-----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, OtpFP0PWrrgyWHTM7UlaoA6Cm3inKSG2KOeLMD/tnh7r5XoX2EjdW2dJ/esRJmyd 2JK+VUT54Qyf02RF79v1cw== 0000789940-98-000004.txt : 19980427 0000789940-98-000004.hdr.sgml : 19980427 ACCESSION NUMBER: 0000789940-98-000004 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980424 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: 98600619 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, 1998 INVESCO VALUE FUNDS You should know what INVESCO knows. INVESCO FUNDS Market Overview March 1998 Like a great prize fighter, it appears that the U.S. economy has taken Asia's best punch and continues to fight. At the beginning of the Asian financial crisis, in the summer of 1997, investment professionals postulated that Asian currency problems were "isolated," and would have little effect on the U.S. economy. Then, as the contagion spread, market pundits theorized that the crisis would derail economic growth in the U.S. and possibly devastate most of the world's financial markets -- wrong again. As with most financial crises, speculation on the length and severity of the situation varies from extreme pessimism to extreme optimism, with the truth usually between the two. Over the last six months, this uncertainty increased volatility in the equity markets -- producing both the first market correction in more than seven years and record highs for most indexes. However, as fears of deflation swept through the economy, fixed-income markets experienced a significant rally, with high-quality obligations realizing the strongest returns. With so much uncertainty regarding the direction of the U.S. economy, it's important to examine the known facts: o The U.S. economy is still the dominant economy in the world. GDP (Gross Domestic Product) grew 3.8% last year -- the fastest rate since 1988. o U.S. exports to the Asian/Pacific Rim region are relatively minimal, currently representing less than 15% of our total exports. o Inflation remains subdued, as both consumer and producer prices remain stable. o Consumer confidence is at its highest level in more than 27 years. o Unemployment is at historically low levels, and real wages are starting to increase. o The chronic U.S. budget deficit might become a surplus in the next few years. It appears that the domestic economy is still poised for growth with benign inflation. Although the Asian financial crisis will influence the profitability of certain industries, it will probably have only a minor effect on the U.S. expansion, as consumer demand remains strong here and in Europe. In fact, the crisis may have been a positive for the U.S, as it applied the brakes to an exuberant economy before it had the chance to overheat. Plus, the crisis may create necessary reforms in Asian economies which could allow for greater global competition. Nonetheless, 1998 may be a more selective stock market with greater volatility compared to the last three years. For fixed-income investors, deflationary pressures produced by the Asian crisis should keep both consumer and producer prices in check as cheaper foreign goods flood the U.S. markets. This may keep the Federal Reserve Board from changing the interest rate environment until the crisis has washed through the U.S. economy. The one possible inflationary pressure remains increasing real wages, given low unemployment rates. Nevertheless, the overall outlook for the fixed-income markets continues to be positive. 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 2/28/98. 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 Average Annual Total Return as of 2/28/98 (2) --------------------------------- 1 Year 6.89% --------------------------------- 5 Years 5.53% --------------------------------- 10 Years 7.32% --------------------------------- Graph: 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 Government/Corporate Bond Intermediate Index, assuming in each case reinvestment of all dividends and capital gain distributions, for the ten year period ended 2/28/98. Intermediate Government Bond Fund For the six-month period ended 2/28/98, INVESCO Intermediate Government Bond Fund had a total return of 3.74%, compared to a total return of 4.56% for the Lehman Intermediate Government Bond Index. (Of course, past performance is not a guarantee of future results.)(1),(2) The fund targets a very specific maturity segment of the fixed-income market - -- bonds maturing within three to five years. Because of this narrow focus, the fund may overperform or underperform over short market cycles. During the last six months, we extended the duration of the fund as we have become less cautious regarding the interest rate environment. (Duration is the weighted average term-to-maturity of a security's cash flows, generally used to measure the price volatility of a bond.) In our view, both the Asian financial crisis and the potential budget surplus bode well for interest rates and the fixed-income market. Within this environment of decreasing interest rates, we have maintained our standard exposure to Treasuries and mortgage-backed securities, making only minimal adjustments between these obligations during the last six months. We will continue to employ our value-oriented bond management style to evaluate the return possibilities for these two types of obligations, and modify portfolio allocations accordingly. One area that is looking more attractive is intermediate-term corporate bonds. As spreads widen between these securities and Treasuries, we may selectively add these obligations to the portfolio. 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 Average Annual Total Return as of 2/28/98 (2) --------------------------------- 1 Year 25.43% --------------------------------- 5 Years 16.43% --------------------------------- 10 Years 14.11% --------------------------------- Total Return Fund For the six-month period ended 2/28/98, INVESCO Total Return Fund had a total return of 12.50%, compared to a total return of 17.62% for the S&P 500, and 6.09% for the Lehman Government/Corporate Bond Index. The fund outperformed its peer group for the same period, besting the average return of 9.93% as measured by the Lipper Flexible Portfolio objective. (Lipper Analytical Services, Inc., is an independent mutual fund analyst, which tracks total return unadjusted for commissions. Of course, past performance is not a guarantee of future results.)