-----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, MChtEfQCJdgrlfeThOWbKhLcJq1azTuNQNFtZCPP7IdpGRxkXbUv5or9ru7yKO2s eeoYlXMzXf5ToNLQ/48xJQ== 0000789940-97-000011.txt : 19971027 0000789940-97-000011.hdr.sgml : 19971027 ACCESSION NUMBER: 0000789940-97-000011 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971024 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: SEC FILE NUMBER: 811-04595 FILM NUMBER: 97700262 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 Annual Report August 31, 1997 INVESCO VALUE FUNDS Intermediate Government Bond Fund Total Return Fund Value Equity Fund INVESCO FUNDS MARKET OVERVIEW September 1997 U.S. financial markets are highly dependent on investors' perception of the domestic economy. This has been especially true this year. In the early spring, fears of inflation and the potential for an overheating economy caused the Federal Reserve Board to increase short-term interest rates by 25 basis points. This produced a sharp pullback in the stock market. Subsequently, the prevailing view had been of strong and stable economic growth with benign inflation. With this change of attitude, equity markets rallied, and many large-capitalization indexes produced 20% gains within a two-month time period. In fact, the Dow Jones Industrial Average jumped 20% in two months for only the third time in 59 years. Recently, however, renewed concerns over inflation, corporate profits, and a stronger-than-expected economy have again increased day-to-day volatility within the equity markets.(1) Why has the economy been so difficult to gauge? Conventional wisdom has always held that strong economic growth and benign inflation couldn't coexist. However, for the last seven months, they have. Some analysts are calling the current economic environment a "new paradigm" or a "utopian environment." The Gross Domestic Product (GDP) -- the primary indicator of economic status -- continues to increase at a rapid pace. In the fourth quarter of 1996, the GDP rose at a revised rate of 3.9%; for the first quarter of 1997, 4.9%; and for the second quarter of 1997, 3.3%. Meanwhile, the specter of inflation has been nonexistent. Wholesale prices across the economy decreased for the first seven months of 1997, yet the unemployment rate measured 4.9% in August and 4.8% in July -- the lowest levels since 1973. Whatever your outlook on the economy, the current environment bodes well for domestic equity markets. Low inflation with strong economic growth may continue to lead to high multiples for corporate stock prices, albeit with likely price volatility. Of course, a significant increase in interest rates could alter the current market conditions and change the investment climate. Until a clearer picture of the direction of the economy develops, fixed- incomeinvestors may experience continued day-to-day volatility, although probably to a lesser degree than equity markets. INVESCO VALUE FUNDS The line graphs below 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 8/31/97. 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) INTERMEDIATE GOVERNMENT BOND FUND For the one-year period ended 8/31/97, INVESCO Intermediate Government Bond Fund had a total return of 6.64%, compared to a total return of 8.05% for the Lehman Intermediate Government Bond Index. (Of course, past performance is not a guarantee of future results.)(1),(2) Intermediate Government Bond Fund Average Annual Total Return as of 8/31/97(2) 1 Year 6.64% --------------------------------- 5 Years 5.65% --------------------------------- 10 Years 7.54% --------------------------------- 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 ten year period ended August 31, 1997. Due to the shifting interest rate environment over the last year, the fund's investments have been highly influenced by interest rate movements and maturity strategies. However, because of our conservative approach and value-oriented bond selection process, we were able to mitigate much of the volatility that affected the broad fixed-income market. We continue to focus the fund's holdings in obligations of the U.S. government and its agencies which mature in three to five years. Because of this narrow focus, the fund may outperform or underperform during short market cycles. Looking forward, we will continue to monitor the policies of the Federal Reserve Board and forward rates. This analysis will dictate our maturity strategy and investment philosophy. Our current evaluation of the Fed and forward rates suggests a more neutral position than our previous expectation of credit tightening. 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 one-year period ended 8/31/97, INVESCO Total Return Fund had a total return of 27.01%, compared to a total return of 40.57% for the S&P 500, and 9.80% for the Lehman Government/Corporate Bond Index. The fund outperformed its peer group for the same period, besting the average fund return of 23.17% 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 Average Annual Total Return as pf 8/31/97(2) 1 Year 27.01% --------------------------- 5 Years 15.38% --------------------------- 10 Years 13.68% --------------------------- 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 Lehman Government/Corporate Bond Index, assuming in each case reinvestment of all dividends and capital gain distributions, for the ten year period ended August 31, 1997. Total Return Fund seeks to add value in three ways: through asset allocation, stock selection, and bond strategy. Asset allocation is based on the spread of returns between bonds and stocks. If this relationship is out-of-line with the historical spread of three percent, then the fund's asset mix is adjusted, with 60% stocks and 40% bonds considered a neutral position. Presently, we slightly favor equities, with an approximate allocation of 25% bonds, 64% equities, and 11% in cash and cash equivalents. With regards to our equity strategy, over the last year the market has been infatuated with lower-yielding, large-capitalization high-growth companies. Although many of these firms are solid fundamentally, it appears that some may be now overpriced. Thus, we have stayed away from higher growth sectors in favor of more conservative, reasonably valued industry groups such as consumer cyclicals, consumer staples, and capital goods. However, stock selectivity remains the crucial ingredient, as our disciplined, "bottom-up" approach identifies securities that may be undervalued, such as Columbia/HCA Healthcare and British Telecommunications PLC Sponsored ADR. This value-oriented