ANNUAL REPORT
August 31, 1996
INVESCO
VALUE
TRUST
Value Equity
Total Return
Intermediate Government Bond
INVESCO FUNDS
<PAGE>
Market Overview September 1996
Over the first eight months of 1996, the securities markets have been
exceptionally attentive to figures: Gross Domestic Product, unemployment, and
earnings growth. Each announcement of fresh data has sent the S&P 500 and other
market indexes moving in a new direction.
Based on a moderate economic expansion, the stock market advanced 9.60% for
the five months ended 5/31/96. But as expectations of economic vigor grew,
investors began to see the likelihood of accelerating inflation. This in turn
makes it more probable that the Federal Reserve Board may hike short-term
interest rates. In June, the S&P 500 advanced a mere 0.44%; in July, the index
declined sharply.(1)
Since 1994 the Fed has actively manipulated short-term rates, seeking to
maintain economic expansion without sparking inflation. Recently, there has been
some indication that the central bank may allow a slightly higher level of
inflation before tightening credit availability; however, their overall strategy
is unlikely to alter in the near-term, given an impending presidential election
and the recent reappointment of Alan Greenspan as Fed chairman.
The current economic expansion has shown unexpected tenacity, with an
annualized 4.7% growth rate in GDP for the second quarter of 1996. As a result,
chances are growing stronger that the Fed will launch a preemptive strike
against inflation during the second half of 1996.
The market environment has been even more challenging for bond investors.
Over the past 18 months, the fixed-income markets experienced two distinct
phases. The first began in 1995 with a bond rally that ran through January 1996.
Price advances were fueled by moderate economic growth and low inflation. For
all of 1995, the broad fixed-income market had a total return of 19.24%, as
measured by the Lehman Government/Corporate Bond Index. (Of course, past
performance is not a guarantee of future results.)(1),(2)
The second fixed-income market phase was initiated in February of this
year. The environment shifted to one of stronger economic growth, with the
concomitant potential for upward spirals in wages and prices; mild indications
of inflation have already appeared. Fixed-income investors responded to the
positive economic news by sending prices tumbling.
With more reassuring economic and corporate data being released, we may
have entered a third phase. After losing ground in three of the previous four
months, the Lehman Government/Corporate Bond Index achieved positive total
returns for two of the past three months. (Of course, past performance is not a
guarantee of future results.)(1),(2)
INVESCO Value Funds, Inc.
Each fund employs a value-oriented investment strategy:
Equities: Unlike many fund managers, we do not evaluate sectors based on a
forecast of the economy. Instead, we take a "bottom-up" approach which involves
identifying those individual securities which seem most likely to outperform
their peers.
<PAGE>
When evaluating a stock, we focus on its price in relation to its
historical earnings power. If the current price is low, and we believe the
company has the resources to maintain or resume historical growth rates, the
stock would be considered attractive -- regardless of its sector. General
characteristics of the resulting portfolio usually include a low price/earnings
ratio and a higher-than-average dividend yield.
Fixed-Income. When managing bond portfolios, we rely on a value methodology
based primarily on comparisons of inflation-adjusted historical yields. When
current yields are high relative to the historical average, this indicates that
the bond market is likely to remain attractive, and we lengthen the portfolio to
capitalize on expected increased returns. Conversely, when current yields drop
below historical averages, we shorten the portfolio in anticipation of potential
decreasing values.
Once these overriding determinations have been made, we evaluate current
interest rate activity to determine whether any short-term conditions may
influence the extent to which we lengthen or shorten the portfolio's duration.
And finally, we evaluate the specific classes of bonds against their historical
values to determine which categories offer the best relative value.
The line graphs on the following pages illustrate the value of a $10,000
investment in each of the INVESCO Value Funds, plus reinvested dividends and
capital gain distributions, for the 10-years ended 8/31/96 (or for Total Return
Fund, from inception through 8/31/96). 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
Intermediate Government Bond Fund
Average Annual Total Return
as of 8/31/96(2)
1 year 3.12%
-----------------------------------------
5 years 6.91%
-----------------------------------------
10 years 6.81%
-----------------------------------------
For the eight-month period ended 8/31/96, INVESCO Intermediate Government
Bond Fund had a total return of -1.68%, compared to a total return of 0.42% for
the Lehman Intermediate Government Bond Index. (Of course, past performance is
not a guarantee of future results.)(1),(2)
The exceptionally volatile nature of the fixed-income market has made
performance highly dependent upon maturity strategies. The fund's maturity
strategy consists of two parts: a primary emphasis on valuation levels based on
<PAGE>
real yields (i.e., adjusted for inflation), and a supporting focus on
Federal Reserve Board policy based on forward rate trends.
Since September 1994, this investment discipline has favored the longer end
of the intermediate maturity spectrum. Consequently, over the past year, the
portfolio's duration (including cash and equivalents) generally ranged from 4.0
to 4.5, which was longer than that of the index. For the 12-month period ended
2/29/96, the fund achieved a total return of 10.94%, outperforming the Lehman
Intermediate Government Bond Index, which had a total return of 10.14% for the
same period. (Of course, past performance is not a guarantee of future
results.)(1),(2)
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 Government Bond Index, assuming in each
case reinvestment of all dividends and capital gain distributions, for the
period from inception (08/86) through 8/31/96.
In February of this year, interest rates began a sharp rise, and over the
short-term the fund's longer duration hindered rather than aided performance.
The fund's average duration has now been reduced to under 3.