(1),(2) The fund seeks to add value in three ways: through asset allocation, stock selection, and bond strategy. Asset allocation decisions are based on the difference between returns on 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; 60% stocks and 40% bonds is considered a neutral position. Historically, our value-based, conservative investment philosophy has helped create a higher-quality, lower-risk portfolio with minimal portfolio turnover. Graph: 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 Lehman Government/Corporate Bond Intermediate and S&P 500 Indexes, assuming in each case reinvestment of all dividends and capital gain distributions, for the ten year period ended 2/28/98. Our analysis continues to favor stocks relative to other investments. With the spread on the 30-year Treasury bond yield and INVESCO's implied rate of return for equities being greater than 300 basis points, equity investors are presently being rewarded with premium returns. As long as inflation remains in check and interest rates are low, we consider our current equity valuations appropriate, and we have adjusted the portfolio accordingly. As of 2/28/98, the fund's approximate allocation was 26% bonds, 67% equities, and 7% in cash/cash equivalents. Individual stock selection continues to drive the equity performance of the fund. We employ a value-oriented process to identify securities that may be mispriced by the market. Many times these stocks will exhibit lower price-to-earnings ratios and higher dividend yields compared to the broad equity market. Two stocks that we presently favor are Merck & Co. and Dun & Bradstreet. Merck & Co. has produced strong returns for the fund over the last six months, as large-cap pharmaceuticals continued to benefit from an improved regulatory environment and strong product pipelines. Dun & Bradstreet recently completed a restructuring of its operations which should increase its future profitability. The fund's bond selection process seeks to identify fixed-income securities undervalued by the broad market. The analysis of historical relationships provides the framework within which we make decisions concerning maturity, market sector, and individual issue selection. Presently, we favor mortgage-backed securities and continue to underweight corporate obligations. 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. Graph: 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 2/28/98. Value Equity Fund For the six-month period ended 2/28/98, INVESCO Value Equity Fund achieved a total return of 15.12%, compared to a total return of 17.62% for the S&P 500. However, the fund outperformed its peer group for the same period, beating the average return of 13.21% for funds in the Lipper Growth and Income objective. (Lipper Analytical Services, Inc., is an independent mutual fund analyst, which tracks total return unadjusted for commissions. Of course, past performance is not a guarantee of future results.)(1)(2) This fund is designed to have a lower risk profile compared to the broad equity market. Because of our value-oriented investment style, there will probably be short periods when we underperform the market. However, we're confident that our strategy will produce strong relative performance over a full market cycle. Over the last six months we have made minor adjustments in the portfolio. Our analysis continues to suggest that many segments of the market may be overvalued. With this in mind, we kept the portfolio structured conservatively, remaining broadly diversified. Value Equity Fund Average Annual Total Return as of 2/28/98 (2) --------------------------------- 1 Year 30.31% --------------------------------- 5 Years 19.21% --------------------------------- 10 Years 15.40% --------------------------------- Although individual stock selection rather than sector targeting drives the performance of the fund, we should note that large-cap pharmaceuticals have provided strong returns for the fund over the last six months. These companies continue to benefit from an improved regulatory environment and new product developments. In addition, these companies' profits are somewhat protected by patents, with little or no exposure to Asian economies. In the fund's annual report, we mentioned that one of our favorite investments is Lowe's Cos, a home improvement retail firm with headquarters in the Southeast U.S. During the last six months, this stock has been a home run for the fund as it has almost doubled in price -- illustrating one of our basic investment philosophies: buy quality companies cheaply. Another name that we continue to favor is Electronic Data Systems (EDS). EDS is similar to Lowe's in that it has been out-of-favor with the market for some time, and has a strong management team. This firm should benefit from the "Year 2000" computer problem, which may increase their future profitability. Looking forward, after three-plus years of phenomenal appreciation, many large-capitalization stocks are presently selling at extreme valuation levels. We feel that this segment of the equity market is overvalued, and we will skew the portfolio's holdings towards better-valued mid-caps. Within this uncertain investment environment, we remain cautious in our investment approach, keeping the fund broadly diversified to help mitigate market volatility. 