approach also kept the fund away from momentum stocks that were devastated in the minor correction that occurred in the spring. Similarly, our bond selection process seeks to identify securities undervalued by the broad market. Within this context, our investment decisions are highly dependent on our analysis of the Federal Reserve Board policy. Earlier this year, our evaluation suggested that the Fed might tighten credit availability. Accordingly, we structured the bond portfolio conservatively. This strategy paid off for the fund, as the Fed raised short-term interest rates in March. Our present reading is more neutral in regards to Fed policy, and the bond portfolio has been adjusted accordingly. FUND MANAGEMENT Total Return Fund is managed by Edward C. Mitchell, chairman 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 one-year period ended 8/31/97, INVESCO Value Equity Fund achieved a total return of 32.04%, compared to a total return of 40.57% for the S&P 500. (Of course, past performance is not a guarantee of future results.)(1),(2) During the last year, the investment community was infatuated with a select few large-capitalization, blue chip stocks. This intense focus on a few names has led to high valuation levels compared to historic norms. Within this environment, we have stayed true to our value-oriented, disciplined investment philosophy. This approach has kept the fund away from high-flying momentum stocks, focusing instead on more conservative, reasonably valued investments. While we have underperformed the broad market indexes in the past 12 months, we feel confident that, over a full market cycle, our investment philosophy should pay off -- as many momentum investors typically suffer a severe loss of capital in down markets. With the broad market appearing fully valued in many sectors, stock selectivity continues to drive the fund's performance. Our continuous search for undervalued securities has lead us to companies like Lowe's Cos and Hanson PLC Sponsored ADR. Lowe's is a home improvement retail company with headquarters in the Southeast U.S. They have continued to exhibit strong earnings growth of approximately 20%, while selling at a relatively low price-to-earnings multiple. This company may also benefit from an improving regional economy. Hanson PLC, a paper and forest products company, is in the process of restructuring and is presently selling at 12 times earnings while providing a hefty dividend yield. Graph: This line graph represents a comparison of the value of a $10,000 investment in INVESCO Value Equity Fund tot he 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 August 31, 1997. A continuing low interest rate environment bodes well for the economy and potentially the markets -- this may lead to higher multiples for stocks. Stock selectivity remains crucial, and we will continue to underweight momentum-prone sectors such as technology. 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. Value Equity Fund Average Annual Total Return as of 8/31/97(2) 1 Year 32.04% --------------------------- 5 Years 17.60% --------------------------- 10 Years 12.74% --------------------------- (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. The Dow Jones Industrial Average reflects the performance of large-capitalization stocks. (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. INVESCO Fund Codes These two-digit codes appear after your account number on Investment Summaries and confirmations. You may also use them to request information about specific funds on PAL(R), your Personal Account Line. Money Market Funds 44 U.S. Government Money Fund 25 Cash Reserves 40 Tax-Free Money Fund Tax-Exempt Funds 36 Tax-Free Intermediate Bond 35 Tax-Free Long-Term Bond Income Funds 33 Short-Term Bond 32 U.S. Government Securities 47 Intermediate Government Bond 30 Select Income 31 High Yield Growth & Income Fund 71 Balanced 70 Multi-Asset Allocation 48 Total Return 15 Industrial Income 46 Value Equity Capital Appreciation Funds 10 Growth 20 Dynamics 74 Small Company Value 60 Small Company Growth Sector Funds 50 Energy 59 Environmental Services 57 Financial Services 51 Gold 52 Health Sciences 53 Leisure 42 Realty 55 Technology 58 Utilities 38 Worldwide Capital Goods 39 Worldwide Communications International Funds 49 International Growth 41 Asian Growth 56 European 37 European Small Company 34 Latin American Growth 54 Pacific Basin For more information about any of the INVESCO Funds, including management fees and expenses, please call us at 1-800-525-8085 for a prospectus. Read it carefully before you invest or send money. INVESCO Value Trust TEN LARGEST COMMON STOCK HOLDINGS August 31, 1997 Description Value - --------------------------------------------------------------------------- TOTAL RETURN Fund Compaq Computer $ 40,937,500 International Business Machines 22,192,500 Morgan Stanley Dean Witter Discovery & Co 21,836,719 First Chicago NBD 21,525,000 Ford Motor 21,500,000 Dow Chemical 19,912,500 SuperValu Inc 19,625,000 Edison International 19,300,000 Bristol-Myers Squibb 19,000,000 Columbia/HCA Healthcare 18,937,500 VALUE EQUITY Fund Electronic Data Systems $ 8,318,750 International Business Machines . 8,070,000 Ford Motor 7,955,000 Compaq Computer 7,516,125 Hewlett-Packard Co 7,357,500 Columbia/HCA Healthcare 7,322,500 Computer Associates International 7,205,781 Dover Corp 6,906,250 Unifi Inc 6,715,625 NationsBank Corp 6,612,238 Composition of holdings is subject to change. INVESCO Value Trust STATEMENT OF INVESTMENT SECURITIES August 31, 1997
Shares or Principal Description Amount Value - --------------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT BOND Fund FIXED INCOME SECURITIES 85.29% US Government Obligations 72.05% US Treasury Bonds 9.250%, 2/15/2016 $ 500,000 $ 636,406 -------------- US Treasury Notes 8.750%, 8/15/2000 $ 2,000,000 2,140,626 8.500%, 2/15/2000 $ 2,600,000 2,743,000 8.500%, 11/15/2000 $ 2,000,000 2,135,626 8.000%, 8/15/1999 $ 2,000,000 2,073,750 7.750%, 2/15/2001 $ 4,000,000 4,196,252 7.500%, 11/15/2001 $ 1,500,000 1,570,313 7.250%, 8/15/2004 $ 2,000,000 2,101,250 7.125%, 10/15/1998 $ 3,000,000 3,041,250 7.000%, 4/15/1999 $ 3,000,000 3,048,750 6.375%, 7/15/1999 $ 2,000,000 2,015,626 6.375%, 8/15/2002 $ 2,500,000 2,516,407 6.250%, 2/15/2003 $ 1,000,000 999,688 6.000%, 10/15/1999 $ 3,000,000 3,004,689 -------------- TOTAL US GOVERNMENT OBLIGATIONS (Cost $31,905,593) 32,223,633 -------------- US Government Agency Obligations 13.24% Federal Home Loan Mortgage, Gold Participation Certificates 8.000%, 10/1/2010 $ 961,750 994,882 