At the time of our last report, the fund was focused almost exclusively on
U.S. Treasury obligations. This allocation was based on our recognition that,
while investment grade corporate bonds and mortgage backed securities' returns
were somewhat higher than Treasury certificates, they were not high enough to
justify the somewhat greater risk they entail. Over the past three months,
mortgage-backed securities began to show better values. We have therefore added
several GNMA and Federal Home Loan Mortgage 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
For the eight-month period ended 8/31/96, INVESCO Total Return Fund had a
total return of 3.64%, compared to a total return of 7.44% for the S&P 500 and
- -1.89% for the Lehman Government/Corporate Bond Index. (Of course, past
performance is not a guarantee of future results.)(1),(2)
Normally, Total Return Portfolio holds 30% of total assets in stocks and
30% in bonds, with the remaining 40% allocated according to market conditions.
The fund's holdings are gradually adjusted according to shifts in the stock and
<PAGE>
bond markets. This flexibility allows us to pursue consistent returns in all
market cycles.
Longer-maturity Treasuries react most quickly to changes in
interest rates -- and thus dropped more strongly than other fixed-income
categories when interest rates began their sharp rise during the first quarter
of 1996. This in turn had a negative effect on the fund's overall performance,
given the fund's 26.08% weighting in Treasury securities.
Total Return Fund
Average Annual Total Return
as of 8/31/96(2)
1 year 12.06%
-----------------------------------------
5 years 12.62%
-----------------------------------------
10 years 12.29%
-----------------------------------------
Over the past five years, however, longer-maturity Treasury obligations
have outperformed almost every other fixed-income category, and we are hopeful
of a rebound as the Fed's stance on interest rates becomes clearer. Meanwhile,
we have reduced the portfolio duration to about 4.7 years, which makes the fund
less vulnerable to sudden upticks in interest rates.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in INVESCO Total Return Fund to the value of a $10,000
investment in the S&P 500 Index and Lehman Government/Corporate Bond
Index, assuming in each case reinvestment of all dividends and capital
gain distributions, for the period from inception (9/87) through 8/31/96.
Equities remain dominant in our overall allocation. Despite the July
correction, stocks have advanced in 1995 and 1996, driven by a moderate economic
expansion and strong gains in corporate earnings. Consistent with our overall
philosophy, selection of individual securities is based upon a "bottom-up,
value" process that evaluates a company's historical profitability relative to
its current price. Stocks which look relatively undervalued on this basis are
candidates for the fund's portfolio.
Over the past six months, we took new positions in only a handful of new
stocks meeting this criteria: Raytheon Co (aerospace & defense), Great Lakes
Chemical (chemicals), and Genuine Parts (retail-automotive).
Many of our existing holdings offer the potential for price appreciation
over the long-term. Accordingly, we added to our positions in a host of firms,
including Compaq Computer, Hewlett-Packard Co, Heinz (H J) Co, Unilever NV,
SAFECO Corp, American Home Products, Bristol-Myers Squibb, Philip Morris, and
Illinois Central.
<PAGE>
As these examples illustrate, the fund is not targeting particular market
sectors, but rather individual companies in a wide variety of industry groups,
from technology to consumer staples to transportation & services. Our policy of
wide diversification lessens the fund's exposure to market, economic, or
government policy shifts affecting any one sector.
Fund Management
Total Return Fund is managed by Edward C. Mitchell, the president of
INVESCO Capital Management. He earned his MBA at the University of Colorado and
a BA from the University of Virginia. Ed began his investment career in 1969 and
is a Chartered Financial Analyst. He is assisted by David S. Griffin, who began
his investment career in 1982. A Chartered Financial Analyst, David holds an MBA
from the College of William & Mary, and a BA from Ohio Wesleyan University.
Value Equity Fund
For the eight-month period ended 8/31/96, INVESCO Value Equity Fund
achieved a total return of 7.61%, compared to a total return of 7.44% for the
S&P 500. (Of course, past performance is not a guarantee of future
results.)(1),(2)
As we described above, our value-orientation leads to a "bottom-up" stock
selection process. Rather than attempt to forecast macro-economic trends or
interest rate shifts, we evaluate an individual company's historical
profitability relative to its current stock price. As a result, the fund's
holdings tend to be mid- to large-capitalization firms of high quality. Relative
to the broad market, the portfolio has an above-average dividend yield, lower
price/earnings ratio, and higher return on equity.
Value Equity Fund
Average Annual Total Return
as of 8/31/96(2)
1 year 17.77%
-----------------------------------------
5 years 13.11%
-----------------------------------------
10 years 12.26%
-----------------------------------------
While seeking appreciation similar to that of the broad market during
upswings, we also hope to maintain a defensive cushion during declines --
providing investors with long-term growth potential with lower short-term
volatility. Wide sector diversification is a key component of our investment
strategy. This tactic may lead the fund to underperform when a large industry
group is leading the market. However, during last summer's market correction,
the fund's lower exposure to particularly volatile areas such as technology
offered a buffer.
The fund's newer holdings illustrate this diversification
policy. During the last six months, we added several names to the
portfolio, including Archer-Daniels-Midland Co (agricultural),
<PAGE>
Great Lakes Chemical (chemicals), Phelps Dodge (metals & mining),
Browning-Ferris Industries (pollution control-related), Rite Aid
(retail-related), and American Brands (tobacco).