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 17-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. INVESCO Value Trust Ten Largest Common Stock Holdings February 28, 1998 Description Value TOTAL RETURN Fund Compaq Computer $32,062,500 Morgan Stanley Dean Witter Discovery & Co 31,620,703 British Telecommunications PLC Sponsored ADR Representing 10 Ord Shrs 30,300,000 Ford Motor 28,281,250 Schering-Plough Corp 26,621,875 Electronic Data Systems 26,287,500 First of America Bank 26,219,531 DTE Energy 25,725,000 Unicom Corp 25,650,000 Dun & Bradstreet 25,125,000 VALUE EQUITY Fund Ford Motor $10,464,062 Electronic Data Systems 9,638,750 Liz Claiborne 9,300,000 Textron Inc 8,992,500 Lowe's Cos 8,765,625 Fannie Mae 8,710,406 Torchmark Corp 8,614,063 Xerox Corp 8,425,313 Whirlpool Corp 8,351,563 American Home Products 8,156,250 Composition of holdings is subject to change. INVESCO Value Trust Statement of Investment Securities February 28, 1998 UNAUDITED Shares or Principal Description Amount Value - ----------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT BOND Fund FIXED INCOME SECURITIES 87.45% US Government Obligations 69.10% US Treasury Bonds 9.250%, 2/15/2016 $ 500,000 $ 679,219 7.625%, 2/15/2025 $1,000,000 1,216,875 US Treasury Notes 8.750%, 8/15/2000 $2,000,000 2,144,376 8.500%, 2/15/2000 $1,100,000 1,158,782 8.500%, 11/15/2000 $3,500,000 3,753,750 8.000%, 8/15/1999 $2,000,000 2,067,500 7.500%, 11/15/2001 $1,400,000 1,487,938 7.500%, 5/15/2002 $2,200,000 2,354,000 6.375%, 7/15/1999 $2,000,000 2,021,876 6.375%, 8/15/2002 $2,500,000 2,575,000 6.250%, 2/15/2003 $1,000,000 1,026,875 6.000%, 10/15/1999 $1,000,000 1,006,563 5.750%, 8/15/2003 $1,000,000 1,005,313 ----------- TOTAL US GOVERNMENT OBLIGATIONS (Cost $22,074,329) 22,498,067 ----------- U S Government Agency Obligations 18.35% Fannie Mae, Gtd Mortgage Pass-Through Certificates 6.000%, 5/1/2009 $861,915 854,140 Freddie Mac, Gold Participation Certificates 8.000%, 10/1/2010 $842,245 867,546 6.500%, 7/1/2001 $820,485 826,237 Government National Mortgage Association I, Pass-Through Certificates 7.500%, 3/15/2026 $1,097,624 1,126,579 7.000%, 10/15/2008 $547,205 559,780 6.500%, 10/15/2008 $592,713 597,123 6.000%, 11/15/2008 $634,862 630,817 Federal Farm Credit Bank Medium-Term Notes 6.320%, 10/12/2010 $500,000 513,905 ------------ TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $5,929,755) 5,976,127 ----------- TOTAL FIXED INCOME SECURITIES (Cost $28,004,084) 28,474,194 ----------- SHORT-TERM INVESTMENTS 12.55% U S Government Obligations 2.61% US Treasury Notes, 5.125%, 3/31/1998 (Cost $849,286) $850,000 $849,735 ----------- U S Government Agency Obligations 6.14% Federal Farm Credit Bank 6.050%, 5/1/1998 (Cost $1,999,722) $2,000,000 1,999,722 ----------- Commercial Paper 0.92% FINANCIAL 0.92% Greenwich Funding, 5.510%, 3/12/1998 (Cost $299,494) $300,000 299,494 ----------- Repurchase Agreements 2.88% Repurchase Agreement with State Street Bank & Trust Co dated 2/27/1998 due 3/2/1998 at 5.580%, repurchased at $938,436 (Collaterized by US Treasury Bonds due 2/15/2020 at 8.500%, value $966,456) (Cost $938,000) $938,000 938,000 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $4,086,502) 4,086,951 ----------- TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $32,090,586) (Cost for Income Tax Purposes $32,173,984) $ 32,561,145 ============== TOTAL RETURN Fund COMMON STOCKS 67.08% AEROSPACE & DEFENSE 4.00% Boeing Co 450,000 $ 24,412,500 Lockheed Martin 175,000 20,420,312 Raytheon Co Class B 400,000 23,525,000 Rockwell International 400,000 24,200,000 ----------- 92,557,812 ----------- AUTO PARTS 1.04% Genuine Parts 650,000 24,050,000 ----------- AUTOMOBILES 1.22% Ford Motor 500,000 28,281,250 ----------- BANKS 4.15% First Chicago NBD 300,000 24,656,250 First of America Bank 337,500 26,219,531 First Union 300,000 15,806,250 NationsBank Corp 250,000 17,125,000 Wachovia Corp 154,000 12,243,000 ----------- 96,050,031 ----------- BEVERAGES 0.51% Anheuser-Busch Cos 250,000 11,718,750 ----------- BUILDING MATERIALS 1.85% Hanson PLC Sponsored ADR Representing 5 Ord Shrs 900,000 $22,781,250 Sherwin-Williams Co 600,000 20,062,500 ----------- 42,843,750 ----------- CHEMICALS 1.73% Dow Chemical 225,000 20,587,500 Great Lakes Chemical 400,000 19,450,000 ----------- 40,037,500 ----------- COMPUTER RELATED 5.14% Compaq Computer 1,000,000 32,062,500 Computer Associates International 375,000 17,671,875 Electronic Data Systems 600,000 26,287,500 Hewlett-Packard Co 300,000 20,100,000 International Business Machines 220,000 22,976,250 ----------- 119,098,125 ----------- CONGLOMERATES 1.02% National Service Industries 265,000 14,690,937 Textron Inc 120,000 8,992,500 ----------- 23,683,437 ----------- DISTRIBUTION 1.03% Supervalu Inc 500,000 23,812,500 ----------- ELECTRIC UTILITIES 4.67% DTE Energy 700,000 25,725,000 Edison International 800,000 22,100,000 Entergy Corp 500,000 14,468,750 Texas Utilities 500,000 20,218,750 Unicom Corp 800,000 25,650,000 ----------- 108,162,500 ----------- ELECTRICAL EQUIPMENT 1.01% General Electric 300,000 23,325,000 ----------- FOODS 2.19% Archer-Daniels-Midland Co 787,500 17,669,531 Heinz (H J) Co 200,000 11,262,500 Unilever NV New York Shrs 340,000 21,866,250 ----------- 50,798,281 ----------- HARDWARE & TOOLS 0.73% Snap-On Inc 400,000 17,000,000 ----------- HEALTH CARE DRUGS -- PHARMACEUTICALS 5.28% Abbott Laboratories 175,000 13,092,188 American Home Products 200,000 18,750,000 Bristol-Myers Squibb 250,000 25,046,875 Lilly (Eli) & Co 300,000 19,743,750 Merck & Co 150,000 19,134,375 Schering-Plough Corp 350,000 26,621,875 ----------- 122,389,063 ----------- HEALTH CARE RELATED 0.82% Columbia/HCA Healthcare 700,000 18,987,500 ----------- HOUSEHOLD FURNITURE & APPLIANCES 0.72% Whirlpool Corp 250,000 16,703,125 ----------- INSURANCE 4.25% American General 300,000 $ 17,437,500 Lincoln National 200,000 16,750,000 Loews Corp 225,000 22,570,312 Ohio Casualty 500,000 23,375,000 SAFECO Corp 350,000 18,353,125 ----------- 98,485,937 ----------- INSURANCE BROKERS 0.82% Marsh & McLennan 220,000 19,071,250 ----------- INVESTMENT BANK/BROKER FIRM 1.37% Morgan Stanley Dean Witter Discovery & Co 453,750 31,620,703 ----------- IRON & STEEL 1.00% Nucor Corp 450,000 23,175,000 ----------- MANUFACTURING 0.95% Minnesota Mining & Manufacturing 130,000 11,090,625 York International 250,000 10,984,375 ----------- 22,075,000 ----------- METALS MINING 0.82% Phelps Dodge 300,000 19,050,000 ----------- OFFICE EQUIPMENT & SUPPLIES 1.38% IKON Office Solutions 300,000 9,806,250 Xerox Corp 250,000 22,171,875 ----------- 31,978,125 ----------- OIL & GAS RELATED 3.99% Amoco Corp 200,000 17,000,000 Exxon Corp 300,000 19,162,500 Norsk Hydro A/S Sponsored ADR Representing Ord Shrs 500,000 22,125,000 Repsol SA Sponsored ADR Representing Ord Shrs 450,000 20,025,000 Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 260,000 14,121,250 ----------- 92,433,750 ----------- PAPER & FOREST PRODUCTS 0.44% Westvaco