than the Lehman Government/Corporate Bond Index. However, over the last six months, we continued to decrease our exposure to Treasuries and have increased our exposure to mortgage-backed securities, in response to spread differentials in these two markets. In the present market environment, it appears that equities continue to offer a return advantage over fixed-income securities. However, we will monitor this relationship and adjust the portfolio accordingly. Graph: Total Return Fund Fund Total Return This line graph compares 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 and Lehman Government/Corporate Bond Indexes, assuming in each case reinvestment of all dividends and capital gain distributions, for the period from inception (9/87) through 2/28/97. Total Return Fund Average Annual Total Return as of 2/28/97(2) 1 year 15.56% ----------------------------------------- 5 years 13.61% ----------------------------------------- Since Inception (9/87) 13.15% ----------------------------------------- Fund Management Total Return Fund is managed by Edward C. Mitchell, the president of INVESCO Capital Management. He earned his MBA at the University of Colorado and a BA from the University of Virginia. Ed 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. A Chartered Financial Analyst, David holds an MBA from the College of William & Mary, and a BA from Ohio Wesleyan University. Value Equity Fund For the six-month period ended 2/28/97, INVESCO Value Equity Fund had a total return of 16.64%, compared to a total return of 22.52% for the S&P 500. (Of course, past performance is not a guarantee of future results.)(1),(2) Over the last six months, we have witnessed a "flight to quality" in the stock market, as large-capitalization growth stocks have dramatically outperformed the overall market. Many investors chased these market momentum stocks, which led to unusually high valuation levels relative to historical price-to-earnings ratios. As value investors with a conservative, disciplined investment style, we stayed away from these market momentum stocks and focused on high-quality companies with broad diversification, which sell at more attractive valuation levels. This approach caused fund performance to lag behind the broad market. However, our more conservative strategy may eventually benefit investors, since market momentum investors typically experience severe loss of capital in down markets. Our strategy did result in strong returns from the consumer non-durables and health care sectors. However, we have since reduced our exposure to the latter area, since we feel it is now fully valued. We continue to be underweighted in energy and technology stocks; this has helped the fund's performance recently as these sectors experienced volatile swings in performance. Looking Forward We believe that stock selectivity will be crucial in the future, since valuation levels appear to be high compared to historical norms. Thus, we plan to rebalance the portfolio by replacing some of our high beta stocks with lower beta stocks. (Beta measures the volatility of a stock compared to the S&P 500. The higher the beta, the higher the risk associated with that stock versus the broad market.) This should give the fund a more conservative profile and help lessen its volatility during market downturns. It may also provide a boost if investors shift away from market momentum stocks and focus on value stocks. Value Equity Fund Average Annual Total Return as of 2/28/97(2) 1 year 20.45% ----------------------------------------- 5 years 14.52% ----------------------------------------- 10 years 12.64% ----------------------------------------- Graph: Value Equity Fund Total Return This line graph compares 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 ten year period ended 2/28/97. Fund Management Value Equity Fund is managed by Michael C. Harhai. Mike began his investment career in 1972. Before joining INVESCO, he served as a portfolio manager with Citizens & Southern Investment Advisors and later as head of the equity/balanced group with Sovran Capital Management. He holds an MBA from the University of Central Florida and a BA from the University of South Florida. He is a Chartered Financial Analyst, as is Terrence Irrgang, who assists in managing the fund. Terry is a 13-year veteran of the investment business, and holds an MBA from Temple University, as well as a BA from Gettysburg College. (1)The S&P 500 is an unmanaged index of common stocks considered representative of the broad U.S. equity market. The Lehman Government/Corporate Bond Index and Lehman Intermediate Government Bond Index are unmanaged indexes of securities considered to be representative of the overall domestic fixed-income and intermediate-term government bond markets, respectively. (2)Total return assumes reinvestment of dividends and capital gain distributions for the periods indicated. Past performance is not a guarantee of future results. Investment return and principal value will fluctuate so that, when redeemed, an investor's shares may be worth more or less than when purchased. INTRODUCING INVESCO's netPAL for Account Information INVESCO now offers secure access to your account information from your own computer -- at your convenience. Account Balance Latest Transactions Latest Distributions 1. To go the INVESCO Funds' web site at http://www.invesco.com. 2. Select netPAL on the navigator bar. 3. Click on INVESCO Account Information. 4. Key in your account number and password. (Your password is identical to the four-digit personal identification number code you use for the PAL(R) Personal Account Line, INVESCO's automated telephone information system.) 