We have also sold a few positions which reached our target price or became
less attractive based on our value methodology. These included Boeing Co,
American General, Morgan Stanley Group, and Reebok International Ltd.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the Value Equity Fund to the value of a $10,000 investment
in the S&P 500 Index, assuming in each case reinvestment of all dividends
and capital gain distributions, for the period from 8/31/86 through
8/31/96
As a defensive measure, our interest-rate sensitive investments in the
utilities and financial industries are underweighted relative to the broad
market. This is due to our belief that interest rates have not yet stabilized,
and there is the possibility that the Fed will act to forestall any inflation
threat by raising rates during the second half of 1996.
Fund Management
Value Equity Fund is managed by Michael C. Harhai. Mike began his
investment career in 1972. Before joining INVESCO, he served as a portfolio
manager with Citizens & Southern Investment Advisors and later as head of the
equity/balanced group with Sovran Capital Management. He holds an MBA from the
University of Central Florida and a BA from the University of South Florida. He
is a Chartered Financial Analyst, as is Terrence Irrgang, who assists in
managing the fund. Terry is a 13-year veteran of the investment business, and
holds an MBA from Temple University, as well as a BA from Gettysburg College.
(1) The S&P 500 is an unmanaged index of common stocks considered
representative of the broad U.S. equity market. The Lehman
Government/ Corporate Bond Index and Lehman Intermediate
Government Bond Index are unmanaged indices 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.
<PAGE>
INVESCO Value Trust
Ten Largest Common Stock Holdings
August 31, 1996
Description Value
- -------------------------------------------------------------------------------
TOTAL RETURN Fund
Compaq Computer $14,156,250
Edison International 13,900,000
First Chicago NBD 12,787,500
Lockheed Martin 12,618,750
Ford Motor 12,562,500
General Electric 12,468,750
Unilever NV New York Shrs 12,197,500
Dow Chemical 11,962,500
American Home Products 11,850,000
SAFECO Corp 11,593,750
VALUE EQUITY Fund
Boatmen's Bancshares $ 4,952,250
Philip Morris 4,487,500
Compaq Computer 4,473,375
Illinois Central Series A 4,083,750
Columbia/HCA Healthcare 4,075,913
Kimberly-Clark Corp 3,918,750
Ford Motor 3,685,000
Lilly (Eli) & Co 3,664,000
Computer Associates International 3,661,875
SAFECO Corp 3,643,750
Composition of holdings is subject to change.
<PAGE>
INVESCO Value Trust
Statement of Investment Securities
August 31, 1996
Shares or
Principal
Description Amount Value
- -------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT BOND Fund
FIXED INCOME SECURITIES 73.90%
US Government Obligations 57.42%
US Treasury Bonds
9.375%, 2/15/2006 $ 1,000,000 $ 1,167,500
US Treasury Notes
8.750%, 8/15/2000 $ 2,000,000 2,141,250
8.500%, 2/15/2000 $ 2,800,000 2,960,121
7.500%, 11/15/2001 $ 1,500,000 1,549,217
7.125%, 10/15/1998 $ 4,000,000 4,058,744
7.000%, 4/15/1999 $ 1,000,000 1,012,500
6.375%, 7/15/1999 $ 4,000,000 3,987,500
6.375%, 8/15/2002 $ 3,000,000 2,940,000
6.250%, 2/15/2003 $ 1,000,000 970,625
5.125%, 3/31/1998 $ 2,000,000 1,966,872
---------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $22,712,839) 22,754,329
---------------
US Government Agency Obligations 16.48%
Federal Home Loan Mortgage, Gold
Participation Certificates
8.000%, 10/1/2010 $ 1,172,416 1,191,186
6.500%, 7/1/2001 $ 997,256 983,544
Federal National Mortgage Association,
Gtd Mortgage Pass-Through Certificates
6.000%, 5/1/2009 $ 1,044,196 989,197
Government National Mortgage Association I,
Pass-Through Certificates
7.500%, 3/15/2026 $ 1,266,715 1,236,237
7.000%, 10/15/2008 $ 676,000 667,191
6.500%, 10/15/2008 $ 752,954 727,774
6.000%, 11/15/2008 $ 773,251 733,745
---------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Cost $6,728,003) 6,528,874
---------------
TOTAL FIXED INCOME SECURITIES
(Cost $29,440,842) 29,283,203
---------------
<PAGE>
SHORT-TERM INVESTMENTS 26.10%
US Government Obligations 22.97%
US Treasury Notes
8.500%, 7/15/1997 $ 4,000,000 4,088,744
6.250%, 1/31/1997 $ 5,000,000 5,105,625