Corp 310,000 10,075,000 ----------- POLLUTION CONTROL 1.33% Browning-Ferris Industries 400,000 13,325,000 Waste Management 700,000 17,500,000 ----------- 30,825,000 ----------- PUBLISHING 0.78% Gannett Co 280,000 18,077,500 ----------- RAILROADS 0.75% Illinois Central 450,000 17,465,625 ----------- RETAIL 2.96 Dillard's Inc Class A 500,000 17,812,500 K mart Corp* 500,000 6,687,500 Penney (J C) Co 275,000 19,439,062 Rite Aid 350,000 11,331,250 Tandy Corp 300,000 13,350,000 ----------- 68,620,312 ----------- SERVICES 1.09% Dun & Bradstreet 750,000 $ 25,125,000 ----------- SPECIALTY PRINTING 0.74% Deluxe Corp 500,000 17,031,250 ----------- TELECOMMUNICATIONS -- LONG DISTANCE 1.31% British Telecommunications PLC Sponsored ADR Representing 10 Ord Shrs 300,000 30,300,000 ----------- TELEPHONE 2.94% Bell Atlantic 150,000 13,462,500 Southern New England Telecommunications 300,000 18,937,500 Telefonica de Espana SA Sponsored ADR Representing 3 Shrs 150,000 15,525,000 Telefonos de Mexico SA de CV Sponsored ADR Representing Ord Series L Shrs 400,000 20,275,000 ----------- 68,200,000 ----------- TEXTILE -- APPAREL MANUFACTURING 1.41% Liz Claiborne 350,000 17,500,000 VF Corp 320,000 15,260,000 ----------- 32,760,000 ----------- TEXTILE -- HOME FURNISHINGS 0.21% Shaw Industries 400,000 4,750,000 ----------- TOBACCO 1.43% Fortune Brands 250,000 9,921,875 Gallaher Group PLC Sponsored ADR Representing 4 Ord Shrs 250,000 5,781,250 Philip Morris 400,000 17,375,000 ----------- 33,078,125 ----------- TOTAL COMMON STOCKS (Cost $988,296,436) 1,553,696,201 ------------- FIXED INCOME SECURITIES 25.99% U S Government Obligations 18.25% US Treasury Bonds 11.250%, 2/15/2015 $12,950,000 20,307,219 9.375%, 2/15/2006 $18,750,000 23,126,962 9.250%, 2/15/2016 $20,800,000 28,255,510 8.125%, 8/15/2019 $20,800,000 26,084,510 7.625%, 2/15/2025 $30,000,000 36,506,250 7.250%, 8/15/2022 $20,800,000 24,089,000 US Treasury Notes 8.750%, 8/15/2000 $25,000,000 26,804,699 8.000%, 5/15/2001 $20,500,000 21,928,603 7.875%, 11/15/1999 $18,500,000 19,182,187 6.500%, 8/15/2005 $29,300,000 30,719,232 6.375%, 7/15/1999 $26,400,000 26,688,762 6.375%, 1/15/2000 $26,400,000 26,763,000 6.375%, 8/15/2002 $23,750,000 24,462,500 6.250%, 2/15/2003 $23,300,000 $ 23,926,187 6.125%, 8/15/2007 $26,000,000 26,804,387 5.750%, 8/15/2003 $18,300,000 18,397,227 US Treasury Security Stripped Interest Payment, Generic Tint Payment, Zero Coupon, 8/15/2003 $25,250,000 18,608,745 TOTAL US GOVERNMENT OBLIGATIONS (Cost $407,616,923) 422,654,980 ----------- U S Government Agency Obligations 4.08% Fannie Mae Gtd Mortgage Pass-Through Certificates 8.500%, 3/1/2010 $5,907,105 6,135,592 8.000%, 7/1/2024 $7,710,354 7,997,410 7.500%, 8/1/2007 $1,440,225 1,482,481 6.500%, 5/1/2026 $7,288,834 7,232,199 6.000%, 5/1/2009 $8,634,472 8,556,589 Medium-Term Notes 6.060%, 10/8/2002 $20,000,000 20,183,719 Freddie Mac, Gold Participation Certificates 8.000%, 10/1/2010 $3,930,478 4,048,550 8.000%, 5/1/2024 $6,288,678 6,521,547 7.500%, 12/1/2026 $9,346,952 9,595,953 6.500%, 7/1/2001 $5,743,394 5,783,655 Government National Mortgage Association I, Pass-Through Certificates 7.500%, 3/15/2026 $5,122,246 5,257,371 7.000%, 10/15/2008 $ 913,088 934,071 7.000%, 12/15/2022 $ 212,984 215,983 7.000%, 12/15/2025 $8,675,380 8,777,748 6.500%, 10/15/2008 $ 889,070 895,684 6.000%, 11/15/2008 $ 952,292 946,226 TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $92,937,791) 94,564,778 ---------- Corporate Bonds 3.44% AEROSPACE & DEFENSE 0.07% Rockwell International, Notes 6.625%, 6/1/2005 $ 1,500,000 1,542,133 ----------- AUTOMOBILES 0.29% Ford Motor, Notes 7.500%, 11/15/1999 $ 750,000 767,410 General Motors Acceptance, Sr Unsub Notes, 6.125%, 1/22/2008 $ 6,000,000 5,865,426 ----------- 6,632,836 ----------- BANKS 0.64% BankAmerica Corp, Sub Notes 6.875%, 6/1/2003 $ 4,000,000 4,111,711 National City, Sub Notes 7.200%, 5/15/2005 $ 2,000,000 2,115,198 NationsBank Corp, Sr Notes 5.375%, 4/15/2000 $ 1,250,000 $ 1,234,885 Wachovia Bank, Medium-Term Notes, 7.000%, 10/17/2008 $ 7,000,000 7,328,125 ----------- 14,789,919 ----------- COMMUNICATIONS -- EQUIPMENT & MANUFACTURING 0.22% Motorola Inc, Sr Notes 6.500%, 3/1/2008 $ 5,000,000 5,119,765 ----------- ELECTRIC UTILITIES 0.20% Duke Power 1st & Ref Mortgage 7.500%, 4/1/1999 $ 1,000,000 1,015,667 Medium-Term Notes 6.125%, 7/22/2003 $ 2,900,000 2,908,674 Union Electric, 1st Mortgage 6.750%, 10/15/1999 $ 750,000 759,454 ----------- 4,683,795 ----------- FINANCIAL 0.39% Associates Corp of North America Notes, 6.375%, 10/15/2002 $ 5,000,000 5,042,660 Commercial Credit, Notes 6.375%, 9/15/2002 $ 4,000,000 4,026,240 ----------- 9,068,900 ----------- FOODS 0.36% CPC International, Medium-Term Notes, Series D 6.875%, 10/15/2003 $ 3,000,000 3,127,386 Campbell Soup, Notes 6.900%, 10/15/2006 $ 5,000,000 5,277,940 ----------- 8,405,326 ----------- INSURANCE 0.23% CNA Financial, Notes 6.450%, 1/15/2008 $ 5,300,000 5,260,392 ----------- OIL & GAS RELATED 0.22% Enron Corp, Notes 6.625%, 11/15/2005 $ 5,000,000 5,041,834 ----------- PUBLISHING 0.15% Gannett Co, Notes 5.850%, 5/1/2000 $ 3,500,000 3,493,727 ----------- RETAIL 0.41% May Department Stores, Deb 6.875%, 11/1/2005 $ 4,000,000 4,140,096 Wal-Mart Stores, Notes 8.625%, 4/1/2001 $ 5,000,000 5,358,395 ----------- 9,498,491 ----------- TELECOMMUNICATIONS -- LONG DISTANCE 0.09% BellSouth Telecommunications Notes, 6.500%, 6/15/2005 $ 2,000,000 2,041,422 ----------- TOYS 0.17% Mattel Inc, Notes 6.750%, 5/15/2000 $ 4,000,000 4,050,184 ----------- TOTAL CORPORATE BONDS (Cost $78,883,110) $ 79,628,724 ----------- Foreign Corporate Obligations 0.22% BANKS 0.22% ABN Amro Bank NV, Global Sub Notes, 6.625%, 10/31/2001 (Cost $5,000,950) $ 5,000,000 5,062,589 ----------- TOTAL FIXED INCOME SECURITIES (Cost $584,438,774) 601,911,071 ----------- SHORT-TERM INVESTMENTS 6.93% U S Government Obligations 2.29% US Treasury Notes 8.250%, 7/15/1998 $ 26,300,000 26,571,231 5.500%, 2/28/1999 $ 26,400,000 26,400,000 ----------- TOTAL US GOVERNMENT OBLIGATIONS (Cost $52,728,355) 52,971,231 ----------- Corporate Bonds 0.13% BEVERAGES 0.07% PepsiCo Inc, Deb, 7.750%, 10/1/1998 $ 1,500,000 1,516,336 ----------- CONSUMER FINANCE 0.03% Beneficial Corp, Medium-Term Notes 5.350%, 10/8/1998 $ 800,000 796,741 ----------- RETAIL 