5. Click on "Submit." Your current account summary will then be displayed automatically. INVESCO Value Trust Ten Largest Common Stock Holdings February 28, 1997 Description Value - -------------------------------------------------------------------------------- TOTAL RETURN Fund Compaq Computer $19,812,500 First Chicago NBD 17,550,000 Morgan Stanley Group 17,539,375 Edison International 17,200,000 Philip Morris 16,890,625 Ford Motor 16,437,500 Bristol-Myers Squibb 16,312,500 Dow Chemical 16,200,000 Unilever NV New York Shrs 16,192,500 International Business Machines 15,812,500 VALUE EQUITY Fund NationsBank Corp 7,266,670 Philip Morris 6,756,250 Compaq Computer 6,260,750 Columbia/HCA Healthcare 5,898,900 American Brands 5,788,750 Illinois Central Series A 5,671,875 Ford Motor 5,588,750 Federal National Mortgage Association 5,460,000 Kimberly-Clark Corp 5,300,000 Raytheon Co 5,183,750 Composition of holdings is subject to change. INVESCO Value Trust Statement of Investment Securities February 28, 1997 UNAUDITED Shares or Principal Description Amount Value - -------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT BOND Fund FIXED INCOME SECURITIES 97.20% US Government Obligations 83.07% US Treasury Notes 8.750%, 8/15/2000 $2,000,000 $2,151,250 8.500%, 2/15/2000 2,800,000 2,970,624 8.500%, 11/15/2000 2,000,000 2,140,624 8.000%, 8/15/1999 5,000,000 5,207,810 7.750%, 2/15/2001 4,000,000 4,196,248 7.500%, 11/15/2001 1,500,000 1,565,155 7.125%, 10/15/1998 3,000,000 3,048,750 7.000%, 4/15/1999 3,000,000 3,053,439 6.375%, 7/15/1999 4,000,000 4,020,000 6.375%, 8/15/2002 2,500,000 2,496,875 6.250%, 2/15/2003 1,000,000 991,562 6.000%, 10/15/1999 3,000,000 2,990,625 5.125%, 3/31/1998 2,000,000 1,985,000 ------------ TOTAL US GOVERNMENT OBLIGATIONS (Cost $36,548,180) 36,817,962 ------------ US Government Agency Obligations 14.13% Federal Home Loan Mortgage, Gold Participation Certificates 8.000%, 10/1/2010 1,066,137 1,098,612 6.500%, 7/1/2001 962,214 960,569 Federal National Mortgage Association, Gtd Mortgage Pass-Through Certificates 6.000%, 5/1/2009 992,294 955,817 Government National Mortgage Association I, Pass-Through Certificates 7.500%, 3/15/2026 1,240,977 1,239,612 7.000%, 10/15/2008 625,378 627,161 6.500%, 10/15/2008 691,404 680,694 6.000%, 11/15/2008 724,406 699,812 ------------ TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $6,331,206) 6,262,277 ------------ TOTAL FIXED INCOME SECURITIES (Cost $42,879,386) 43,080,239 ------------ SHORT-TERM INVESTMENTS - REPURCHASE AGREEMENTS 2.80% Repurchase Agreement with State Street Bank & Trust Co dated 2/28/1997 due 3/3/1997 at 5.280%, repurchased at $1,243,547 (Collateralized by US Treasury Notes due 6/30/1999 at 6.750%, value $1,284,833) (Cost $1,243,000) 1,243,000 1,243,000 ------------ TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $44,122,386) (Cost for Income Tax Purposes $44,205,784) 44,323,239 ============ TOTAL RETURN Fund COMMON STOCKS 62.43% AEROSPACE & DEFENSE 2.50% Boeing Co 100,000 10,175,000 Lockheed Martin 150,000 13,275,000 Raytheon Co 250,000 11,781,250 ------------ 35,231,250 ------------ AUTO PARTS 1.62% Genuine Parts 300,000 14,025,000 Snap-On Inc 225,000 8,746,875 ------------ 22,771,875 ------------ AUTOMOBILES 1.17% Ford Motor 500,000 16,437,500 ------------ BANKS 4.70% First Chicago NBD 300,000 17,550,000 First of America Bank 225,000 14,090,625 First Union 150,000 13,162,500 NationsBank Corp 100,000 11,975,000 Wachovia Corp 154,000 9,374,750 ------------ 66,152,875 ------------ BEVERAGES 0.65% Anheuser-Busch Cos 205,400 9,140,300 ------------ BUILDING MATERIALS 0.60% Sherwin-Williams Co 150,000 8,418,750 ------------ CHEMICALS 1.97% Dow Chemical 200,000 16,200,000 Great Lakes Chemical 250,000 11,593,750 ------------ 27,793,750 ------------ COMPUTER RELATED 4.15% Compaq Computer* 250,000 19,812,500 Computer Associates International 204,750 8,906,625 Hewlett-Packard Co 250,000 14,000,000 International Business Machines 110,000 15,812,500 ------------ 58,531,625 ------------ CONGLOMERATES 0.42% Textron Inc 60,000 5,917,500 ------------ DISTRIBUTION 1.10% Supervalu Inc 500,000 15,500,000 ------------ ELECTRIC UTILITIES 2.80% Edison International 800,000 17,200,000 Energy Group PLC Sponsored ADR* 100,000 3,400,000 Texas Utilities 190,000 7,671,250 Unicom Corp 500,000 11,125,000 ------------ 39,396,250 ------------ ELECTRICAL EQUIPMENT 1.10% General Electric 150,000 15,431,250 ------------ FOODS 2.79% Archer-Daniels-Midland Co 577,500 10,683,750 Heinz (H J) Co 300,000 12,487,500 Unilever NV New York Shrs 85,000 16,192,500 ------------ 39,363,750 ------------ GOLD & PRECIOUS METALS MINING 0.86% Phelps Dodge 170,000 12,155,000 ------------ HEALTH CARE DRUGS - PHARMACEUTICALS 5.76% Abbott Laboratories 160,000 9,000,000 American Home Products 200,000 12,800,000 Bristol-Myers Squibb 125,000 16,312,500 Lilly (Eli) & Co 150,000 13,106,250 Merck & Co 100,000 9,200,000 Rite Aid 175,000 7,371,875 Schering-Plough Corp 175,000 13,409,375 ------------ 81,200,000 ------------ HEALTH CARE RELATED 0.67% Columbia/HCA Healthcare 225,000 9,450,000 ------------ HOUSEHOLD FURNITURE & APPLIANCES 0.99% Whirlpool Corp 275,000 13,887,500 ------------ HOUSEHOLD PRODUCTS 0.75% Kimberly-Clark Corp 100,000 10,600,000 ------------ INSURANCE 2.82% American General 260,000 11,277,500 Ohio Casualty 350,000 13,868,750 SAFECO Corp 350,000 14,612,500 ------------ 39,758,750 ------------ INSURANCE BROKERS 0.91% Marsh & McLennan 110,000 12,870,000 ------------ INVESTMENT BANK/BROKER FIRM 1.23% Morgan Stanley Group 275,000 17,359,375 ------------ MANUFACTURING 1.79% Minnesota Mining & Manufacturing 130,000 11,960,000 National Service Industries 350,000 13,300,000 ------------ 25,260,000 ------------ OFFICE EQUIPMENT & SUPPLIES 1.11% Xerox Corp 250,000 15,625,000 ------------ OIL & GAS RELATED 3.13% Amoco Corp 150,000 12,675,000 Norsk Hydro A/S Sponsored ADR 100,000 5,000,000 Repsol SA Sponsored ADR 400,000 15,200,000 Royal Dutch Petroleum 5 Gldr Shrs 65,000 11,245,000 ------------ 44,120,000 ------------ PAPER & FOREST PRODUCTS 0.81% Hanson PLC Sponsored ADR 100,000 2,225,000 Westvaco Corp 310,000 9,145,000 ------------ 