---------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $9,183,594) 9,104,369
---------------
Repurchase Agreements 3.13%
Repurchase Agreement with State
Street Bank & Trust Co dated
8/30/1996 due 9/3/1996 at 4.750%,
repurchased at $1,240,654
(Collateralized by US Treasury
Notes due 3/31/2000
at 6.875%, value $1,304,612)
(Cost $1,240,000) $ 1,240,000 1,240,000
TOTAL SHORT-TERM INVESTMENTS
(Cost $10,423,594) 10,344,369
---------------
TOTAL INVESTMENT SECURITIES AT VALUE 100.00%
(Cost $39,864,436)
(Cost for Income Tax Purposes $39,947,834) $ 39,627,572
===============
TOTAL RETURN Fund
COMMON STOCKS 63.55%
AEROSPACE & DEFENSE 3.11%
Boeing Co 100,000 $ 9,050,000
Lockheed Martin 150,000 12,618,750
Raytheon Co 200,000 10,300,000
---------------
31,968,750
---------------
AGRICULTURAL 1.00%
Archer-Daniels-Midland Co 577,500 10,250,625
---------------
AUTOMOBILE RELATED 1.22%
Ford Motor 375,000 12,562,500
---------------
BANKING 4.73%
First Chicago NBD 300,000 12,787,500
First of America Bank 225,000 10,631,250
First Union 150,000 9,581,250
NationsBank Corp 100,000 8,512,500
Wachovia Corp 154,000 7,045,500
---------------
48,558,000
---------------
<PAGE>
CHEMICALS 2.64%
Dow Chemical 50,000 11,962,500
Great Lakes Chemical 150,000 8,625,000
Imperial Chemical Industries PLC ADR 130,000 6,581,250
---------------
27,168,750
---------------
COMPUTER RELATED 4.47%
Compaq Computer* 250,000 14,156,250
Computer Associates International 204,750 10,749,375
Hewlett-Packard Co 220,000 9,625,000
International Business Machines 100,000 11,437,500
---------------
45,968,125
---------------
DIVERSIFIED COMPANIES 5.63%
du Pont (E I) de Nemours 110,000 9,033,750
General Electric 150,000 12,468,750
Hanson PLC Sponsored ADR 800,000 10,100,000
Minnesota Mining & Manufacturing 130,000 8,937,500
National Service Industries 200,000 7,600,000
Norsk Hydro A/S Sponsored ADR 100,000 4,562,500
Textron Inc 60,000 5,122,500
---------------
57,825,000
---------------
FINANCE RELATED 1.83%
Deluxe Corp 250,000 9,562,500
Dun & Bradstreet 160,000 9,220,000
---------------
18,782,500
---------------
FOOD PRODUCTS & BEVERAGES 2.86%
Anheuser-Busch Cos 102,700 7,779,525
Heinz (H J) Co 300,000 9,450,000
Unilever NV New York Shrs 85,000 12,197,500
---------------
29,427,025
FOOD STORES - WHOLESALE 0.82%
Supervalu Inc 300,000 8,437,500
---------------
HEALTH CARE FACILITIES 0.65%
Columbia/HCA Healthcare 117,850 6,643,794
---------------
INSURANCE 3.90%
American General 260,000 9,490,000
Marsh & McLennan 110,000 10,230,000
Ohio Casualty 275,000 8,765,625
SAFECO Corp 350,000 11,593,750
---------------
40,079,375
---------------
<PAGE>
INVESTMENT BROKERS 1.02%
Morgan Stanley Group 220,000 10,505,000
---------------
MEDICAL RELATED - DRUGS 5.48%
Abbott Laboratories 160,000 7,220,000
American Home Products 200,000 11,850,000
Bristol-Myers Squibb 125,000 10,968,750
Lilly (Eli) & Co 173,200 9,915,700
Merck & Co 100,000 6,562,500
Schering-Plough Corp 175,000 9,778,125
---------------
56,295,075
---------------
METALS & MINING 1.00%
Phelps Dodge 170,000 10,285,000
---------------
OIL & GAS RELATED 3.06%
Amoco Corp 150,000 10,350,000
Repsol SA Sponsored ADR 350,000 11,418,750
Royal Dutch Petroleum 5 Gldr Shrs 65,000 9,709,375
---------------
31,478,125
---------------
PAPER & PAPER PRODUCTS 1.63%
Kimberly-Clark Corp 100,000 7,837,500
Westvaco Corp 310,000 8,873,750
---------------
16,711,250
---------------
POLLUTION CONTROL RELATED 0.99%
Browning-Ferris Industries 400,000 10,200,00
---------------
PRINTING & PUBLISHING 0.91%
Gannett Co 140,000 9,380,000
---------------
RETAIL 5.28%
Genuine Parts 175,000 7,503,125
K mart Corp 500,000 5,000,000
McDonald's Corp 103,200 4,785,900
Melville Corp 200,000 8,450,000
Penney (J C) Co 185,000 9,781,875
Rite Aid 175,000 5,578,125
Sherwin-Williams Co 150,000 6,562,500
Tandy Corp 150,000 6,618,750
---------------
54,280,275
---------------
<PAGE>
TEXTILES & APPAREL MANUFACTURERS 2.18%
Liz Claiborne 200,000 6,950,000
Shaw Industries 400,000 6,000,000
VF Corp 160,000 9,400,000
---------------
22,350,000
---------------
TOBACCO 1.99%
American Brands 250,000 10,156,250
Philip Morris 115,000 10,321,250
---------------
20,477,500
---------------
TOOLS 0.67%
Snap-On Inc 150,000 6,843,750