0.03% Wal-Mart Stores, Notes 5.500%, 3/1/1998 $ 750,000 750,000 ---------- TOTAL CORPORATE BONDS (Cost $3,055,517) 3,063,077 ---------- Commercial Paper 1.27% FINANCIAL 1.27% Greenwich Funding 5.510%, 3/12/1998 (Cost $29,414,265) $ 29,464,000 29,414,265 ----------- Repurchase Agreements 3.24% Repurchase Agreement with State Street Bank & Trust Co dated 2/27/1998 due 3/2/1998 at 5.580%, repurchased at $75,023,870 (Collateralized by US Treasury Bonds due 2/15/2020 at 8.500%, value $76,774,509) (Cost $74,989,000) $ 74,989,000 74,989,000 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $160,187,137) 160,437,573 ----------- TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $1,732,922,347) (Cost for Income Tax Purposes $1,732,935,672) $ 2,316,044,845 =============== VALUE EQUITY Fund COMMON STOCKS 93.80% AEROSPACE & DEFENSE 3.05% Lockheed Martin 53,260 $ 6,214,776 Raytheon Co Class B 120,000 7,057,500 ----------- 13,272,276 ----------- AUTO PARTS 1.21% Genuine Parts 142,500 5,272,500 ----------- AUTOMOBILES 2.40% Ford Motor 185,000 10,464,062 ----------- BANKS 5.08% First Chicago NBD 80,000 6,575,000 First Union 60,000 3,161,250 NationsBank Corp 111,364 7,628,434 Wachovia Corp 60,000 4,770,000 ----------- 22,134,684 ----------- BEVERAGES 1.26% PepsiCo Inc 150,000 5,484,375 ----------- BUILDING MATERIALS 4.31% Hanson PLC Sponsored ADR Representing 5 Ord Shrs 130,000 3,290,625 Lowe's Cos 150,000 8,765,625 Sherwin-Williams Co 200,000 6,687,500 ----------- 18,743,750 ----------- CHEMICALS 0.64% Dow Chemical 30,600 2,799,900 ----------- COMPUTER RELATED 10.03% Adaptec Inc* 168,200 4,446,787 Compaq Computer 229,500 7,358,344 Computer Associates International 161,625 7,616,578 Electronic Data Systems 220,000 9,638,750 Hewlett-Packard Co 120,000 8,040,000 International Business Machines 62,700 6,548,231 ----------- 43,648,690 ----------- CONGLOMERATES 2.07% Textron Inc 120,000 8,992,500 ----------- DISTRIBUTION 1.31% Supervalu Inc 120,000 5,715,000 ----------- ELECTRIC UTILITIES 4.56% DTE Energy 137,000 5,034,750 Entergy Corp 225,000 6,510,937 Southern Co 135,000 3,332,813 Unicom Corp 155,000 4,969,688 ----------- 19,848,188 ----------- ELECTRICAL EQUIPMENT 1.33% General Electric 74,200 5,769,050 ----------- ELECTRONICS -- SEMICONDUCTOR 1.20% Texas Instruments 90,000 5,208,750 ----------- FINANCIAL 2.00% Fannie Mae 136,500 $ 8,710,406 ----------- FOODS 1.00% Archer-Daniels-Midland Co 194,250 4,358,484 ----------- FOOTWEAR 1.11% NIKE Inc Class B 110,000 4,826,250 ----------- HEALTH CARE DRUGS -- PHARMACEUTICALS 9.64% Abbott Laboratories 47,000 3,516,187 Allergan Inc 130,000 4,550,000 American Home Products 87,000 8,156,250 Bristol-Myers Squibb 60,000 6,011,250 Merck & Co 58,700 7,487,919 Schering-Plough Corp 84,000 6,389,250 Warner-Lambert Co 40,000 5,850,000 ----------- 41,960,856 ----------- HEALTH CARE RELATED 2.48% Biomet Inc 242,000 7,214,625 Columbia/HCA Healthcare 132,000 3,580,500 ----------- 10,795,125 ----------- HOUSEHOLD FURNITURE & APPLIANCES 1.92% Whirlpool Corp 125,000 8,351,563 ----------- INSURANCE 9.65% American General 100,000 5,812,500 American International Group 52,750 6,339,891 General Re 26,500 5,644,500 Jefferson-Pilot Corp 57,575 4,829,103 Loews Corp 50,000 5,015,625 SAFECO Corp 110,000 5,768,125 Torchmark Corp 185,000 8,614,063 ----------- 42,023,807 ----------- INSURANCE BROKERS 1.19% Marsh & McLennan 60,000 5,201,250 ----------- IRON & STEEL 0.81% Nucor Corp 68,200 3,512,300 MACHINERY 1.77% Dover Corp 200,000 7,725,000 ---------- MANUFACTURING 0.97% York International 96,000 4,218,000 ----------- METALS MINING 0.83% Phelps Dodge 57,200 3,632,200 ----------- OFFICE EQUIPMENT & SUPPLIES 3.36% IKON Office Solutions 190,000 6,210,625 Xerox Corp 95,000 8,425,313 ----------- 14,635,938 ----------- OIL & GAS RELATED 5.77% Amoco Corp 55,000 4,675,000 Exxon Corp 70,550 4,506,381 Norsk Hydro A/S Sponsored ADR Representing Ord Shrs 60,000 2,655,000 Repsol SA Sponsored ADR Representing Ord Shrs 105,400 4,690,300 Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 88,304 4,796,011 YPF SA Sponsored ADR Representing Class D Shrs 120,000 3,795,000 ----------- 25,117,692 ----------- PAPER & FOREST PRODUCTS 1.60% Kimberly-Clark Corp 125,000 6,960,937 ----------- POLLUTION CONTROL 0.86% Waste Management 150,000 3,750,000 ----------- RAILROADS 1.66% Illinois Central 186,000 7,219,125 ----------- RETAIL 1.74% Rite Aid 234,000 7,575,750 ----------- SERVICES 1.77% Dun & Bradstreet 230,000 7,705,000 ----------- TEXTILE -- APPAREL MANUFACTURING 2.14% Liz Claiborne 186,000 9,300,000 ----------- TOBACCO 1.82% Philip Morris 182,200 7,914,313 ----------- TOYS 1.26% Mattel Inc 130,000 5,500,625 ----------- TOTAL COMMON STOCKS (Cost $269,426,395) 408,348,346 ----------- SHORT-TERM INVESTMENTS 6.20% Commercial Paper 3.67% FINANCIAL 3.67% Greenwich Funding 5.510%, 3/12/1998 (Cost $15,972,992) $16,000,000 15,972,992 ----------- Repurchase Agreements 2.53% Repurchase Agreement with State Street Bank Trust Co dated 2/27/1998 due 3/2/1998 at 5.580%, repurchased at $11,023,123 (Collateralized by US Treasury Bonds due 2/15/2020 at 8.500%, value $11,284,031) (Cost $11,018,000) $11,018,000 11,018,000 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $26,990,992) 26,990,992 ----------- TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $296,417,387) (Cost for Income Tax Purposes $297,482,854) $ 435,339,338 ============= * Security is non-income producing. See Notes to Financial Statements