11,370,000 ------------ POLLUTION CONTROL 0.89% Browning-Ferris Industries 400,000 12,550,000 ------------ PUBLISHING 1.66% Dun & Bradstreet 500,000 12,250,000 Gannett Co 140,000 11,165,000 ------------ 23,415,000 ------------ RAILROADS 0.98% Illinois Central Series A 400,000 13,750,000 ------------ RESTAURANTS 0.32% McDonald's Corp 103,200 4,463,400 ------------ RETAIL 3.74% CVS Corp 200,000 9,250,000 Dillard Department Store Class A 450,000 13,556,250 K mart Corp* 500,000 6,250,000 Penney (J C) Co 275,000 13,543,750 Tandy Corp 200,000 10,075,000 ------------ 52,675,000 ------------ SPECIALTY PRINTING 1.01% Deluxe Corp 450,000 14,231,250 ------------ TELEPHONE 3.00% NYNEX Corp 250,000 12,875,000 Telefonica de Espana SA Sponsored ADR 200,000 13,775,000 Telefonos de Mexico SA de CV Sponsored ADR Representing Ord Series L Shrs 400,000 15,550,000 ------------ 42,200,000 ------------ TEXTILE - APPAREL MANUFACTURING 1.36% Liz Claiborne 200,000 8,100,000 VF Corp 160,000 11,120,000 ------------ 19,220,000 ------------ TEXTILE - HOME FURNISHINGS 0.37% Shaw Industries 400,000 5,200,000 ------------ TOBACCO 2.13% American Brands 250,000 13,156,250 Philip Morris 125,000 16,890,625 ------------ 30,046,875 ------------ TRUCKERS 0.57% Caliber System 350,000 7,962,500 ------------ TOTAL COMMON STOCKS (Cost $622,554,422) 879,456,325 ------------ FIXED INCOME SECURITIES 29.29% US Government Obligations 20.86% US Treasury Bonds 11.250%, 2/15/2015 12,450,000 18,075,844 9.375%, 2/15/2006 17,450,000 20,749,132 9.250%, 2/15/2016 20,000,000 24,937,500 8.750%, 8/15/2000 25,000,000 26,890,625 8.250%, 7/15/1998 20,000,000 20,606,240 8.125%, 8/15/2019 10,000,000 11,337,500 8.000%, 5/15/2001 19,100,000 20,251,959 7.875%, 11/15/1999 17,100,000 17,805,375 6.500%, 8/15/2005 28,000,000 27,912,500 6.375%, 1/15/2000 15,000,000 15,084,375 6.375%, 8/15/2002 22,150,000 22,122,313 US Treasury Notes 6.375%, 7/15/1999 25,000,000 25,125,000 5.750%, 8/15/2003 17,000,000 16,367,804 5.500%, 2/28/1999 10,000,000 9,890,620 US Treasury Security Stripped Interest Payment, Generic Tint Payment, Zero Coupon 8/15/2003 25,250,000 16,707,673 ------------ TOTAL US GOVERNMENT OBLIGATIONS (Cost $292,913,663) 293,864,460 ------------ US Government Agency Obligations 5.27% Federal Home Loan Mortgage Gold, Participation Certificates 8.000%, 10/1/2010 4,975,307 5,126,855 8.000%, 5/1/2024 7,228,258 7,407,664 7.500%, 12/1/2026 10,099,999 10,114,947 6.500%, 6/1/2001 6,735,498 6,723,980 Federal National Mortgage Association, Gtd Mortgage Pass-Through Certificates 8.500%, 3/1/2010 7,554,940 7,857,062 7.500%, 8/1/2007 1,718,738 1,745,155 6.500%, 5/1/2026 7,832,069 7,452,840 6.000%, 5/1/2009 9,940,584 9,575,168 Government National Mortgage Association I, Pass-Through Certificates 7.500%, 3/15/2026 5,791,227 5,784,856 7.000%, 10/15/2008 1,034,553 1,037,502 7.000%, 12/15/2022 230,321 225,937 7.000%, 12/15/2025 9,386,420 9,157,579 6.500%, 10/15/2008 1,037,106 1,021,041 6.000%, 11/15/2008 1,086,608 1,049,718 ------------ TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $74,381,998) 74,280,304 ------------ Corporate Bonds 3.16% AEROSPACE & DEFENSE 0.10% Rockwell International, Notes 6.625%, 6/1/2005 1,500,000 1,466,887 ------------ AUTOMOBILES 0.06% Ford Motor, Notes 7.500%, 11/15/1999 750,000 766,475 ------------ BANKS 0.86% ABN Amro Bank NV Global Sub Notes 6.625%, 10/31/2001 5,000,000 4,965,550 BankAmerica Corp, Sub Notes 6.875%, 6/1/2003 4,000,000 3,988,664 National City, Sub Notes 7.200%, 5/15/2005 2,000,000 2,012,326 NationsBank Corp, Sr Notes 5.375%, 4/15/2000 1,250,000 1,207,874 ------------ 12,174,414 ------------ BEVERAGES 0.11% PepsiCo Inc, Notes 7.750%, 10/1/1998 1,500,000 1,534,267 ------------ CONSUMER FINANCE 0.06% Beneficial Corp, Medium-Term Notes, 5.350%, 10/8/1998 800,000 788,789 ------------ ELECTRIC UTILITIES 0.13% Duke Power, 1st & Ref Mortgage 7.500%, 4/1/1999 1,000,000 1,020,408 Union Electric, 1st Mortgage 6.750%, 10/15/1999 750,000 754,765 ------------ 1,775,173 ------------ FINANCIAL 0.63% Associates Corp of North America Notes, 6.375%, 10/15/2002 5,000,000 4,905,050 Commercial Credit, Notes 6.375%, 9/15/2002 4,000,000 3,904,600 ------------ 8,809,650 ------------ FOODS 0.21% CPC International Medium-Term Notes, Series D 6.875%, 10/15/2003 3,000,000 3,004,929 ------------ HEALTH CARE DRUGS - PHARMACEUTICALS 0.29% American Home Products, Notes 7.700%, 2/15/2000 4,000,000 4,128,080 ------------ PUBLISHING 0.24% Gannett Co, Notes 5.850%, 5/1/2000 3,500,000 3,430,249 ------------ RETAIL 0.33% May Department Stores, Notes 6.875%, 11/1/2005 4,000,000 3,954,840 Wal-Mart Stores, Notes 5.500%, 3/1/1998 750,000 746,408 ------------ 4,701,248 ------------ TELECOMMUNICATIONS - CELLULAR & WIRELESS 0.14% BellSouth Telecommunications Notes, 6.500%, 6/15/2005 2,000,000 1,952,252 ------------ TOTAL CORPORATE BONDS (Cost $44,763,115) 44,532,413 ------------ TOTAL FIXED INCOME SECURITIES (Cost $412,058,776) 412,677,177 ------------ SHORT-TERM INVESTMENTS 8.28% US Government Obligations 2.64% US Treasury Bonds 7.875%, 1/15/1998 16,750,000 17,048,368 US Treasury Notes 6.000%, 11/30/1997 20,000,000 20,056,240 ------------ TOTAL US GOVERNMENT OBLIGATIONS (Cost $ 37,051,883) 37,104,608 ------------ Commercial Paper 4.92% ELECTRICAL EQUIPMENT 1.42% Emerson Electric 5.230%, 3/21/1997 20,000,000 19,979,605 ------------ FINANCIAL 1.53% Greenwich Funding 5.330%, 3/10/1997 21,540,000 21,517,663 ------------ HOUSEHOLD PRODUCTS 1.41% Kimberly-Clark Corp 5.250%, 3/21/1997 20,000,000 19,947,354 ------------ OIL & GAS RELATED 0.56% Cortez Capital, 5.280%, 3/17/1997 7,870,000 7,853,795 ------------ TOTAL COMMERCIAL PAPER (Cost $69,298,417) 69,298,417 ------------ Repurchase Agreements 0.72% Repurchase Agreement with State Street Bank & Trust Co dated 2/28/1997 due 3/3/1997 at 5.280%, repurchased at $10,193,483 (Collateralized by US Treasury Notes due 6/30/1999 at 6.750%, value $10,394,567) (Cost $10,189,000) 