---------------
TRANSPORTATION 1.49%
Caliber System 225,000 3,909,375
Illinois Central Series A 375,000 11,343,750
---------------
15,253,125
---------------
UTILITIES 4.99%
Edison International 800,000 13,900,000
NYNEX Corp 200,000 8,625,000
Telefonica de Espana SA Sponsored AD 200,000 11,075,000
Telefonos de Mexico SA de CV Sponsored
ADR Representing Ord Series L Shrs 300,000 9,862,500
Texas Utilities 190,000 7,790,000
---------------
51,252,500
---------------
TOTAL COMMON STOCKS (Cost $521,213,140) 652,983,544
---------------
FIXED INCOME SECURITIES 31.24%
US Government Obligations 26.08%
US Treasury Bonds
11.250%, 2/15/2015 12,450,000 17,535,029
9.375%, 2/15/2006 17,450,000 20,372,875
9.250%, 2/15/2016 20,000,000 24,137,500
US Treasury Notes
8.750%, 8/15/2000 25,000,000 26,765,625
8.250%, 7/15/1998 20,000,000 20,650,000
8.000%, 5/15/2001 19,100,000 20,066,938
7.875%, 1/15/1998 16,750,000 17,121,616
7.875%, 11/15/1999 17,100,000 17,730,563
6.500%, 8/15/2005 28,000,000 27,203,708
6.375%, 7/15/1999 25,000,000 24,921,875
6.375%, 8/15/2002 10,150,000 9,947,000
5.750%, 8/15/2003 17,000,000 15,969,375
5.500%, 2/28/1999 10,000,000 9,784,360
<PAGE>
US Treasury Security Stripped Interest
Payment, Generic Tint Payment
Zero Coupon, 8/15/2003 25,250,000 15,749,410
---------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $273,179,256) 267,955,874
---------------
US Government Agency Obligations 3.98%
Federal Home Loan Mortgage
Gold, Participation Certificates
8.000%, 10/1/2010 5,471,277 5,558,867
6.500%, 7/1/2001 6,980,795 6,884,809
Federal National Mortgage Association,
Gtd Mortgage Pass-Through Certificates
7.500%, 8/1/2007 1,866,258 1,873,871
6.500%, 5/1/2026 8,000,000 7,392,504
6.000%, 5/1/2009 10,460,523 9,909,557
Government National Mortgage Association I,
Pass-Through Certificates
7.500%, 3/15/2026 5,911,339 5,769,106
7.000%, 10/15/2008 1,102,438 1,088,073
7.000%, 12/15/2022 236,522 226,030
6.500%, 10/15/2008 1,129,431 1,091,662
6.000%, 11/15/2008 1,159,877 1,100,618
---------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Cost $41,655,764) 40,895,097
---------------
Corporate Bonds 1.18%
AEROSPACE & DEFENSE 0.14%
Rockwell International, Notes
6.625%, 6/1/2005 1,500,000 1,430,543
---------------
AUTOMOBILE RELATED 0.07%
Ford Motor, Notes
7.500%, 11/15/1999 750,000 760,565
---------------
BANKING 0.31%
National City, Sub Notes
7.200%, 5/15/2005 2,000,000 1,951,271
NationsBank Corp, Sr Notes
5.375%, 4/15/2000 1,250,000 1,186,222
---------------
3,137,493
---------------
FINANCE RELATED 0.08%
Beneficial Corp Medium-Term Notes
5.350%, 10/8/1998 800,000 779,711
---------------
<PAGE>
FOOD PRODUCTS & BEVERAGES 0.15%
PepsiCo Inc, Deb
7.750%, 10/1/1998 1,500,000 1,532,756
---------------
RETAIL 0.07%
Wal-Mart Stores, Notes
5.500%, 3/1/1998 750,000 739,431
---------------
UTILITIES 0.36%
Duke Power, 1st & Ref Mortgage
7.500%, 4/1/1999 1,000,000 1,015,445
Scana Corp, Medium-Term Notes
6.150%, 7/3/2000 2,000,000 1,924,838
Union Electric, 1st Mortgage
6.750%, 10/15/1999 750,000 746,132
---------------
3,686,415
---------------
TOTAL CORPORATE BONDS
(Cost $12,437,538) 12,066,914
---------------
TOTAL FIXED INCOME SECURITIES
(Cost $327,272,558) 320,917,885
---------------
SHORT-TERM INVESTMENTS 5.21%
US Government Obligations 1.96%
US Treasury Notes
8.000%, 1/15/1997 (Cost $20,375,625) 20,000,000 20,175,000
---------------
Commercial Paper 2.43%
AEROSPACE & DEFENSE 2.43%
Raytheon Co
5.280%, 9/12/1996 (Cost $24,959,667) 25,000,000 24,959,667
---------------
Repurchase Agreements 0.82%
Repurchase Agreement with State
Street Bank & Trust Co dated
8/30/1996 due 9/3/1996 at 4.750%,
repurchased at $8,404,433
(Collateralized by US Treasury
Notes due 3/31/2000 at 6.875%,
value $8,807,465)
(Cost $8,400,000) 8,400,000 8,400,000
---------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $53,735,292) 53,534,667
---------------
TOTAL INVESTMENT SECURITIES AT VALUE 100.00%
(Cost $902,220,990)
(Cost for Income Tax Purposes $902,234,315) 1,027,436,096
===============
<PAGE>
VALUE EQUITY Fund
COMMON STOCKS 94.73%
AEROSPACE & DEFENSE 3.32%
Lockheed Martin 35,860 $ 3,016,723
Raytheon Co 70,000 3,605,000
---------------
6,621,723
---------------
AGRICULTURAL 1.54%