INVESCO Value Trust Statement of Assets and Liabilities February 28, 1998 UNAUDITED Intermediate Government Total Return Value Equity Bond Fund Fund Fund --------------------------------------------------- ASSETS Investment Securities: At Cost~ $32,090,586 $1,732,922,347 $296,417,387 ================================================== At Value~ $32,561,145 $2,316,044,845 $435,339,338 Cash 397 830,790 0 Receivables: Fund Shares Sold 302,130 6,111,417 1,853,768 Dividends and Interest 338,493 8,927,984 780,077 Prepaid Expenses and Other Assets 104,627 230,113 72,118 -------------------------------------------------- TOTAL ASSETS 33,306,792 2,332,145,149 438,045,301 -------------------------------------------------- LIABILITIES Payables: Custodian 0 0 14,255 Distributions to Shareholders 12,640 214,042 31,521 Fund Shares Repurchased 15,507 2,360,764 2,050,300 Accrued Distribution Expenses 2,311 0 41,478 Accrued Expenses and Other Payables 8,541 119,501 19,005 -------------------------------------------------- TOTAL LIABILITIES 38,999 2,694,307 2,156,559 -------------------------------------------------- Net Assets at Value $33,267,793 $2,329,450,842 $435,888,742 ================================================== NET ASSETS Paid-in Capital $33,026,682 $1,733,597,086 $287,871,828 Accumulated Undistributed (Distributions in Excess of) Net Investment Income 0 13,408 (23,559) Accumulated Undistributed Net Realized Gain (Loss) on Investment Securities and Foreign Currency Transactions (229,448) 12,717,850 9,118,522 Net Appreciation of Investment Securities and Foreign Currency Transactions 470,559 583,122,498 138,921,951 ---------------------------------------------------- Net Assets at Value $33,267,793 $2,329,450,842 $435,888,742 ==================================================== Shares Outstanding* 2,644,394 76,832,346 14,524,655 Net Asset Value, Offering and Redemption Price per Share $ 12.58 $ 30.32 $ 30.01 ====================================================
~ Investment securities at cost and value at February 28, 1998 include repurchase agreements of $938,000, $74,989,000 and $11,018,000 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, 1998, 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, 1998 UNAUDITED Intermediate Government Total Return Value Equity Bond Fund Fund Fund -------------------------------------------------- INVESTMENT INCOME INCOME Dividends $ 0 $ 15,581,870 $ 3,456,776 Interest 1,322,366 21,727,735 456,439 Foreign Taxes Withheld 0 (249,319) (20,675) --------------------------------------------------- TOTAL INCOME 1,322,366 37,060,286 3,892,540 --------------------------------------------------- EXPENSES Investment Advisory Fees 128,961 6,138,984 1,436,154 Distribution Expenses 5,072 0 97,035 Transfer Agent Fees 117,339 1,651,218 421,138 Administrative Fees 7,834 159,406 33,723 Custodian Fees and Expenses 4,908 104,072 23,904 Professional Fees and Expenses 8,286 43,090 14,710 Registration Fees and Expenses 13,303 116,418 43,109 Reports to Shareholders 7,372 44,581 53,591 Trustees' Fees and Expenses 6,066 65,822 16,807 Other Expenses 3,153 23,854 5,176 --------------------------------------------------- TOTAL EXPENSES 302,294 8,347,445 2,145,347 Fees and Expenses Absorbed by Investment Adviser (84,438) (24,057) 0 Fees and Expenses Paid Indirectly (1,914) (134,321) (9,038) NET EXPENSES 215,942 8,189,067 2,136,309 ---------------------------------------------------- NET INVESTMENT INCOME 1,106,424 28,871,219 1,756,231 ---------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES Net Realized Gain on Investment Securities and Foreign Currency Transactions 342,848 29,815,314 17,229,322 Change in Net Appreciation of Investment Securities and Foreign Currency Transactions 163,345 186,274,468 36,704,414 ------------------------------------------------- NET GAIN ON INVESTMENT SECURITIES 506,193 216,089,782 53,933,736 ------------------------------------------------- Net Increase in Net Assets from Operations $ 1,612,617 $ 244,961,001 $ 55,689,967 =================================================
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 --------------------------- -------------------------- 1998 1997 1998 1997 UNAUDITED UNAUDITED OPERATIONS Net Investment Income $ 1,106,424 $ 2,385,295 $ 28,871,219 $ 44,496,579 Net Realized Gain on Investment Securities and Foreign Currency Transactions 342,848 126,618 29,815,314 20,361,309 Change in Net Appreciation of Investment Securities and Foreign Currency Transactions 163,345 348,594 186,274,468 269,713,544 ---------------------------- --------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 1,612,617 2,860,507 244,961,001 334,571,432 ---------------------------- --------------------------------- DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income (1,106,424) (2,385,295) (28,963,828) (44,405,999) Net Realized Gain on Investment Securities and Foreign Currency Transactions 0 0 (34,776,937) (4,314,901) ---------------------------- --------------------------------- TOTAL DISTRIBUTIONS (1,106,424) (2,385,295) (63,740,765) (48,720,900) ---------------------------- --------------------------------- FUND SHARE TRANSACTIONS Proceeds from Sales of Shares 18,310,716 26,474,792 595,529,162 997,370,885 Reinvestment of Distributions 966,591 2,208,130 62,810,012 47,962,510 ---------------------------- --------------------------------- 19,307,307 28,682,922 658,339,174 1,045,333,395 Amounts Paid for Repurchases of Shares (30,986,375) (24,665,970) (355,702,673) (517,740,980) ---------------------------- --------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS (11,679,068) 4,016,952 302,636,501 527,592,415 ---------------------------- --------------------------------- Total Increase (Decrease) in Net Assets (11,172,875) 4,492,164 483,856,737 813,442,947 NET ASSETS Beginning of Period 44,440,668 39,948,504 1,845,594,105 1,032,151,158 End of Period $33,267,793 $ 44,440,668 $ 2,329,450,842 $1,845,594,105 ============================ ================================= Accumulated Undistributed Net Investment Income Included in Net Assets at End of Period $0 $ 0 $ 13,408 $ 106,017 - ---------------------------------------------------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS Shares Sold 1,456,143 2,132,651 20,419,778 39,163,785 Shares Issued from Reinvestment of Distributions 79,884 178,829 2,168,421 1,844,859 ---------------------------- --------------------------------- 1,536,027 2,311,480 22,588,199 41,008,644 Shares Repurchased (2,464,537) (1,985,434) (12,222,342) (20,216,862) ---------------------------- --------------------------------- Net Increase (Decrease) in Fund Shares (928,510) 326,046 10,365,857 20,791,782 ============================ =================================