6.500%, 7/1/2001 $ 902,085 903,672 Federal National Mortgage Association, Gtd Mortgage Pass-Through Certificates 6.000%, 5/1/2009 $ 929,094 905,588 Government National Mortgage Association I, Pass-Through Certificates 7.500%, 3/15/2026 $ 1,188,637 1,199,940 7.000%, 10/15/2008 $ 604,301 609,734 6.500%, 10/15/2008 $ 643,620 639,758 6.000%, 11/15/2008 $ 686,954 670,413 -------------- TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $5,941,859) 5,923,987 -------------- TOTAL FIXED INCOME SECURITIES (Cost $37,847,452) 38,147,620 -------------- SHORT-TERM INVESTMENTS 14.71% US Government Obligations 6.37% US Treasury Notes 6.000%, 12/31/1997 $ 2,000,000 $ 2,003,126 5.125%, 3/31/1998 $ 850,000 847,875 -------------- TOTAL US GOVERNMENT OBLIGATIONS (Cost $2,846,176) 2,851,001 -------------- US Government Agency Obligations 4.48% Federal Farm Credit Bank 6.050%, 5/1/1998 (Cost $2,000,278) $ 2,000,000 2,002,499 -------------- Repurchase Agreements 3.86% Repurchase Agreement with State Street Bank & Trust Co dated 8/29/1997 due 9/2/1997 at 5.500%, repurchased at $1,725,054 (Collateralized by US Treasury Bonds due 8/15/2019 at 8.125%, value $1,768,487) (Cost $1,724,000) $ 1,724,000 1,724,000 -------------- TOTAL SHORT-TERM INVESTMENTS (Cost $6,570,454) 6,577,500 -------------- TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $44,417,906) (Cost for Income Tax Purposes $44,561,784) $ 44,725,120 ============== TOTAL RETURN Fund COMMON STOCKS 64.04% AEROSPACE & DEFENSE 2.56% Boeing Co 200,000 $ 10,887,500 Lockheed Martin 175,000 18,145,312 Raytheon Co 325,000 17,875,000 -------------- 46,907,812 -------------- AUTO PARTS 1.41% Genuine Parts 500,000 15,437,500 Snap-On Inc 250,000 10,500,000 -------------- 25,937,500 -------------- AUTOMOBILES 1.17% Ford Motor 500,000 21,500,000 -------------- BANKS 4.08% First Chicago NBD 300,000 21,525,000 First of America Bank 337,500 17,381,250 First Union 300,000 14,418,750 NationsBank Corp 200,000 11,875,000 Wachovia Corp 154,000 9,586,500 -------------- 74,786,500 -------------- BEVERAGES 0.58% Anheuser-Busch Cos 250,000 10,656,250 -------------- BUILDING MATERIALS 0.45% Sherwin-Williams Co 300,000 8,231,250 -------------- CHEMICALS 1.85% Dow Chemical . 225,000 19,912,500 Great Lakes Chemical 300,000 13,950,000 -------------- 33,862,500 -------------- COMPUTER RELATED 6.18% Compaq Computer* 625,000 40,937,500 Computer Associates International 250,000 16,718,750 Electronic Data Systems 400,000 15,125,000 Hewlett-Packard Co 300,000 18,393,750 International Business Machines 220,000 22,192,500 -------------- 113,367,500 -------------- CONGLOMERATES 0.41% Textron Inc 120,000 7,477,500 -------------- DISTRIBUTION 1.35% Ikon Office Solutions 200,000 5,200,000 SuperValu Inc 500,000 19,625,000 -------------- 24,825,000 -------------- ELECTRIC UTILITIES 4.23% DTE Energy 600,000 17,775,000 Edison International 800,000 19,300,000 Energy Group PLC Sponsored ADR 100,000 4,043,750 Texas Utilities 500,000 17,437,500 Unicom Corp 800,000 18,900,000 -------------- 77,456,250 -------------- ELECTRICAL EQUIPMENT 1.02% General Electric 300,000 18,750,000 -------------- FOODS 2.54% Archer-Daniels-Midland Co 787,500 17,029,687 Heinz (H J) Co 300,000 12,487,500 Unilever NV New York Shrs 85,000 17,106,250 -------------- 46,623,437 -------------- GOLD & PRECIOUS METALS MINING 0.75% Phelps Dodge 170,000 13,674,375 -------------- HEALTH CARE DRUGS - PHARMACEUTICALS 4.67% Abbott Laboratories 175,000 10,489,062 American Home Products 200,000 14,400,000 Bristol-Myers Squibb 250,000 19,000,000 Lilly (Eli) & Co 150,000 15,693,750 Merck & Co 100,000 9,181,250 Schering-Plough Corp 350,000 16,800,000 -------------- 85,564,062 -------------- HEALTH CARE RELATED 1.03% Columbia/HCA Healthcare 600,000 18,937,500 -------------- HOUSEHOLD FURNITURE & APPLIANCES 0.86% Whirlpool Corp 275,000 15,743,750 -------------- INSURANCE 3.23% American General 300,000 14,456,250 Lincoln National 150,000 10,040,625 Ohio Casualty 375,000 17,437,500 SAFECO Corp 350,000 17,193,750 -------------- 59,128,125 -------------- INSURANCE BROKERS 0.82% Marsh & McLennan 220,000 15,015,000 -------------- INVESTMENT BANK/BROKER FIRM 1.19% Morgan Stanley Dean Witter Discovery & Co 453,750 21,836,719 -------------- MANUFACTURING 1.89% Minnesota Mining & Manufacturing 130,000 11,683,750 National Service Industries 265,000 11,726,250 York International 250,000 11,218,750 -------------- 34,628,750 -------------- OFFICE EQUIPMENT & SUPPLIES 1.03% Xerox Corp 250,000 18,875,000 -------------- OIL & GAS RELATED 3.48% Amoco Corp 150,000 14,184,375 Norsk Hydro AS Sponsored ADR 350,000 18,790,625 Repsol SA Sponsored ADR 450,000 17,718,750 Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 260,000 13,195,000 -------------- 63,888,750 -------------- PAPER & FOREST PRODUCTS 1.49% Hanson PLC Sponsored ADR 700,000 16,800,000 Westvaco Corp 310,000 10,501,250 -------------- 27,301,250 -------------- POLLUTION CONTROL 0.76% Browning-Ferris Industries* 400,000 13,975,000 -------------- PUBLISHING 1.51% Dun & Bradstreet 500,000 14,000,000 Gannett Co 140,000 13,641,250 -------------- 27,641,250 -------------- RAILROADS 0.82% Illinois Central Series A 450,000 15,103,125 -------------- RETAIL 4.08% CVS Corp 200,000 11,275,000 Dillard's Department Store Class A 450,000 18,000,000 K mart Corp* 500,000 6,937,500 Penney (J C) Co 275,000 16,500,000 Rite Aid 175,000 8,760,938 Tandy Corp* 200,000 13,275,000 -------------- 74,748,438 -------------- SPECIALTY PRINTING 0.81% Deluxe Corp 450,000 14,821,875 -------------- TELECOMMUNICATIONS - LONG DISTANCE 0.71% British Telecommunications PLC Sponsored ADR Final Installment 200,000 12,937,500 -------------- TELEPHONE 3.17% Bell Atlantic 230,400 16,675,200 Southern New England Telecommunications 300,000 11,475,000 Telefonica de Espana SA Sponsored ADR 150,000 11,662,500 Telefonos de Mexico SA de CV Sponsored ADR Representing Ord Series L Shrs 400,000 18,350,000 -------------- 58,162,700 -------------- TEXTILE - APPAREL MANUFACTURING 1.26% Liz Claiborne 200,000 8,912,500 VF Corp 160,000 14,140,000 -------------- 23,052,500 -------------- TEXTILE - HOME FURNISHINGS 0.24% Shaw Industries 400,000 4,475,000 -------------- TOBACCO 1.61% Fortune Brands 250,000 8,593,750 Gallaher Group PLC Sponsored ADR* 250,000 4,484,375 Philip Morris 375,000 16,359,375 -------------- 29,437,500 -------------- TRUCKERS 0.80% Caliber System 350,000 14,612,500 -------------- TOTAL COMMON STOCKS (Cost $782,684,142) 1,173,942,168 -------------- FIXED INCOME SECURITIES 25.64% US Government Obligations 18.23% US Treasury Bonds 11.250%, 