Archer-Daniels-Midland Co 173,250 3,075,187
---------------
AUTOMOBILE RELATED 1.85%
Ford Motor 110,000 3,685,000
---------------
BANKING 6.17%
Boatmen's Bancshares 93,000 4,952,250
First Chicago NBD 70,000 2,983,750
First Union 30,000 1,916,250
Wachovia Corp 53,700 2,456,775
---------------
12,309,025
---------------
CHEMICALS 2.89%
Dow Chemical 34,000 2,711,500
Great Lakes Chemical 53,000 3,047,500
---------------
5,759,000
---------------
COMPUTER RELATED 8.34%
Automatic Data Processing 50,000 2,081,250
Compaq Computer* 79,000 4,473,375
Computer Associates International 69,750 3,661,875
Hewlett-Packard Co 76,000 3,325,000
International Business Machines 27,000 3,088,125
---------------
16,629,625
---------------
DIVERSIFIED COMPANIES 5.97%
General Electric 42,100 3,499,562
Hanson PLC Sponsored ADR 218,300 2,756,037
Minnesota Mining & Manufacturing 30,000 2,062,500
Textron Inc 42,000 3,585,750
---------------
11,903,849
---------------
ELECTRICAL EQUIPMENT 1.37%
Emerson Electric 32,700 2,738,625
---------------
FINANCE RELATED 1.81%
Federal National Mortgage Association 116,500 3,611,500
---------------
<PAGE>
FOOD PRODUCTS & BEVERAGES 2.96%
Anheuser-Busch Cos 23,000 1,742,250
Heinz (H J) Co 72,500 2,283,750
PepsiCo Inc 65,000 1,868,750
---------------
5,894,750
---------------
HEALTH CARE FACILITIES 2.91%
Columbia/HCA Healthcare 72,300 4,075,913
Manor Care 50,000 1,718,750
---------------
5,794,663
---------------
INSURANCE 7.38%
American International Group 28,500 2,707,500
General Re 18,000 2,607,750
Jefferson-Pilot Corp 57,575 2,957,916
Marsh & McLennan 30,000 2,790,000
SAFECO Corp 110,000 3,643,750
---------------
14,706,916
---------------
MEDICAL RELATED - DRUGS 9.87%
Abbott Laboratories 47,000 2,120,875
American Home Products 52,000 3,081,000
Bristol-Myers Squibb 30,000 2,632,500
Lilly (Eli) & Co 64,000 3,664,000
Merck & Co 48,000 3,150,000
Schering-Plough Corp 47,400 2,648,475
Warner-Lambert Co 40,000 2,380,000
---------------
19,676,850
---------------
METALS & MINING 0.94%
Phelps Dodge 31,000 1,875,500
---------------
MOTION PICTURES & TELEVISION 1.43%
Disney (Walt) Co 50,000 2,850,000
---------------
OFFICE EQUIPMENT 1.73%
Pitney-Bowes Inc 71,700 3,459,525
---------------
OIL & GAS RELATED 5.79%
Amoco Corp 40,000 2,760,000
Exxon Corp 35,275 2,870,503
Repsol SA Sponsored ADR 80,400 2,623,050
Royal Dutch Petroleum 5 Gldr Shrs 22,076 3,297,603
---------------
11,551,156
---------------
<PAGE>
PAPER & PAPER PRODUCTS 3.40%
Kimberly-Clark Corp 50,000 3,918,750
Westvaco Corp 100,050 2,863,931
---------------
6,782,681
---------------
POLLUTION CONTROL RELATED 1.59%
Browning-Ferris Industries 124,000 3,162,000
---------------
PRINTING & PUBLISHING 1.01%
Gannett Co 30,000 2,010,000
---------------
RETAIL 9.77%
Circuit City Stores 108,000 3,402,000
Dillard Department Stores Class A 57,000 1,938,000
Giant Food Class A 64,000 2,152,000
K mart Corp 209,000 2,090,000
McDonald's Corp 67,000 3,107,125
Penney (J C) Co 68,000 3,595,500
Rite Aid 100,000 3,187,500
---------------
19,472,125
---------------
TEXTILES & APPAREL MANUFACTURERS 2.53%
Russell Corp 90,000 2,880,000
Shaw Industries 145,000 2,175,000
---------------
5,055,000
---------------
TOBACCO 3.17%
American Brands 45,000 1,828,125
Philip Morris 50,000 4,487,500
---------------
6,315,625
---------------
TRANSPORTATION 2.05%
Illinois Central Series A 135,000 4,083,750
---------------
UTILITIES 4.94%
CINergy Corp 100,700 3,021,000
DTE Energy 52,000 1,482,000
Southern Co 60,000 1,357,500
Southern New England Telecommunications 46,000 1,753,750
<PAGE>
Telefonos de Mexico SA de CV Sponsored
ADR Representing Ord Series L Shrs 68,000 2,235,500
---------------
9,849,750
---------------
TOTAL COMMON STOCKS (Cost $143,910,632) 188,873,825
---------------
SHORT-TERM INVESTMENTS - REPURCHASE
AGREEMENTS 5.27%
Repurchase Agreement with State
Street Bank & Trust Co dated
8/30/1996 due 9/3/1996 at 4.750%,
repurchased at $10,515,547
(Collateralized by US Treasury
Notes due 3/31/2000 at 6.875%,
value $11,024,588) (Cost $10,510,000) 10,510,000 10,510,000
---------------
TOTAL INVESTMENT SECURITIES AT VALUE 100.00%
(Cost $154,420,632) (Cost for Income
Tax Purposes $154,602,933) $ 199,383,825
===============
* Security is non-income producing.