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 --------------------------------------- 1998 1997 UNAUDITED OPERATIONS Net Investment Income $ 1,756,231 $ 4,046,156 Net Realized Gain on Investment Securities and Foreign Currency Transactions 17,229,322 20,055,067 Change in Net Appreciation of Investment Securities and Foreign Currency Transactions 36,704,414 57,254,344 --------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 55,689,967 81,355,567 --------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income (1,797,273) (4,071,368) Net Realized Gain on Investment Securities and Foreign Currency Transactions (26,582,983) (5,507,949) --------------------------------------- TOTAL DISTRIBUTIONS (28,380,256) (9,579,317) --------------------------------------- FUND SHARE TRANSACTIONS Proceeds from Sales of Shares 265,374,611 517,380,902 Reinvestment of Distributions 27,200,186 9,315,225 -------------------------------------- 292,574,797 526,696,127 Amounts Paid for Repurchases of Shares (253,761,386) (428,752,415) -------------------------------------- NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 38,813,411 97,943,712 -------------------------------------- Total Increase in Net Assets 66,123,122 169,719,962 NET ASSETS Beginning of Period 369,765,620 200,045,658 -------------------------------------- End of Period $435,888,742 $369,765,620 ====================================== Accumulated Undistributed (Distributions in Excess of) Net Investment Income Included in Net Assets at End of Period $ (23,559) $ 17,483 - ------------------------------------------------------------------------------------------------ FUND SHARE TRANSACTIONS Shares Sold 9,200,412 20,198,347 Shares Issued from Reinvestment of Distributions 997,711 378,067 -------------------------------------- 10,198,123 20,576,414 Shares Repurchased (8,737,452) (16,506,962) -------------------------------------- Net Increase in Fund Shares 1,460,671 4,069,452 ======================================
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") 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 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. 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. 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 investment securities includes fluctuations from currency exchange rates and fluctuations in market value. 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 Trust does not hold short-term forward foreign currency contracts for trading purposes. The Trust 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. 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. 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. 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 six months ended February 28, 1998, Fees and Expenses Paid Indirectly consisted of the following: Custodian Fees Transfer Fund and Expenses Agent Fees -------------------------------------------------------------------------- Intermediate Government Bond Fund $ 1,914 $ 0 Total Return Fund 51,679 82,642 Value Equity Fund 9,037 1 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. A plan of distribution pursuant to Rule 12b-1 of the Act (the "Plan") became effective November 1, 1997 for Intermediate Government Bond and Value Equity Funds. The Plan provides for compensation of marketing and advertising expenditures to INVESCO Distributors, Inc. to a maximum of 0.25% of net assets. For the six months ended February 28, 1998, Intermediate Government Bond and Value Equity Funds paid the Distributor $2,761 and $55,557, respectively, under the plan of distribution. 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 six months ended February 28, 1998, 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 $ 305,299,355 $ 71,925,547 Value Equity Fund 74,468,319 88,439,749 The aggregate cost of purchases and proceeds from sales of U.S. Government securities were as follows: Fund Purchases Sales - -------------------------------------------------------------------------------- Intermediate Government Bond Fund $ 6,706,286 $ 16,236,656 Total Return Fund 98,180,797 16,750,000 NOTE 4 - APPRECIATION AND DEPRECIATION. At February 28, 1998, 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 $ 475,533 $ 88,372 $ 387,161 Total Return Fund 594,672,588 11,563,415 583,109,173 Value Equity Fund 143,612,565 5,756,081 137,856,484
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 six months ended February 28, 1998, 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 $ 503 $ 1,865 $ 4,082 Total Return Fund 16,385 38,653 80,944 Value Equity Fund 3,278 9,615 20,078
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, 1998, there were no such borrowings. Other Information UNAUDITED On October 28, 1997, a special meeting of the shareholders of the Trust was held at which the approval to change the investment policy to allow each Fund to utilize futures contracts, options on futures, puts and calls to the extent permitted by law (Proposal 1) was ratified by Total Return and Value Equity Funds and failed for Intermediate Government Bond Fund and the approval of a Plan and Agreement of Distribution for Intermediate Government and Value Equity Funds (Proposal 2) was ratified. The following is a report on the votes cast:
Proposal For Against Abstain Total - --------------------------------------------------------------------------------------------- Intermediate Government Bond Fund Proposal 1 1,323,336 916,628 91,153 2,331,117 Proposal 2 1,603,043 627,945 100,129 2,331,117 Total Return Fund Proposal 1 29,034,865 4,697,372 1,942,130 35,674,367 Value Equity Fund Proposal 1 6,036,336 1,996,642 828,582 8,861,560 Proposal 2 6,627,112 1,374,392 860,056 8,861,560