10,189,000 10,189,000 ------------ TOTAL SHORT-TERM INVESTMENTS (Amortized Cost $116,539,300) 116,592,025 ------------ TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $1,151,152,498) (Cost for Income Tax Purposes $1,151,165,823) 1,408,725,527 ============ VALUE EQUITY Fund COMMON STOCKS 95.17% AEROSPACE & DEFENSE 2.75% Lockheed Martin 35,860 3,173,610 Raytheon Co 110,000 5,183,750 ------------ 8,357,360 ------------ AUTO PARTS 2.28% Cooper Tire & Rubber 125,000 2,484,375 Genuine Parts 95,000 4,441,250 ------------ 6,925,625 ------------ AUTOMOBILES 1.84% Ford Motor 170,000 5,588,750 ------------ BANKS 7.04% Banc One 80,000 3,530,000 First Chicago NBD 80,000 4,680,000 First Union 30,000 2,632,500 NationsBank Corp 60,682 7,266,670 Wachovia Corp 53,700 3,268,987 ------------ 21,378,157 ------------ BEVERAGES 1.62% PepsiCo Inc 150,000 4,931,250 ------------ BUILDING MATERIALS 1.39% Sherwin-Williams Co 75,000 4,209,375 ------------ CHEMICALS 2.73% Dow Chemical 45,000 3,645,000 Great Lakes Chemical 100,000 4,637,500 ------------ 8,282,500 ------------ COMPUTER RELATED 6.61% Compaq Computer* 79,000 6,260,750 Computer Associates International 107,750 4,687,125 Hewlett-Packard Co 86,000 4,816,000 International Business Machines 30,000 4,312,500 ------------ 20,076,375 ------------ CONGLOMERATES 1.37% Textron Inc 42,000 4,142,250 ------------ DISTRIBUTION 1.02% Supervalu Inc 100,000 3,100,000 ------------ ELECTRIC UTILITIES 2.65% DTE Energy 70,000 2,117,500 Southern Co 135,000 2,936,250 Unicom Corp 135,000 3,003,750 ------------ 8,057,500 ------------ ELECTRICAL EQUIPMENT 2.49% Emerson Electric 32,700 3,237,300 General Electric 42,100 4,331,037 ------------ 7,568,337 ------------ FINANCIAL 1.80% Federal National Mortgage Association 136,500 5,460,000 ------------ FOODS 2.07% General Mills 50,000 3,262,500 Heinz (H J) Co 72,500 3,017,812 ------------ 6,280,312 ------------ GOLD & PRECIOUS METALS MINING 0.73% Phelps Dodge 31,000 2,216,500 ------------ HEALTH CARE DRUGS - PHARMACEUTICALS 9.68% Abbott Laboratories 47,000 2,643,750 American Home Products 52,000 3,328,000 Astra AB Sponsored ADR Representing Series A Shrs 65,000 3,128,125 Bristol-Myers Squibb 30,000 3,915,000 Lilly (Eli) & Co 25,000 2,184,375 Merck & Co 37,000 3,404,000 Rite Aid 100,000 4,212,500 Schering-Plough Corp 42,000 3,218,250 Warner-Lambert Co 40,000 3,360,000 ------------ 29,394,000 ------------ HEALTH CARE RELATED 2.74% Biomet Inc 157,600 2,403,400 Columbia/HCA Healthcare 140,450 5,898,900 ------------ 8,302,300 ------------ HOUSEHOLD FURNITURE & APPLIANCES 1.09% Maytag Corp 150,000 3,300,000 ------------ HOUSEHOLD PRODUCTS 1.75% Kimberly-Clark Corp 50,000 5,300,000 ------------ INSURANCE 7.64% American General 100,000 4,337,500 American International Group 28,500 3,448,500 General Re 23,000 3,901,375 Jefferson-Pilot Corp 57,575 3,396,925 SAFECO Corp 110,000 4,592,500 Torchmark Corp 60,000 3,532,500 ------------ 23,209,300 ------------ INSURANCE BROKERS 1.16% Marsh & McLennan 30,000 3,510,000 ------------ INVESTMENT BANK/BROKER FIRM 0.75% Salomon Inc 41,000 2,280,625 ------------ MACHINERY 1.64% Dover Corp 100,000 4,962,500 ------------ MANUFACTURING 1.45% York International 100,000 4,412,500 ------------ OFFICE EQUIPMENT & SUPPLIES 3.11% Pitney-Bowes Inc 71,700 4,454,363 Xerox Corp 80,000 5,000,000 ------------ 9,454,363 ------------ OIL & GAS RELATED 4.96% Amoco Corp 55,000 4,647,500 Exxon Corp 35,275 3,523,091 Repsol SA Sponsored ADR 80,400 3,055,200 Royal Dutch Petroleum New York Registry 5 Gldr Shrs 22,076 3,819,148 ------------ 15,044,939 ------------ PAPER & FOREST PRODUCTS 0.97% Westvaco Corp 100,050 2,951,475 ------------ POLLUTION CONTROL 1.04% WMX Technologies 100,000 3,162,500 ------------ PUBLISHING 1.57% Dun & Bradstreet 195,000 4,777,500 ------------ RAILROADS 1.87% Illinois Central Series A 165,000 5,671,875 ------------ RESTAURANTS 1.25% McDonald's Corp 88,000 3,806,000 ------------ RETAIL 4.19% Dillard Department Store Class A 100,000 3,012,500 Giant Food Class A 94,000 3,066,750 Penney (J C) Co 68,000 3,349,000 Wal-Mart Stores 125,000 3,296,875 ------------ 12,725,125 ------------ TELEPHONE 0.96% Southern New England Telecommunications 80,000 2,900,000 ------------ TEXTILE - APPAREL MANUFACTURING 2.93% Russell Corp 135,000 5,079,375 Unifi Inc 120,000 3,825,000 ------------ 8,904,375 ------------ TEXTILE - HOME FURNISHINGS 0.75% Shaw Industries 175,000 2,275,000 ------------ TOBACCO 4.13% American Brands 110,000 5,788,750 Philip Morris 50,000 6,756,250 ------------ 12,545,000 ------------ TOYS 1.15% Mattel Inc 140,000 3,482,500 ------------ TOTAL COMMON STOCKS (Cost $216,519,044) 288,946,168 ------------ SHORT-TERM INVESTMENTS 4.83% Commercial Paper 4.78% FINANCIAL 4.78% Greenwich Funding 5.330%, 3/7/1997 (Cost $14,509,397) 14,518,000 14,509,397 ------------ Repurchase Agreements 0.05% Repurchase Agreement with State Street Bank & Trust Co dated 2/28/1997 due 3/3/1997 at 5.280%, repurchased at $167,073 (Collateralized by US Treasury Notes due 6/30/1999 at 6.750%, value $176,146) (Cost $167,000) 167,000 167,000 ------------ TOTAL SHORT-TERM INVESTMENTS (Amortized Cost $14,676,397) 14,676,397 ------------ TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $231,195,441) (Cost for Income Tax Purposes $231,969,229) 303,622,565 ============== * Security is non-income producing. See Notes to Financial Statements INVESCO Value Trust Statement of Assets and Liabilities February 28, 1997 UNAUDITED