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Statement of Assets and Liabilities
August 31, 1996
Intermediate
Government Total Return Value Equity
Bond Fund Fund Fund
-------------------------------------------------
ASSETS
Investment Securities:
At Cost~ $39,864,436 $ 902,220,990 $154,420,632
=================================================
At Value~ 39,627,572 1,027,436,096 199,383,825
Cash 3,755 0 158,521
Receivables:
Fund Shares Sold 26,209 1,390,202 651,795
Dividends and Interest 390,262 4,656,855 422,146
Prepaid Expenses and
Other Assets 12,040 67,458 25,893
-------------------------------------------------
TOTAL ASSETS $40,059,838 $1,033,550,611 $200,642,180
-------------------------------------------------
LIABILITIES
Payables:
Custodian 0 634,783 0
Distributions to
Shareholders 13,182 152,290 33,789
Fund Shares Repurchased 95,238 589,073 550,315
Accrued Expenses and Other
Payables 2,914 23,307 12,418
-------------------------------------------------
TOTAL LIABILITIES 111,334 1,399,453 596,522
-------------------------------------------------
Net Assets at Value $39,948,504 $1,032,151,158 $200,045,658
=================================================
NET ASSETS
Paid-in Capital $40,688,798 $ 903,372,268 $151,114,705
Accumulated Undistributed
Net Investment Income 0 11,343 42,661
Accumulated Undistributed
Net Realized Gain (Loss)
on Investment Securities
and Foreign Currency
Transactions (503,430) 3,552,441 3,925,099
<PAGE>
Net Appreciation
(Depreciation) of Investment
Securities and Foreign
Currency Transactions (236,864) 125,215,106 44,963,193
-------------------------------------------------
Net Assets at Value $39,948,504 $1,032,151,158 $200,045,658
=================================================
Shares Outstanding* $ 3,246,858 $ 45,674,707 $ 8,994,532
Net Asset Value, Offering
and Redemption Price per
Share $12.30 $22.60 $22.24
=================================================
~ Investment securities at cost and value at August 31, 1996 include repurchase
agreements of $1,240,000, $8,400,000 and $10,510,000 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 August 31, 1996, there was
an unlimited number of authorized Fund shares.
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Statement of Operations
Year Ended August 31, 1996
Intermediate
Government Total Return Value Equity
Bond Fund Fund Fund
----------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 0 $15,402,155 $ 4,459,132
Interest 2,716,458 21,637,913 456,707
Foreign Taxes Withheld 0 (345,592) (65,754)
----------------------------------------------
TOTAL INCOME 2,716,458 36,694,476 4,850,085
EXPENSES
Investment Advisory Fees 235,160 6,025,905 1,382,049
Transfer Agent Fees 156,123 953,383 282,255
Administrative Fees 15,879 137,623 37,641
Custodian Fees and Expenses 14,629 145,677 38,278
Professional Fees and Expenses 13,833 38,324 20,786
Registration Fees and Expenses 24,346 118,394 47,065
Reports to Shareholders 12,001 59,989 22,596
Trustees' Fees and Expenses 9,755 41,092 16,188
Other Expenses 3,655 40,333 11,107
----------------------------------------------
TOTAL EXPENSES 485,381 7,560,720 1,857,965
Fees and Expenses Absorbed
by Investment Adviser (36,683) 0 0
Fees and Expenses Paid
Indirectly (7,176) (83,578) (21,921)
----------------------------------------------
NET EXPENSES 441,522 7,477,142 1,836,044
----------------------------------------------
NET INVESTMENT INCOME 2,274,936 29,217,334 3,014,041
----------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT
SECURITIES
Net Realized Gain on
Investment Securities and
Foreign Currency Transactions 416,138 6,273,916 4,119,794
Change in Net Appreciation
(Depreciation) of Investment
Securities and Foreign
Currency Transactions (1,505,858) 48,298,544 20,794,083
----------------------------------------------
<PAGE>
NET GAIN (LOSS) ON
INVESTMENT SECURITIES (1,089,720) 54,572,460 24,913,877
----------------------------------------------
Net Increase in Net Assets
from Operations $ 1,185,216 $83,789,794 $ 27,927,918
==============================================
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Statement of Changes in Net Assets
Year Ended August 31
<TABLE>
<CAPTION>
Intermediate Government
Bond Fund Total Return Fund
----------------------------- --------------------------------
1996 1995 1996 1995
OPERATIONS
<S> <C> <C> <C> <C>
Net Investment Income $ 2,274,936 $ 2,156,239 $ 29,217,334 $14,983,860
Net Realized Gain (Loss) on
Investment Securities and Foreign
Currency Transactions 416,138 (915,758) 6,273,916 2,916,413
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions (1,505,858) 2,538,939 48,298,544 46,627,023
-------------------------------- --------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 1,185,216 3,779,420 83,789,794 64,527,296
-------------------------------- --------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (2,261,908) (2,147,391) (29,200,386) (14,983,860)
In Excess of Net Investment Income 0 0 0 (20,316)
Net Realized Gain on Investment
Securities 0 0 (4,352,151) (787,737)
--------------------------------- --------------------------------
TOTAL DISTRIBUTIONS (2,261,908) (2,147,391) (33,552,537) (15,791,913)
--------------------------------- --------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Share 28,705,527 27,363,047 609,919,491 326,800,315
Reinvestment of Distributions 2,132,961 2,080,851 32,908,763 15,396,556
--------------------------------- --------------------------------
30,838,488 29,443,898 642,828,254 342,196,871
Amounts Paid for Repurchases of Shares (27,152,636) (25,597,128) (224,382,843) (120,228,352)
--------------------------------- --------------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 3,685,852 3,846,770 418,445,411 221,968,519
--------------------------------- --------------------------------
Total Increase in Net Assets 2,609,160 5,478,799 468,682,668 270,703,902
NET ASSETS
Beginning of Period 37,339,344 31,860,545 563,468,490 292,764,588
--------------------------------- --------------------------------
End of Period $39,948,504 $37,339,344 $1,032,151,158 $563,468,490
================================= ================================
<PAGE>
Accumulated Undistributed
(Distributions In Excess of)
Net Investment Income Included