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 ------------ -------------------------------- ---------- ----------- 1998 1997 1996 1995 1994 1993^ 1992 UNAUDITED Intermediate Government Bond Fund PER SHARE DATA Net Asset Value - Beginning of Period $12.44 $12.30 $12.64 $12.16 $13.25 $12.68 $12.89 ------- ------ ------- ------ ------- ------ ------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.32 0.66 0.73 0.73 0.70 0.48 0.90 Net Gains or (Losses) on Securities (Both Realized and Unrealized) 0.14 0.14 (0.34) 0.48 (0.75) 0.57 (0.16) ------ ------ ------ ------ ----- ------ ------- Total from Investment Operations 0.46 0.80 0.39 1.21 (0.05) 1.05 0.74 ------ ------ ------ ------ ----- ------ ------- LESS DISTRIBUTIONS Dividends from Net Investment Income+ 0.32 0.66 0.73 0.73 0.70 0.48 0.90 Distributions from Capital Gains 0.00 0.00 0.00 0.00 0.34 0.00 0.05 ------ ------ ------ ------ ----- ------ ------- Total Distributions 0.32 0.66 0.73 0.73 1.04 0.48 0.95 ------ ------ ------ ------ ----- ------ ------- Net Asset Value - End of Period $ 12.58 $12.44 $ 12.30 $ 12.64 $ 12.16 $ 13.25 $ 12.68 ====== ====== ====== ====== ====== ====== ======= TOTAL RETURN 3.74%* 6.64% 3.12% 10.36% (0.37%) 8.38%* 6.03% RATIOS Net Assets - End of Period ($000 Omitted) $33,268 $44,441 $39,949 $37,339 $31,861 $39,384 $29,649 Ratio of Expenses to Average Net Asset # 0.50%*@ 1.02%@ 1.15%@ 1.20% 1.07% 0.96%~ 0.97% Ratio of Net Investment Income to Average Net Assets# 2.55%* 5.32% 5.81% 6.04% 5.58% 5.48%~ 6.38% Portfolio Turnover Rate 17%* 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 six months ended February 28, 1998 and 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 0.70% (not annualized), 1.37% and 1.24%, respectively, and ratio of net investment income to average net assets would have been 2.35% (not annualized), 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) Six Months Period Year Ended Ended Ended February 28 Year Ended August 31 August 31 December 31 ------------- ---------------------------------- --------- ----------- 1998 1997 1996 1995 1994 1993^ 1992 UNAUDITED Total Return Fund PER SHARE DATA Net Asset Value - Beginning of Period $ 27.77 $22.60 $20.95 $18.54 $18.27 $17.18 $ 16.43 ------- ------ ------ ------ ------ ------ ------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.40 0.77 0.73 0.72 0.69 0.40 0.66 Net Gains on Securities (Both Realized and Unrealized) 3.03 5.26 1.78 2.46 0.60 1.09 0.93 ------- ------ ------ ------ ----- ------ ------- Total from Investment Operations 3.43 6.03 2.51 3.18 1.29 1.49 1.59 ------- ------ ------ ------ ----- ------ ------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.40 0.77 0.73 0.72 0.60 0.40 0.65 In Excess of Net Investment Income+ 0.00 0.00 0.00 0.00 0.09 0.00 0.00 Distributions from Capital Gains 0.48 0.09 0.13 0.05 0.17 0.00 0.19 In Excess of Capital Gains 0.00 0.00 0.00 0.00 0.16 0.00 0.00 ------- ------ ------ ------ ----- ------ ------- Total Distributions 0.88 0.86 0.86 0.77 1.02 0.40 0.84 ------- ------ ------ ------ ----- ------ ------- Net Asset Value - End of Period $ 30.32 $27.77 $22.60 $ 20.95 $18.54 $ 18.27 $ 17.18 ======= ====== ====== ======= ====== ======= ======= TOTAL RETURN 12.50%* 27.01% 12.06% 17.54% 7.22% 8.72%* 9.84% RATIOS Net Assets - End of Period ($000 Omitted) $2,329,451 $1,845,594 $1,032,151 $563,468 $292,765 $220,224 $137,196 Ratio of Expenses to Average Net Assets# 0.40%*@ 0.86%@ 0.89%@ 0.95% 0.96% 0.93%~ 0.88% Ratio of Net Investment Income to Average Net Assets# 1.39%* 3.11% 3.44% 3.97% 3.31% 3.51%~ 4.06% Portfolio Turnover Rate 7%* 4% 10% 30% 12% 19%* 13% Average Commission Rate Paid^^ $0.0559* $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, less Expenses Absorbed by Investment Adviser, if applicable, which is before any offset arrangements. # Various expenses of the Fund were voluntarily absorbed by IFG for the six months ended February 28, 1998 and the effect was insignificant. ~ 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 ----------- --------------------------------------- ---------- ----------- 1998 1997 1996 1995 1994 1993^ 1992 UNAUDITED Value Equity Fund PER SHARE DATA Net Asset Value -- Beginning of Period $ 28.30 $ 22.24 $ 19.53 $18.12 $ 17.79 $ 16.91 $ 16.57 INCOME FROM INVESTMENT OPERATIONS Net Investment Income 0.13 0.35 0.35 0.39 0.36 0.24 0.36 Net Gains on Securities (Both Realized and Unrealized) 3.90 6.62 3.09 2.58 1.20 0.88 0.45 ------- ------ ------ ------ ----- ------ ------- Total from Investment Operations 4.03 6.97 3.44 2.97 1.56 1.12 0.81 ------- ------ ------ ------ ----- ------ ------- LESS DISTRIBUTIONS Dividends from Net Investment Income 0.13 0.35 0.35 0.39 0.31 0.24 0.34 In Excess of Net Investment Income 0.00 0.00 0.00 0.00 0.04 0.00 0.00 Distributions from Capital Gains 2.19 0.56 0.38 1.17 0.88 0.00 0.13 ------- ------ ------ ------ ----- ------ ------- Total Distributions 2.32 0.91 0.73 1.56 1.23 0.24 0.47 ------- ------ ------ ------ ----- ------ ------- Net Asset Value-- End of Period $ 30.01 $ 28.30 $ 22.24 $19.53 $ 18.12 $ 17.79 $ 16.91 ======= ====== ====== ====== ====== ====== ======= TOTAL RETURN 15.12%* 32.04% 17.77% 17.84% 9.09% 6.65%* 4.98% RATIOS Net Assets -- End of Period ($000 Omitted) $435,889 $369,766 $200,046 $153,171 $111,850 $81,914 $78,609 Ratio of Expenses to Average Net Assets 0.56%*@ 1.04%@ 1.01%@ 0.97% 1.01% 1.00%~ 0.91% Ratio of Net Investment Income to Average Net Assets 0.45%* 1.35% 1.64% 2.17% 1.80% 2.07%~ .19% Portfolio Turnover Rate 20%* 37% 27% 34% 53% 35%* 37% Average Commission Rate Paid^^ $0.0539* $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 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. FAMILY OF FUNDS Newspaper Fund Name Fund Code Ticker Symbol Abbreviation - -------------------------------------------------------------------------------- International International Growth 49 FSIGX IntlGr Emerging Markets 43 * * Asian Growth 41 IVAGX AsianGr Pacific Basin 54 FPBSX PcBas European 56 FEURX Europ European Small Company 37 IVECX EuroSmCo Latin American Growth 34 IVSLX LatinAmGr - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- Equity Growth 10 FLRFX Grwth Dynamics 20 FIDYX Dynm Small Company Growth 60 FIEGX SmCoGth Value Equity 46 FSEQX ValEq Small Company Value 74 IDSCX SmCoVal S&P 500 Index Fund Class II 23 * * - -------------------------------------------------------------------------------- All-Weather Industrial Income 15 FIIIX IndInc Multi-Asset Allocation 70 IMAAX MulAstAl Total Return 48 FSFLX TotRtn Balanced 71 IMABX Bal - -------------------------------------------------------------------------------- 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 Post Office Box 173706 Denver, CO 80217-3706 1-800-525-8085 PAL(R): 1-800-424-8085 http://www.invesco.com In Denver, visit one of our convenient Investor Centers: Cherry Creek, 155-B Fillmore Street Denver Tech Center, 7800 East Union Avenue, Lobby Level This information must be preceded or accompanied by a current prospectus.
-----END PRIVACY-ENHANCED MESSAGE-----