Intermediate Government Total Return Value Equity Bond Fund Fund Fund ------------------------------------------------------- ASSETS Investment Securities: At Cost~ $44,122,386 $1,151,152,498 $231,195,441 ======================================================= At Value~ $44,323,239 $1,408,725,527 $303,622,565 Cash 516 0 2,454,026 Receivables: Investment Securities Sold 192,344 0 1,669,968 Fund Shares Sold 42,012 5,264,396 999,140 Dividends and Interest 298,029 5,803,013 624,155 Prepaid Expenses and Other Assets 98,647 166,390 47,940 ------------------------------------------------------- TOTAL ASSETS $44,954,787 $1,419,959,326 $309,417,794 ------------------------------------------------------- LIABILITIES Payables: Custodian 0 165,664 0 Distributions to Shareholders 11,367 177,805 0 Investment Securities Purchased 0 5,113,577 4,547,664 Fund Shares Repurchased 10,243 1,336,377 448,439 Accrued Expenses and Other Payables 8,324 967,902 12,608 ------------------------------------------------------- TOTAL LIABILITIES 29,934 7,761,325 5,008,711 ------------------------------------------------------- Net Assets at Value $44,924,853 $1,412,198,001 $304,409,083 ======================================================= NET ASSETS Paid-in Capital $45,326,899 $1,150,444,748 $225,567,859 Accumulated Distributions in Excess of Net Investment Income (See Note 1) (195,497) (1,918,737) (57,638) Accumulated Undistributed Net Realized Gain (Loss) on Investment Securities and Foreign Currency Transactions (407,402) 6,098,961 6,471,738 Net Appreciation of Investment Securities and Foreign Currency Transactions 200,853 257,573,029 72,427,124 ------------------------------------------------------- Net Assets at Value $44,924,853 $1,412,198,001 $304,409,083 ======================================================= Shares Outstanding* 3,622,231 55,843,649 12,105,447 Net Asset Value, Offering and Redemption Price per Share $12.40 $25.29 $25.15 =======================================================
~ Investment securities at cost and value at February 28, 1997 include repurchase agreements of $1,243,000, $10,189,000 and $167,000 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 28, 1997, there was an unlimited number of authorized Fund shares. See Notes to Financial Statements INVESCO Value Trust Statement of Operations Six Months Ended February 28, 1997 UNAUDITED
Intermediate Government Total Return Value Equity Bond Fund Fund Fund ------------------------------------------------------ INVESTMENT INCOME INCOME Dividends $ 0 $ 9,770,039 $ 2,740,880 Interest 1,413,955 13,805,898 384,586 Foreign Taxes Withheld 0 (132,534) (24,309) ------------------------------------------------------ TOTAL INCOME 1,413,955 23,443,403 3,101,157 ------------------------------------------------------ EXPENSES Investment Advisory Fees 134,154 4,041,352 937,275 Transfer Agent Fees 125,484 1,049,254 243,562 Administrative Fees 8,414 96,261 23,805 Custodian Fees and Expenses 6,562 88,779 26,659 Professional Fees and Expenses 7,225 28,841 12,087 Registration Fees and Expenses 13,966 80,230 26,692 Reports to Shareholders 3,966 28,248 12,403 Trustees' Fees and Expenses 4,636 28,942 8,773 Other Expenses 2,009 18,823 3,852 ------------------------------------------------------ TOTAL EXPENSES 306,416 5,460,730 1,295,108 Fees and Expenses Absorbed by Investment Adviser (78,403) 0 0 Fees and Expenses Paid Indirectly (3,623) (45,323) (19,820) ------------------------------------------------------ NET EXPENSES 224,390 5,415,407 1,275,288 ------------------------------------------------------ NET INVESTMENT INCOME 1,189,565 18,027,996 1,825,869 ------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES Net Realized Gain on Investment Securities and Foreign Currency Transactions 96,028 6,861,420 8,054,587 Change in Net Appreciation of Investment Securities and Foreign Currency Transactions 437,717 132,357,923 27,463,931 ------------------------------------------------------ NET GAIN ON INVESTMENT SECURITIES 533,745 139,219,343 35,518,518 ------------------------------------------------------ Net Increase in Net Assets from Operations $ 1,723,310 $ 157,247,339 $ 37,344,387 ======================================================
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 28 August 31 February 28 August 31 ---------------------------------- ---------------------------------- 1997 1996 1997 1996 UNAUDITED UNAUDITED OPERATIONS Net Investment Income $ 1,189,565 $ 2,274,936 $ 18,027,996 $ 29,217,334 Net Realized Gain on Investment Securities and Foreign Currency Transactions 96,028 416,138 6,861,420 6,273,916 Change in Net Appreciation (Depreciation) of Investment Securities and Foreign Currency Transactions 437,717 (1,505,858) 132,357,923 48,298,544 ---------------------------------- ---------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 1,723,310 1,185,216 157,247,339 83,789,794 ---------------------------------- ---------------------------------- DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income (1,385,062) (2,261,908) (19,958,076) (29,200,386) Net Realized Gain on Investment Securities 0 0 (4,314,900) (4,352,151) ---------------------------------- ---------------------------------- TOTAL DISTRIBUTIONS (1,385,062) (2,261,908) (24,272,976) (33,552,537) ---------------------------------- ---------------------------------- FUND SHARE TRANSACTIONS Proceeds from Sales of Shares 17,024,415 28,705,527 456,705,812 609,919,491 Reinvestment of Distributions 1,097,867 2,132,961 21,992,604 32,908,763 ---------------------------------- ---------------------------------- 18,122,282 30,838,488 478,698,416 642,828,254 Amounts Paid for Repurchases of Shares (13,484,181) (27,152,636) (231,625,936) (224,382,843) ---------------------------------- ---------------------------------- NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 4,638,101 3,685,852 247,072,480 418,445,411 ---------------------------------- ---------------------------------- Total Increase in Net Assets 4,976,349 2,609,160 380,046,843 468,682,668 NET ASSETS Beginning of Period 39,948,504 37,339,344 1,032,151,158 563,468,490 ---------------------------------- ---------------------------------- End of Period 44,924,853 39,948,504 1,412,198,001 1,032,151,158 ================================== ================================== Accumulated Undistributed (Distributions in Excess of) Net Investment Income Included in Net Assets at End of Period (See Note 1) (195,497) 0 (1,918,737) 11,343 FUND SHARE TRANSACTIONS Shares Sold 1,346,595 2,283,726 18,746,650 27,294,383 Shares Issued from Reinvestment of Distributions 89,225 169,140 889,723 1,459,274 ---------------------------------- ---------------------------------- 1,435,820 2,452,866 19,636,373 28,753,657 Shares Repurchased (1,060,447) (2,159,851) (9,467,431) (9,971,539) ---------------------------------- ---------------------------------- Net Increase in Fund Shares 375,373 293,015 10,168,942 18,782,118 ================================== ==================================