2/15/2015 $ 12,450,000 18,375,428 9.375%, 2/15/2006 $ 17,450,000 20,836,399 9.250%, 2/15/2016 $ 20,000,000 25,456,259 8.125%, 8/15/2019 $ 10,000,000 11,631,250 7.250%, 8/15/2022 $ 20,000,000 21,312,500 US Treasury Notes 8.750%, 8/15/2000 $ 25,000,000 26,757,824 8.000%, 5/15/2001 $ 19,100,000 20,240,040 7.875%, 11/15/1999 $ 17,100,000 17,746,602 6.500%, 8/15/2005 $ 28,000,000 28,210,000 6.375%, 7/15/1999 $ 25,000,000 25,195,324 6.375%, 1/15/2000 $ 15,000,000 15,126,569 6.375%, 8/15/2002 $ 22,150,000 22,295,370 6.250%, 2/15/2003 $ 22,000,000 21,993,135 5.750%, 8/15/2003 $ 17,000,000 16,548,445 5.500%, 2/28/1999 $ 25,000,000 24,859,375 US Treasury Security Stripped Interest Payment, Generic Tint Payment Zero Coupon, 8/15/2003 $ 25,250,000 17,452,040 -------------- TOTAL US GOVERNMENT OBLIGATIONS (Cost $329,459,061) 334,036,560 -------------- US Government Agency Obligations 4.35% Federal Home Loan Mortgage, Gold Participation Certificates 8.000%, 10/1/2010 $ 4,488,166 4,642,783 8.000%, 5/1/2024 $ 6,815,600 7,038,061 7.500%, 12/1/2026 $ 9,924,310 10,052,134 6.500%, 7/1/2001 $ 6,314,593 6,325,706 Federal National Mortgage Association, Gtd Mortgage Pass-Through Certificates 8.500%, 3/1/2010 $ 6,806,904 7,088,505 8.000%, 7/1/2024 $ 8,739,718 9,003,307 7.500%, 8/1/2007 $ 1,577,152 1,611,014 6.500%, 5/1/2026 $ 7,602,103 7,342,262 6.000%, 5/1/2009 $ 9,307,457 9,071,977 Government National Mortgage Association I, Pass-Through Certificates 7.500%, 3/15/2026 $ 5,546,970 5,599,721 7.000%, 10/15/2008 $ 978,718 987,516 7.000%, 12/15/2022 $ 220,529 219,365 7.000%, 12/15/2025 $ 8,890,133 8,798,030 6.500%, 10/15/2008 $ 965,430 959,638 6.000%, 11/15/2008 $ 1,030,432 1,005,619 -------------- TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $79,097,651) 79,745,638 -------------- Corporate Bonds 2.79% AEROSPACE & DEFENSE 0.08% Rockwell International, Notes 6.625%, 6/1/2005 $ 1,500,000 1,491,964 AUTOMOBILES 0.04% Ford Motor, Notes 7.500%, 11/15/1999 $ 750,000 767,391 -------------- BANKS 0.40% BankAmerica Corp, Sub Notes 6.875%, 6/1/2003 $ 4,000,000 4,018,080 National City, Sub Notes 7.200%, 5/15/2005 $ 2,000,000 2,038,146 NationsBank Corp, Sr Notes 5.375%, 4/15/2000 $ 1,250,000 1,220,306 -------------- 7,276,532 -------------- BEVERAGES 0.08% PepsiCo Inc, Deb, 7.750%, 10/1/1998 $ 1,500,000 1,526,952 -------------- CONSUMER FINANCE 0.04% Beneficial Corp, Medium-Term Notes 5.350%, 10/8/1998 $ 800,000 793,845 -------------- ELECTRIC UTILITIES 0.25% Duke Power 1st & Refunding Mortgage 7.500%, 4/1/1999 $ 1,000,000 1,018,378 Medium-Term Notes 6.125%, 7/22/2003 $ 2,900,000 2,810,741 Union Electric, 1st Mortgage 6.750%, 10/15/1999 $ 750,000 756,582 -------------- 4,585,701 -------------- FINANCIAL 0.49% Associates Corp of North America Notes, 6.375%, 10/15/2002 $ 5,000,000 4,946,834 Commercial Credit, Notes 6.375%, 9/15/2002 $ 4,000,000 3,943,204 -------------- 8,890,038 -------------- FOODS 0.33% CPC International, Medium-Term Notes, Series D, 6.875%, 10/15/2003 $ 3,000,000 3,028,188 Nabisco Inc, Notes, 8.000%, 1/15/2000 $ 3,000,000 3,098,766 -------------- 6,126,954 -------------- HEALTH CARE DRUGS - PHARMACEUTICALS 0.23% American Home Products, Notes 7.700%, 2/15/2000 $ 4,000,000 4,126,060 -------------- PUBLISHING 0.19% Gannett Co, Notes, 5.850%, 5/1/2000 $ 3,500,000 3,456,694 -------------- RETAIL 0.55% May Department Stores, Deb 6.875%, 11/1/2005 $ 4,000,000 4,023,387 Wal-Mart Stores, Notes 8.625%, 4/1/2001 $ 5,000,000 5,337,234 5.500%, 3/1/1998 $ 750,000 748,531 -------------- 10,109,152 -------------- TELECOMMUNICATIONS - LONG DISTANCE 0.11% BellSouth Telecommunications, Notes 6.500%, 6/15/2005 $ 2,000,000 1,980,246 -------------- TOTAL CORPORATE BONDS (Cost $50,955,817) 51,131,529 -------------- Foreign Corporate Obligations 0.27% BANKS 0.27% ABN Amro Bank NV, Global Sub Notes, 6.625%, 10/31/2001 (Cost $5,001,134) $ 5,000,000 4,993,574 -------------- TOTAL FIXED INCOME SECURITIES (Cost $464,513,663) 469,907,301 -------------- SHORT-TERM INVESTMENTS 10.32% US Government Obligations 5.05% US Treasury Notes 8.250%, 7/15/1998 $ 25,000,000 25,523,449 7.875%, 1/15/1998 $ 21,750,000 21,933,526 6.125%, 3/31/1998 $ 25,000,000 25,078,125 6.000%, 11/30/1997 $ 20,000,000 20,025,000 -------------- TOTAL US GOVERNMENT OBLIGATIONS (Cost $92,363,734) 92,560,100 -------------- Commercial Paper 1.09% FINANCIAL 1.09% Greenwich Funding, 5.600%, 9/2/1997 (Cost $19,996,856) $ 20,000,000 19,996,856 -------------- Repurchase Agreements 4.18% Repurchase Agreement with State Street Bank & Trust Co dated 8/29/1997 due 9/2/1997 at 5.500%, repurchased at $76,670,826 (Collateralized by US Treasury Bonds due 8/15/2019 at 8.125%, value $78,424,451) (Cost $76,624,000) $ 76,624,000 76,624,000 -------------- TOTAL SHORT-TERM INVESTMENTS (Cost $188,984,590) 189,180,956 -------------- TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $1,436,182,395) (Cost for Income Tax Purposes $1,438,652,250) $1,833,030,425 ============== VALUE EQUITY Fund COMMON STOCK 100.00% AEROSPACE & DEFENSE 3.39% Lockheed Martin 56,860 $ 5,895,671 Raytheon Co 120,000 6,600,000 -------------- 12,495,671 -------------- AUTO PARTS 1.19% Genuine Parts 142,500 4,399,687 -------------- AUTOMOBILES 2.16% Ford Motor 185,000 7,955,000 -------------- BANKS 5.55% First Chicago NBD 80,000 5,740,000 First Union 60,000 2,883,750 NationsBank Corp 111,364 6,612,238 Wachovia Corp 83,700 5,210,325 -------------- 20,446,313 -------------- BEVERAGES 1.47% PepsiCo Inc 150,000 5,400,000 -------------- BUILDING MATERIALS 1.41% Lowe's Cos 150,000 5,184,375 -------------- CHEMICALS 2.82% Dow Chemical 65,000 5,752,500 Great Lakes Chemical 100,000 4,650,000 -------------- 10,402,500 -------------- COMMUNICATIONS - EQUIPMENT & MANUFACTURING 0.67% Motorola Inc 33,500 2,458,062 -------------- COMPUTER RELATED 10.44% Compaq Computer* 114,750 7,516,125 Computer Associates International 107,750 7,205,781 Electronic Data Systems 220,000 8,318,750 Hewlett-Packard Co 120,000 7,357,500 International Business Machines 80,000 8,070,000 -------------- 38,468,156 -------------- CONGLOMERATES 1.42% Textron Inc 84,000 5,234,250 -------------- DISTRIBUTION 2.41% Ikon Office Solutions 160,000 4,160,000 Supervalu Inc 120,000 4,710,000 -------------- 8,870,000 -------------- ELECTRIC UTILITIES 3.88% DTE Energy 137,000 4,058,625 Entergy Corp 150,000 3,721,875 Southern Co 135,000 2,843,437 Unicom Corp 155,000 3,661,875 -------------- 14,285,812 -------------- ELECTRICAL EQUIPMENT 1.26% General Electric 74,200 4,637,500 -------------- ELECTRONICS - SEMICONDUCTOR 0.50% Intel Corp 20,000 1,842,500 -------------- FINANCIAL 1.63% Federal National Mortgage Association 136,500 6,006,000 -------------- FOODS 1.72% Archer-Daniels-Midland Co 194,250 4,200,656 Tyson Foods Class A 100,000 2,125,000 -------------- 6,325,656 -------------- FOOTWEAR 1.16% NIKE Inc Class B 80,000 4,270,000 -------------- GOLD & PRECIOUS METALS MINING 0.68% Phelps Dodge 31,000 2,493,563 -------------- HEALTH CARE DRUGS - PHARMACEUTICALS 8.85% Abbott Laboratories 47,000 2,817,062 Allergan Inc 130,000 4,208,750 American Home Products 52,000 3,744,000 Astra AB Sponsored ADR Representing Series A Shrs 200,000 3,200,000 Bristol-Myers Squibb 60,000 4,560,000 Lilly (Eli) & Co 15,000 1,569,375 Merck & Co 37,000 3,397,062 Schering-Plough Corp 84,000 4,032,000 Warner-Lambert Co 40,000 5,082,500 -------------- 32,610,749 -------------- HEALTH CARE RELATED 3.72% Biomet Inc 307,100 6,372,325 Columbia/HCA Healthcare 232,000 7,322,500 -------------- 13,694,825 -------------- HOUSEHOLD FURNITURE & APPLIANCES 1.55% Whirlpool Corp 100,000 5,725,000 -------------- HOUSEHOLD PRODUCTS 1.61% Kimberly-Clark Corp 125,000 5,929,688 -------------- INSURANCE 8.78% American General 100,000 4,818,750 American International Group 42,750 4,034,531 General Re 23,000 4,459,125 Jefferson-Pilot Corp 57,575 4,005,061 Loews Corp 50,000 5,096,875 SAFECO Corp 110,000 5,403,750 Torchmark Corp 120,000 4,522,500 -------------- 32,340,592 -------------- INSURANCE BROKERS 1.11% Marsh & McLennan 60,000 4,095,000 -------------- INVESTMENT BANK/BROKER FIRM 0.67% Salomon Inc 41,000 2,454,875 -------------- MACHINERY 1.87% Dover Corp 100,000 6,906,250 -------------- MANUFACTURING 1.34% York International 110,000 4,936,250 -------------- OFFICE EQUIPMENT & SUPPLIES 2.58% Pitney-Bowes Inc 45,600 3,482,700 Xerox Corp 80,000 6,040,000 -------------- 9,522,700 -------------- OIL & GAS RELATED 5.80% Amoco Corp 55,000 5,200,938 Exxon Corp 70,550 4,316,778 Norsk Hydro AS Sponsored ADR 60,000 3,221,250 Repsol SA Sponsored ADR 105,400 4,150,125 Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 88,304 4,481,428 -------------- 21,370,519 -------------- PAPER & FOREST PRODUCTS 1.25% Hanson PLC Sponsored ADR 50,000 1,200,000 Westvaco Corp 100,050 3,389,194 -------------- 4,589,194 -------------- POLLUTION CONTROL 1.04% Waste Management 120,000 3,840,000 -------------- PUBLISHING 1.48% Dun & Bradstreet 195,000 5,460,000 -------------- RAILROADS 1.50% Illinois Central Series A 165,000 5,537,813 -------------- RESTAURANTS 1.20% McDonald's Corp 93,300 4,414,256 -------------- RETAIL 3.61% Dillard's Department Store Class A 115,000 4,600,000 Rite Aid 100,000 5,006,250 Wal-Mart Stores 103,900 3,688,450 -------------- 13,294,700 -------------- TELEPHONE 1.56% Southern New England Telecommunications 150,000 5,737,500 -------------- TEXTILE - APPAREL MANUFACTURING 1.82% Unifi Inc 175,000 6,715,625 -------------- TEXTILE - HOME FURNISHINGS 0.53% Shaw Industries 175,000 1,957,813 -------------- TOBACCO 2.69% Fortune Brands 120,000 4,125,000 Philip Morris 132,200 5,767,225 -------------- 9,892,225 -------------- TOYS 1.68% Mattel Inc 185,000 6,185,938 -------------- TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $266,169,020) (Cost for Income Tax Purposes $266,932,603) $ 368,386,557 ==============
* Security is non-income producing. See Notes to Financial Statements INVESCO Value Trust STATEMENT OF ASSETS AND LIABILITIES August 31, 1997
Intermediate Government Total Return Value Equity Bond Fund Fund Fund ----------------------------------------------------------- ASSETS Investment Securities: At Cost~ $44,417,906 $1,436,182,395 $266,169,020 =========================================================== At Value~ $44,725,120 $1,833,030,425 $368,386,557 Cash 3,581 479,725 448,905 Receivables: Investment Securities Sold 0 0 489,217 Fund Shares Sold 68,338 7,871,403 765,461 Dividends and Interest 502,554 9,363,419 736,777 Prepaid Expenses and Other Assets 18,270 122,756 44,838 ----------------------------------------------------------- TOTAL ASSETS 45,317,863 1,850,867,728 370,871,755 ----------------------------------------------------------- LIABILITIES Payables: Distributions to Shareholders 15,084 209,466 33,657 Fund Shares Repurchased 856,839 5,043,497 1,063,767 Accrued Expenses and Other Payables 5,272 20,660 8,711 ----------------------------------------------------------- TOTAL LIABILITIES 877,195 5,273,623 1,106,135 ----------------------------------------------------------- Net Assets at Value $44,440,668 $1,845,594,105 $369,765,620 =========================================================== NET ASSETS Paid-in Capital $44,705,750 $1,430,960,585 $249,058,417 Accumulated Undistributed Net Investment Income (See Note 1) 0 106,017 17,483 Accumulated Undistributed Net Realized Gain (Loss) on Investment Securities and Foreign Currency Transactions (572,296) 17,679,473 18,472,183 Net Appreciation of Investment Securities (See Notes 1) 307,214 396,848,030 102,217,537 ----------------------------------------------------------- Net Assets at Value $44,440,668 $1,845,594,105 $369,765,620 =========================================================== Shares Outstanding* 3,572,904 66,466,489 13,063,984 Net Asset Value, Offering and Redemption Price per Share $12.44 $27.77 $28.30 ===========================================================
~ Investment securities at cost and value at August 31, 1997 include repurchase agreements of $1,724,000 and $76,624,000 for Intermediate Government Bond and Total Return 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 August 31, 1997, there was an unlimited number of authorized Fund shares. See Notes to Financial Statements INVESCO Value Trust STATEMENT OF OPERATIONS Year Ended August 31, 1997
Intermediate Government Total Return Value Equity Bond Fund Fund Fund ----------------------------------------------------------- INVESTMENT INCOME INCOME Dividends $ 0 $ 23,898,737 $ 6,243,692 Interest 2,833,739 33,302,056 931,093 Foreign Taxes Withheld 0 (548,396) (50,896) ------------------------------------------------------------ TOTAL INCOME 2,833,739 56,652,397 7,123,889 ------------------------------------------------------------ EXPENSES Investment Advisory Fees 268,593 9,140,227 2,250,039 Transfer Agent Fees 251,070 2,332,422 610,115 Administrative Fees 16,715 224,249 55,001 Custodian Fees and Expenses 13,316 199,691 47,971 Professional Fees and Expenses 14,225 60,021 24,779 Registration Fees and Expenses 27,972 179,562 59,101 Reports to Shareholders 9,430 59,721 33,029 Trustees' Fees and Expenses 9,671 65,158 19,539 Other Expenses 4,322 62,040 12,274 ------------------------------------------------------------ TOTAL EXPENSES 615,314 12,323,091 3,111,848 Fees and Expenses Absorbed by Investment Adviser (159,761) 0 0 Fees and Expenses Paid Indirectly (7,109) (167,273) (34,115) ------------------------------------------------------------ NET EXPENSES 448,444 12,155,818 3,077,733 ------------------------------------------------------------ NET INVESTMENT INCOME 2,385,295 44,496,579 4,046,156 ------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES Net Realized Gain on Investment Securities and Foreign Currency Transactions 126,618 20,361,309 20,055,067 Change in Net Appreciation/Depreciation of Investment Securities and Foreign Currency Transactions 348,594 269,713,544 57,254,344 ------------------------------------------------------------ NET GAIN ON INVESTMENT SECURITIES 475,212 290,074,853 77,309,411 ------------------------------------------------------------ Net Increase in Net Assets from Operations $ 2,860,507 $ 334,571,432 $ 81,355,567 ============================================================
See Notes to Financial Statements INVESCO Value Trust STATEMENT OF CHANGES IN NET ASSETS Year Ended August 31
Intermediate Government Bond Fund Total Return Fund -------------------------------- -------------------------------- 1997 1996 1997 1996 OPERATIONS Net Investment Income $ 2,385,295 $ 2,274,936 $ 44,496,579 $ 29,217,334 Net Realized Gain on Investment Securities and Foreign Currency Transactions 126,618 416,138 20,361,309 6,273,916 Change in Net Appreciation (Depreciation) of Investment Securities and Foreign Currency Transactions 348,594 (1,505,858) 269,713,544 48,298,544 ------------------------------- --------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 2,860,507 1,185,216 334,571,432 83,789,794 ------------------------------- --------------------------------- DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income (2,385,295) (2,261,908) (44,405,999) (29,200,386) Net Realized Gain on Investment Securities and Foreign Currency Transactions 0 0 (4,314,901) (4,352,151) ------------------------------- --------------------------------- TOTAL DISTRIBUTIONS (2,385,295) (2,261,908) (48,720,900) (33,552,537) ------------------------------- --------------------------------- FUND SHARE TRANSACTIONS Proceeds from Sales of Shares 26,474,792 28,705,527 997,370,885 609,919,491 Reinvestment of Distributions 2,208,130 2,132,961 47,962,510 32,908,763 ------------------------------- --------------------------------- 28,682,922 30,838,488 1,045,333,395 642,828,254 Amounts Paid for Repurchases of Shares (24,665,970) (27,152,636) (517,740,980) (224,382,843) ------------------------------- --------------------------------- NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 4,016,952 3,685,852 527,592,415 418,445,411 ------------------------------- --------------------------------- Total Increase in Net Assets 4,492,164 2,609,160 813,442,947 468,682,668 NET ASSETS Beginning of Period 39,948,504 37,339,344 1,032,151,158 563,468,490 ------------------------------- --------------------------------- End of Period $ 44,440,668 $ 39,948,504 $1,845,594,105 $1,032,151,158 =============================== ================================= Accumulated Undistributed Net Investment Income Included in Net Assets at End of Period (See Note 1) 0 0 106,017 11,343 -------------------------------------------------------------- FUND SHARE TRANSACTIONS Shares Sold 2,132,651 2,283,726 39,163,785 27,294,383 Shares Issued from Reinvestment of Distributions 178,829 169,140 1,844,859 1,459,274 ------------------------------- --------------------------------- 2,311,480 2,452,866 41,008,644 28,753,657 Shares Repurchased (1,985,434) (2,159,851) (20,216,862) (9,971,539) ------------------------------- --------------------------------- Net Increase in Fund Shares 326,046 293,015 20,791,782 18,782,118 =============================== =================================
See Notes to Financial Statements INVESCO Value Trust STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Year Ended August 31
Value Equity Fund ------------------------------- 1997 1996 OPERATIONS Net Investment Income $ 4,046,156 $ 3,014,041 Net Realized Gain on Investment Securities and Foreign Currency Transactions 20,055,067 4,119,794 Change in Net Appreciation of Investment Securities and Foreign Currency Transactions 57,254,344 20,794,083 ------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 81,355,567 27,927,918 ------------------------------- DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income (4,071,368) (2,995,302) Net Realized Gain on Investment Securities and Foreign Currency Transactions (5,507,949) (3,086,946) ------------------------------- TOTAL DISTRIBUTIONS (9,579,317) (6,082,248) ------------------------------- FUND SHARE TRANSACTIONS Proceeds from Sales of Shares 517,380,902 214,313,579 Reinvestment of Distributions 9,315,225 5,906,003 ------------------------------- 526,696,127 220,219,582 Amounts Paid for Repurchases of Shares (428,752,415) (195,190,483) ------------------------------- NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 97,943,712 25,029,099 ------------------------------ Total Increase in Net Assets 169,719,962 46,874,769 NET ASSETS Beginning of Period 200,045,658 153,170,889 ------------------------------ End of Period $369,765,620 $200,045,658 =============================== Accumulated Undistributed Net Investment Income Included in Net Assets at End of Period $ 17,483 $ 42,661 ------------------------------------- FUND SHARE TRANSACTIONS Shares Sold 20,198,347 9,902,174 Shares Issued from Reinvestment of Distributions 378,067 277,102 ------------------------------- 20,576,414 10,179,276 Shares Repurchased (16,506,962) (9,026,840) ------------------------------- Net Increase in Fund Shares 4,069,452 1,152,436 ===============================