See Notes to Financial Statements INVESCO Value Trust Statement of Changes in Net Assets (Continued)
Value Equity Fund ------------------------------------- Six Months Year Ended Ended February 28 August 31 ------------------------------------- 1997 1996 UNAUDITED OPERATIONS Net Investment Income $ 1,825,869 $ 3,014,041 Net Realized Gain on Investment Securities and Foreign Currency Transactions 8,054,587 4,119,794 Change in Net Appreciation of Investment Securities and Foreign Currency Transactions 27,463,931 20,794,083 ------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 37,344,387 27,927,918 ------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income (1,926,168) (2,995,302) Net Realized Gain on Investment Securities (5,507,948) (3,086,946) ------------------------------------- TOTAL DISTRIBUTIONS (7,434,116) (6,082,248) ------------------------------------- FUND SHARE TRANSACTIONS Proceeds from Sales of Shares 227,292,699 214,313,579 Reinvestment of Distributions 7,254,609 5,906,003 ------------------------------------- 234,547,308 220,219,582 Amounts Paid for Repurchases of Shares (160,094,154) (195,190,483) ------------------------------------- NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 74,453,154 25,029,099 ------------------------------------- Total Increase in Net Assets 104,363,425 46,874,769 NET ASSETS Beginning of Period 200,045,658 153,170,889 ------------------------------------- End of Period $ 304,409,083 $ 200,045,658 ===================================== Accumulated Undistributed (Distributions in Excess of) Net Investment Income (Loss) Included in Net Assets at End of Period (57,638) 42,661 FUND SHARE TRANSACTIONS Shares Sold 9,371,546 9,902,174 Shares Issued from Reinvestment of Distributions 303,137 277,102 ------------------------------------- 9,674,683 10,179,276 Shares Repurchased (6,563,768) (9,026,840) ------------------------------------- Net Increase in Fund Shares 3,110,915 1,152,436 =====================================
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 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 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. Assets and liabilities initially expressed in terms of foreign currencies are translated into U.S. dollars at the prevailing market rates as quoted by one or more banks or dealers on the date of valuation. The cost of securities is translated into U.S. dollars at the rates of exchange prevailing when such securities are acquired. Income and expenses are translated into U.S. dollars at the rates of exchange prevailing when accrued. 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, original issue discount and amortized premium is recorded on the accrual basis. Discounts and premiums on debt securities purchased are amortized over the life of the respective security as adjustments to interest income. Cost is determined on the specific identification basis. The 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. 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 currency contracts for trading purposes. The Fund may hold foreign currency in anticipation of settling foreign security transactions and not for investment purposes. 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. Effective September 1, 1996, the Trust began accruing income using the effective interest method which includes amortizing premiums on purchases of portfolio securities as adjustments to income. This method of recording income more closely reflects the economics of holding and disposing of debt instruments. Prior to September 1, 1996, the Trust accrued coupon interest income and original issue discount and accounted for purchased premiums as capital gains or losses when realized upon disposition of the associated security. The cumulative effect of applying this accounting change was to decrease accumulated distributions in excess of undistributed net investment income by $195,497 and $1,917,260 for Intermediate Government Bond and Total Return Funds, respectively. Such accounting change had no effect on net asset value per share. 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, 1996, Intermediate Government Bond Fund had $411,995 and $16,031 in net capital loss carryovers which expire in the years 2003 and 2004, respectively. To the extent future capital gains are offset by capital loss carryovers, 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, premiums, foreign currency transactions, nontaxable dividends, net operating losses and expired capital loss carryforwards. F. FORWARD FOREIGN CURRENCY CONTRACTS - The Trust 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. G. 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, Transfer Agent Fees are reduced by credits earned by each Fund from security brokerage transactions under certain broker/service arrangements with third parties. Such credits are included in Fees and Expenses Paid Indirectly in the Statement of Operations. For the six months ended February 28, 1997, Fees and Expenses Paid Indirectly consisted of the following: Custodian Fees Transfer Fund and Expenses Agent Fees - -------------------------------------------------------------------------------- Intermediate Government Bond Fund $ 3,623 $ 0 Total Return Fund 44,267 1,056 Value Equity Fund 19,810 10 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 $20.00 for Total Return and Value Equity Funds, and $26.00 for Intermediate Government Bond Fund per shareholder account, or, where applicable, per participant in an omnibus account, per year. 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. IFG has voluntarily agreed, in some instances to absorb certain fees and expenses incurred by Intermediate Government Bond. NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months ended February 28, 1997, 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 $159,820,014 $ 32,936,575 Value Equity Fund 117,916,197 53,362,433 The aggregate cost of purchases and proceeds from sales of U.S. Government securities were as follows: Fund Purchases Sales - --------------------------------------------------------------------------- Intermediate Government Bond Fund $16,601,834 $12,157,479 Total Return Fund 81,721,614 10,122,156 NOTE 4 - APPRECIATION AND DEPRECIATION. At February 28, 1997, 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 $ 294,450 $ 176,995 $ 117,455 Total Return Fund 271,052,617 13,492,913 257,559,704 Value Equity Fund 74,091,531 2,438,195 71,653,336 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 deferred compensation 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 of 40% of the retainer fee at the time of retirement. Pension expenses for the six months ended February 28, 1997, 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 $ 359 $ 1,477 $ 2,944 Total Return Fund 7,229 21,712 41,482 Value Equity Fund 1,626 6,172 12,154 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. At February 28, 1997, there were no such borrowings. Other Information UNAUDITED On January 31, 1997, a special meeting of the shareholders of the Trust was held at which the eleven trustees identified below were elected, the selection of Price Waterhouse LLP as independent accountants (Proposal 1), the approval of a new investment advisory agreement with INVESCO Funds Group, Inc. ("IFG") (Proposal 2) and a new sub-advisory agreement between IFG and INVESCO Trust Company (Proposal 3) were ratified. The following is a report of the votes cast: Withheld/ Nominee/Proposal For Against Abstain Total - -------------------------------------------------------------------------------- Intermediate Government Bond Fund Charles W. Brady 2,477,451 0 27,067 2,504,518 Dan J. Hesser 2,477,940 0 26,578 2,504,518 Fred A. Deering 2,477,478 0 27,040 2,504,518 Victor L. Andrews 2,477,940 0 26,578 2,504,518 Bob R. Baker 2,475,969 0 28,549 2,504,518 Lawrence H. Budner 2,477,940 0 26,578 2,504,518 Daniel D. Chabris 2,475,079 0 29,439 2,504,518 A.D. Frazier, Jr. 2,477,940 0 26,578 2,504,518 Hubert L. Harris, Jr. 2,478,010 0 26,508 2,504,518 Kenneth T. King 2,475,079 0 29,439 2,504,518 John W. McIntyre 2,477,940 0 26,578 2,504,518 Proposal 1 2,470,212 5,636 28,669 2,504,517 Proposal 2 2,440,204 13,004 51,310 2,504,518 Proposal 3 2,443,658 11,079 49,781 2,504,518 Total Return Fund Charles W. Brady 30,764,351 0 570,613 31,334,964 Dan J. Hesser 30,765,474 0 569,490 31,334,964 Fred A. Deering 30,778,958 0 556,006 31,334,964 Victor L. Andrews 30,782,064 0 552,900 31,334,964 Bob R. Baker 30,783,089 0 551,875 31,334,964 Lawrence H. Budner 30,782,434 0 552,530 31,334,964 Daniel D. Chabris 30,775,393 0 559,571 31,334,964 A.D. Frazier, Jr. 30,766,773 0 568,191 31,334,964 Hubert L. Harris, Jr. 30,772,664 0 562,300 31,334,964 Kenneth T. King 30,771,189 0 563,775 31,334,964 John W. McIntyre 30,782,657 0 552,307 31,334,964 Proposal 1 30,680,409 452,950 201,605 31,334,964 Proposal 2 30,564,520 497,228 273,216 31,334,964 Proposal 3 30,557,517 493,468 283,979 31,334,964 Value Equity Fund Charles W. Brady 6,097,742 0 169,615 6,267,357 Dan J. Hesser 6,097,868 0 169,489 6,267,357 Fred A. Deering 6,096,758 0 170,599 6,267,357 Victor L. Andrews 6,097,292 0 170,065 6,267,357 Bob R. Baker 6,097,815 0 169,542 6,267,357 Lawrence H. Budner 6,097,854 0 169,503 6,267,357 Daniel D. Chabris 6,097,386 0 169,971 6,267,357 A.D. Frazier, Jr. 6,097,933 0 169,424 6,267,357 Hubert L. Harris, Jr. 6,098,822 0 168,535 6,267,357 Kenneth T. King 6,096,704 0 170,653 6,267,357 John W. McIntyre 6,097,227 0 170,130 6,267,357 Proposal 1 6,088,176 145,250 33,930 6,267,356 Proposal 2 5,769,946 160,489 336,922 6,267,357 Proposal 3 5,762,429 166,379 338,548 6,267,356 INVESCO Value Trust Financial Highlights (For a Fund Share Outstanding Throughout Each Period)
Six Months Period Year Ended Ended Ended February 28 Year Ended August 31 August 31 December 31 ------------- --------------------------------- --------- -------------------- 1997 1996 1995 1994 1993>> 1992 1991 UNAUDITED Intermediate Government Bond Fund PER SHARE DATA Net Asset Value - Beginning of Period $ 12.30 $ 12.64 $ 12.16 $ 13.25 $ 12.68 $ 12.89 $ 12.13 ------------- --------------------------------- --------- -------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.33 0.73 0.73 0.70 0.48 0.90 0.89 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 0.10 (0.34) 0.48 (0.75) 0.57 (0.16) 0.77 ------------- --------------------------------- --------- -------------------- Total from Investment Operations 0.43 0.39 1.21 (0.05) 1.05 0.74 1.66 ------------- --------------------------------- --------- -------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income+ 0.33 0.73 0.73 0.70 0.48 0.90 0.90 Distributions from Capital Gains 0.00 0.00 0.00 0.34 0.00 0.05 0.00 ------------- --------------------------------- --------- -------------------- Total Distributions 0.33 0.73 0.73 1.04 0.48 0.95 0.90 ------------- --------------------------------- --------- -------------------- Net Asset Value - End of Period $ 12.40 $ 12.30 $ 12.64 $ 12.16 $ 13.25 $ 12.68 $ 12.89 ============= ================================= ========= ==================== TOTAL RETURN 3.49%* 3.12% 10.36% (0.37%) 8.38%* 6.03% 14.16% RATIOS Net Assets - End of Period ($000 Omitted) $ 44,925 $ 39,949 $ 37,339 $ 31,861 $ 39,384 $ 29,649 $ 24,385 Ratio of Expenses to Average Net Assets# 0.51%*@ 1.15%@ 1.20% 1.07% 0.96%~ 0.97% 0.93% Ratio of Net Investment Income to Average Net Assets# 2.66%* 5.81% 6.04% 5.58% 5.48%~ 6.38% 7.28% Portfolio Turnover Rate 34%* 63% 92% 49% 34%* 93% 51%