See Notes to Financial Statements INVESCO Value Trust NOTES TO FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Value Trust (the "Trust") is 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 objective of each Fund is 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 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. In the event of default on the obligation to repurchase, the Trust has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. 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. Mortgage paydown gain/loss is treated as ordinary income for tax purposes and is included in interest income on the Statement of Operations. 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, market discount 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 undistributed net investment income and increase net unrealized appreciation of investment securities by $195,484 and $1,919,380 for Intermediate Government Bond and Total Return Funds, respectively. Such accounting change had no effect on net asset value per share. The Trust's use of short-term forward foreign currency contracts may subject it to certain risks as a result of unanticipated movements in foreign exchange rates. The Fund does not hold short-term forward foreign currency contracts for trading purposes. 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. 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, 1997, Intermediate Government Bond Fund had $411,995, $16,031 and $8,387 in net capital loss carryovers which expire in the years 2003, 2004 and 2005, 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. Of the ordinary income distributions declared for the year ended August 31, 1997, 44.31% for Total Return Fund and 89.87% for Value Equity Fund qualified for the dividends received deduction available to the Trust's corporate 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. Income dividends are reinvested at the ex dividend date. 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, amortized premiums, foreign currency transactions, nontaxable dividends, net operating losses and expired capital loss carryforwards. For the year ended August 31, 1997, the effects of such differences were as follows:
Accumulated Accumulated Undistributed Undistributed Net Realized Net Investment Gain on Paid-In Fund Income Investments Capital - --------------------------------------------------------------------------------------------- Intermediate Government Bond Fund $195,484 $(195,484) - Total Return Fund 1,923,474 (1,919,376) $ (4,098) Value Equity Fund 34 (34) -
Net Investment income, net realized gains and net assets were not affected. 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, Transfer Agent Fees are reduced by credits earned by each Fund from security brokerage transactions under certain broker/service agreements with third parties. Such credits are included in Fees and Expenses Paid Indirectly in the Statement of Operations. For the year ended August 31, 1997, Fees and Expenses Paid Indirectly consisted of the following: Custodian Fees Transfer Fund and Expenses Agent Fees - -------------------------------------------------------------------------------- Intermediate Government Bond Fund $ 7,109 $ 0 Total Return Fund 91,539 75,734 Value Equity Fund 34,103 12 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 Fund. NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended August 31, 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 $334,924,181 $ 57,764,719 Value Equity Fund 206,698,944 104,495,742 For the year ended August 31, 1997, the aggregate cost of purchases and proceeds from sales of U.S. Government securities were as follows: Fund Purchases Sales - -------------------------------------------------------------------------------- Intermediate Government Bond Fund $ 23,299,219 $20,977,579 Total Return Fund 153,243,664 0 NOTE 4 - APPRECIATION AND DEPRECIATION. At August 31, 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 $ 291,356 $ 128,020 $ 163,336 Total Return Fund 402,842,089 8,463,914 394,378,175 Value Equity Fund 104,888,866 3,434,912 101,453,954
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 equal to 40% of the retainer fee at the time of retirement. Pension expenses for the year ended August 31, 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 $ 605 $ 1,477 $ 3,190 Total Return Fund 13,333 21,712 47,585 Value Equity Fund 2,824 6,172 13,351
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 maximum 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 August 31, 1997, there were no such borrowings. INVESCO Value Trust FINANCIAL HIGHLIGHTS (For a Fund Share Outstanding Throughout Each Period)
Period Year Ended Ended Year Ended August 31 August 31 December 31 ------------------------------------------------------ ---------- ------------ 1997 1996 1995 1994 1993^ 1992 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 ------------------------------------------------------ ---------- ------------ INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.66 0.73 0.73 0.70 0.48 0.90 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 0.14 (0.34) 0.48 (0.75) 0.57 (0.16) ------------------------------------------------------ ---------- ------------ Total from Investment Operations 0.80 0.39 1.21 (0.05) 1.05 0.74 ------------------------------------------------------ ---------- ------------ LESS DISTRIBUTIONS Dividends from Net Investment Income+ 0.66 0.73 0.73 0.70 0.48 0.90 Distributions from Capital Gains 0.00 0.00 0.00 0.34 0.00 0.05 ------------------------------------------------------ ---------- ------------ Total Distributions 0.66 0.73 0.73 1.04 0.48 0.95 ------------------------------------------------------ ---------- ------------ Net Asset Value - End of Period $12.44 $12.30 $12.64 $12.16 $13.25 $12.68 ====================================================== ========== ============ TOTAL RETURN 6.64% 3.12% 10.36% (0.37%) 8.38%* 6.03% RATIOS Net Assets - End of Period ($000 Omitted) $44,441 $39,949 $37,339 $31,861 $39,384 $29,649 Ratio of Expenses to Average Net Assets # 1.02%@ 1.15%@ 1.20% 1.07% 0.96%~ 0.97% Ratio of Net Investment Income to Average Net Assets# 5.32% 5.81% 6.04% 5.58% 5.48%~ 6.38% Portfolio Turnover Rate 37% 63% 92% 49% 34%* 93%
^ From January 1, 1993 to August 31, 1993. + 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 years ended August 31, 1997 and 1996. If such expenses had not been voluntarily absorbed, ratio of expenses to average net assets would have been 1.37% and 1.24%, respectively, and ratio of net investment income to average net assets would have been 4.97% 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)