>> From January 1, 1993 to August 31, 1993, the Fund's current 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 six months ended February 28, 1997 and the year ended August 31, 1996. If such expenses had not been voluntarily absorbed, ratio of expenses to average net assets would have been 0.68% (not annualized) and 1.24%, respectively, and ratio of net investment income to average net assets would have been 2.49% (not annualized) and 5.72%, respectively. @ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by Investment Adviser, 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 Year Ended Ended Ended February 28 Year Ended August 31 August 31 December 31 ------------- ---------------------------------- ---------- ---------------------- 1997 1996 1995 1994 1993>> 1992 1991 UNAUDITED Total Return Fund PER SHARE DATA Net Asset Value - Beginning of Period $ 22.60 $ 20.95 $ 18.54 $ 18.27 $ 17.18 $ 16.43 $ 14.21 ------------- ---------------------------------- ---------- --------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.36 0.73 0.72 0.69 0.40 0.66 0.71 Net Gains on Securities (Both Realized and Unrealized) 2.78 1.78 2.46 0.60 1.09 0.93 2.78 ------------- ---------------------------------- ---------- --------------------- Total from Investment Operations 3.14 2.51 3.18 1.29 1.49 1.59 3.49 ------------- ---------------------------------- ---------- --------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.36 0.73 0.72 0.60 0.40 0.65 0.72 In Excess of Net Investment Income+ 0.00 0.00 0.00 0.09 0.00 0.00 0.00 Distributions from Capital Gains 0.09 0.13 0.05 0.17 0.00 0.19 0.55 In Excess of Capital Gains 0.00 0.00 0.00 0.16 0.00 0.00 0.00 ------------- ---------------------------------- ---------- --------------------- Total Distributions 0.45 0.86 0.77 1.02 0.40 0.84 1.27 ------------- ---------------------------------- ---------- --------------------- Net Asset Value - End of Period 25.29 22.60 20.95 18.54 18.27 17.18 16.43 ============= ================================== ========== ===================== TOTAL RETURN 13.93%* 12.06% 17.54% 7.22% 8.72%* 9.84% 24.96% RATIOS Net Assets - End of Period ($000 Omitted) $ 1,412,198 $1,032,151 $ 563,468 $ 292,765 $ 220,224 $ 137,196 $ 82,219 Ratio of Expenses to Average Net Assets 0.45%*@ 0.89%@ 0.95% 0.96% 0.93%~ 0.88% 0.92% Ratio of Net Investment Income to Average Net Assets# 1.49%* 3.44% 3.97% 3.31% 3.51%~ 4.06% 4.62% Portfolio Turnover Rate 4%* 10% 30% 12% 19%* 13% 49% Average Commission Rate Paid^^ 0.0553* 0.0539 - - - - -
>> From January 1, 1993 to August 31, 1993, the Fund's current 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 ^^ The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased or sold which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. INVESCO Value Trust Financial Highlights (Continued) (For a Fund Share Outstanding Throughout Each Period)
Six Months Period Year Ended Ended Ended February 28 Year Ended August 31 August 31 December 31 ------------- --------------------------------- ----------- --------------------- 1997 1996 1995 1994 1993>> 1992 1991 UNAUDITED Value Equity Fund PER SHARE DATA Net Asset Value - Beginning of Period $ 22.24 $ 19.53 $ 18.12 $ 17.79 $ 16.91 $ 16.57 $ 13.88 ------------- --------------------------------- ---------- --------------------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.18 0.35 0.39 0.36 0.24 0.36 0.40 Net Gains on Securities (Both Realized and Unrealized) 3.48 3.09 2.58 1.20 0.88 0.45 4.54 ------------- --------------------------------- ---------- --------------------- Total from Investment Operations 3.66 3.44 2.97 1.56 1.12 0.81 4.94 ------------- --------------------------------- ---------- --------------------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.19 0.35 0.39 0.31 0.24 0.34 0.40 In Excess of Net Investment Income 0.00 0.00 0.00 0.04 0.00 0.00 0.00 Distributions from Capital Gains 0.56 0.38 1.17 0.88 0.00 0.13 1.85 ------------- --------------------------------- ---------- --------------------- Total Distributions 0.75 0.73 1.56 1.23 0.24 0.47 2.25 ------------- --------------------------------- ---------- --------------------- Net Asset Value - End of Period $ 25.15 $ 22.24 $ 19.53 $ 18.12 $ 17.79 $ 16.91 $ 16.57 TOTAL RETURN 16.64%* 17.77% 17.84% 9.09% 6.65%* 4.98% 35.84% RATIOS Net Assets - End of Period ($000 Omitted) $ 304,409 $200,046 $153,171 $111,850 $ 81,914 $ 78,609 $ 39,741 Ratio of Expenses to Average Net Assets 0.52%*@ 1.01%@ 0.97% 1.01% 1.00%~ 0.91% 0.98% Ratio of Net Investment Income to Average Net Assets# 0.73%* 1.64% 2.17% 1.80% 2.07%~ 2.19% 2.39% Portfolio Turnover Rate 23%* 27% 34% 53% 35%* 37% 64% Average Commission Rate Paid^^ $ 0.0564* $ 0.0589 - - - - -
>> From January 1, 1993 to August 31, 1993, the Fund's current fiscal year-end. * 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 offset arrangements. ~ Annualized ^^ The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased or sold which is required to be disclosed for the fiscal years beginning September 1, 1995 and thereafter. INVESCO FUNDS We're easy to stay in touch with: INVESCO Services Representatives, 1-800-525-8085 PAL(R), your Personal Account Line, 1-800-424-8085 On the World Wide Web: http://www.invesco.com Denver Investor Centers: Cherry Creek, 155-B Fillmore Street; Denver Tech Center, 7800 E. Union Avenue, Lobby Level INVESCO Funds Group, Inc.,(SM) Distributor Post Office Box 173706 Denver, Colorado 80217-3706 This information must be preceded or accompanied by a current prospectus. -----END PRIVACY-ENHANCED MESSAGE-----