Period Year Ended Ended Year Ended August 31 August 31 December 31 ---------------------------------------------------- --------- ----------- 1997 1996 1995 1994 1993^ 1992 Total Return Fund PER SHARE DATA Net Asset Value - Beginning of Period $22.60 $20.95 $18.54 $18.27 $17.18 $16.43 --------------------------------------------------- --------- ----------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.77 0.73 0.72 0.69 0.40 0.66 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 5.26 1.78 2.46 0.60 1.09 0.93 --------------------------------------------------- --------- ----------- Total from Investment Operations 6.03 2.51 3.18 1.29 1.49 1.59 --------------------------------------------------- --------- ----------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.77 0.73 0.72 0.60 0.40 0.65 In Excess of Net Investment Income+ 0.00 0.00 0.00 0.09 0.00 0.00 Distributions from Capital Gains 0.09 0.13 0.05 0.17 0.00 0.19 In Excess of Capital Gains 0.00 0.00 0.00 0.16 0.00 0.00 --------------------------------------------------- --------- ----------- Total Distributions 0.86 0.86 0.77 1.02 0.40 0.84 --------------------------------------------------- --------- ----------- Net Asset Value - End of Period $27.77 $22.60 $20.95 $18.54 $18.27 17.18 =================================================== ========= =========== TOTAL RETURN 27.01% 12.06% 17.54% 7.22% 8.72%* 9.84% RATIOS Net Assets - End of Period ($000 Omitted) $1,845,594 $1,032,151 $563,468 $292,765 $220,224 $137,196 Ratio of Expenses to Average Net Assets 0.86%@ 0.89%@ 0.95% 0.96% 0.93%~ 0.88% Ratio of Net Investment Income to Average Net Assets 3.11% 3.44% 3.97% 3.31% 3.51%~ 4.06% Portfolio Turnover Rate 4% 10% 30% 12% 19%* 13% Average Commission Rate Paid^^ $ 0.0520 $ 0.0539 - - - -
^ From January 1, 1993 to August 31, 1993. + Distributions in excess of net 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 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)
Period Year Ended Ended Year Ended August 31 August 31 December 31 ---------------------------------------------------- ---------- ----------- 1997 1996 1995 1994 1993^ 1992 Value Equity Fund PER SHARE DATA Net Asset Value - Beginning of Period $22.24 $19.53 $18.12 $17.79 $16.91 $16.57 --------------------------------------------------- ---------- ----------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.35 0.35 0.39 0.36 0.24 0.36 Net Gains on Securities (Both Realized and Unrealized) 6.62 3.09 2.58 1.20 0.88 0.45 --------------------------------------------------- ---------- ----------- Total from Investment Operations 6.97 3.44 2.97 1.56 1.12 0.81 --------------------------------------------------- ---------- ----------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.35 0.35 0.39 0.31 0.24 0.34 In Excess of Net Investment Income 0.00 0.00 0.00 0.04 0.00 0.00 Distributions from Capital Gains 0.56 0.38 1.17 0.88 0.00 0.13 --------------------------------------------------- ---------- ----------- Total Distributions 0.91 0.73 1.56 1.23 0.24 0.47 --------------------------------------------------- ---------- ----------- Net Asset Value - End of Period $28.30 $22.24 $19.53 $18.12 $17.79 $16.91 =================================================== ========== =========== TOTAL RETURN 32.04% 17.77% 17.84% 9.09% 6.65%* 4.98% RATIOS Net Assets - End of Period ($000 Omitted) $369,766 $200,046 $153,171 $111,850 $81,914 $78,609 Ratio of Expenses to Average Net Assets 1.04%@ 1.01%@ 0.97% 1.01% 1.00%~ 0.91% Ratio of Net Investment Income to Average Net Assets 1.35% 1.64% 2.17% 1.80% 2.07%~ 2.19% Portfolio Turnover Rate 37% 27% 34% 53% 35%* 37% Average Commission Rate Paid^^ 0.0538 0.0589 - - - -
^ From January 1, 1993 to August 31, 1993. * 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 expenses 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. REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Trustees of INVESCO Value Trust In our opinion, the accompanying statement of assets and liabilities, including the statement of investment securities, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of INVESCO Intermediate Government Bond Fund, INVESCO Total Return Fund and INVESCO Value Equity Fund (constituting INVESCO Value Trust, hereafter referred to as the "Fund") at August 31, 1997, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 1997 by correspondence with the custodian and the application of alternative auditing procedures where securities purchased had not been received, provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Denver, Colorado October 8, 1997 FAMILY OF FUNDS Newspaper Fund Name Fund Code Ticker Symbol Abbreviation - -------------------------------------------------------------------------------- International International Growth 49 FSIGX IntlGr Asian Growth 41 IVAGX AsianGr European 56 FEURX Europ European Small Company 37 IVECX EuroSmCo Latin American Growth 34 IVSLX LatinAmGr Pacific Basin 54 FPBSX PcBas - -------------------------------------------------------------------------------- Sector Energy 50 FSTEX Enrgy Environmental Services 59 FSEVX Envirn Financial Services 57 FSFSX FinSvc Gold 51 FGLDX Gold Health Sciences 52 FHLSX HlthSc Leisure 53 FLISX Leisur Realty 42 IVSRX Realty Technology 55 FTCHX Tech Utilities 58 FSTUX Util Worldwide Capital Goods 38 ISWGX WldCap Worldwide Communications 39 ISWCX WldCom - -------------------------------------------------------------------------------- Capital Appreciation Growth 10 FLRFX Grwth Dynamics 20 FIDYX Dynm Small Company 74 IDSCX DivSmCo Emerging Growth 60 FIEGX Emgrth - -------------------------------------------------------------------------------- Growth & Income Industrial Income 15 FIIIX IndInc Value Equity 46 FSEQX ValEq Multi-Asset Allocation 70 IMAAX MulAstAl Balanced 71 IMABX Bal Total Return 48 FSFLX TotRtn - -------------------------------------------------------------------------------- Bond Short-Term Bond 33 INIBX ShTrBd Intermediate Government Bond 47 FIGBX IntGov U.S. Government Securities 32 FBDGX USGvt Select Income 30 FBDSX SelInc High Yield 31 FHYPX HiYld - -------------------------------------------------------------------------------- Tax-Exempt Tax-Free Intermediate Bond 36 IVTIX * Tax-Free Long-Term Bond 35 FTIFX TxFre - -------------------------------------------------------------------------------- Money Market U.S. Government Money Fund 44 FUGXX InvGvtMF Cash Reserves 25 FDSXX InvCshR Tax-Free Money Fund 40 FFRXX InvTaxFree * This fund does not meet size requirements to be assigned a ticker symbol in newspaper listings. For more information about any of the INVESCO Funds, including management fees and expenses, please call us at 1-800-525-8085 for a prospectus. Read it carefully before you invest or send money. INVESCO FUNDS INVESCO Distributors, Inc., (SM) Distributor (formerly INVESCO Funds Group, Inc., Distributor) Post Office Box 173706 Denver, CO 80217-3706 1-800-525-8085 PAL(R): 1-800-424-8085 http://www.invesco.com If you're in Denver, visit one of our convenient Investor Centers: Cherry Creek, 155-B Fillmore Street Denver Tech Center, 7800 East Union Avenue, Lobby Level -----END PRIVACY-ENHANCED MESSAGE-----