in Net Assets at End of Period $ 0 $ 0 $ 11,343 $ (6,527)
FUND SHARE TRANSACTIONS
Shares Sold 2,283,726 2,246,918 27,294,383 16,593,356
Shares Issued from Reinvestment
of Distributions 169,140 170,015 1,459,274 786,039
--------------------------------- --------------------------------
2,452,866 2,416,933 28,753,657 17,379,395
Shares Repurchased (2,159,851) (2,082,218) (9,971,539) (6,275,356)
-------------------------------- --------------------------------
Net Increase in Fund Shares 293,015 334,715 18,782,118 11,104,039
================================ ================================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Statement of Changes in Net Assets (Continued)
Year Ended August 31
Value Equity Fund
------------------------------
1996 1995
OPERATIONS
Net Investment Income $ 3,014,041 $ 2,846,758
Net Realized Gain on Investment
Securities and Foreign Currency
Tansactions 4,119,794 5,886,502
Change in Net Appreciation of
Investment Securities and Foreign
Currency Transactions 20,794,083 14,593,965
-------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 27,927,918 23,327,225
-------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (2,995,302) (2,834,142)
Net Realized Gain on Investment
Securities (3,086,946) (7,116,877)
-------------------------------
TOTAL DISTRIBUTIONS (6,082,248) (9,951,019)
-------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 214,313,579 98,871,021
Reinvestment of Distributions 5,906,003 9,797,324
-------------------------------
220,219,582 108,668,345
Amounts Paid for Repurchases
of Shares (195,190,483) (80,723,493)
------------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 25,029,099 27,944,852
------------------------------
Total Increase in Net Assets 46,874,769 41,321,058
NET ASSETS
Beginning of Period 153,170,889 111,849,831
------------------------------
End of Period $200,045,658 $153,170,889
==============================
Accumulated Undistributed Net
Investment Income Included in
Net Assets at End of Period $ 42,661 $ 12,616
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 9,902,174 5,496,357
Shares Issued from Reinvestment
of Distributions 277,102 573,039
------------------------------
10,179,276 6,069,396
Shares Repurchased (9,026,840) (4,400,997)
------------------------------
Net Increase in Fund Shares 1,152,436 1,668,399
==============================
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Value Trust
(the "Trust") was organized under the laws of the Commonwealth of Massachusetts
and presently consists of three separate Funds: Intermediate Government Bond
Fund, Total Return Fund and Value Equity Fund. The investment objectives of the
Funds are to achieve a high total return on investments through capital
appreciation and current income. The Trust is registered under the Investment
Company Act of 1940 (the "Act") as a diversified, open-end management investment
company.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION - Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales
price in the market where such securities are primarily traded. If last sales
prices are not available, securities are valued at the highest closing bid
price obtained from one or more dealers making a market for such securities
or by a pricing service approved by the Trust's trustees.
Debt securities are valued at evaluated bid prices as determined by a
pricing service approved by the Trust's trustees. If evaluated bid prices
are not available, debt securities are valued by averaging the bid prices
obtained from one or more dealers making a market for such securities.
Foreign securities are valued at the closing price on the principal
stock exchange on which they are traded. In the event that closing prices are
not available for foreign securities, prices will be obtained from the
principal stock exchange at or prior to the close of the New York Stock
Exchange. Foreign currency exchange rates are determined daily prior to
the close of the New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good
faith by the Trust's trustees.
Short-term securities are stated at amortized cost (which
approximates market value) if maturity is 60 days or less at the time of
purchase, or market value if maturity is greater than 60 days.
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.
<PAGE>
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the trade date and dividend income is recorded on the ex
dividend date. Certain dividends from foreign securities will be recorded as
soon as the Trust is informed of the dividend if such information is obtained
subsequent to the ex dividend date. Interest income, which may be comprised
of stated coupon rate, market discount and original issue discount, is
recorded on the accrual basis. Discounts on debt securities purchased are
amortized over the life of the respective security as adjustments to interest
income. Cost is determined on the specific identification basis.
The Trust may have elements of risk due to concentrated investments
in foreign issuers located in a specific country. Such concentrations may
subject the Trust to additional risks resulting from future political or
economic conditions and/or possible impositions of adverse foreign
governmental laws or currency exchange restrictions. Net realized and
unrealized gain or loss from investments includes fluctuations from
currency exchange rates and fluctuations in market value.
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, 1996, Intermediate Government Bond Fund had $411,995 and
$16,031 in net capital loss carryovers which expire in the years 2003 and
2004, respectively.
To the extent future capital gains are offset by capital loss
carryovers and deferred post-October 31 losses, such gains will not be
distributed to shareholders.
Dividends paid by the Trust from net investment income and
distributions of net realized short-term capital gains are, for federal
income tax purposes, taxable as ordinary income to shareholders. Of the
ordinary income distributions declared for the year ended August 31,
1996, 44.02% for Total Return Fund and 75.04% 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. Reinvestment of dividends is effected at the month-end net
asset value. The Trust distributes net realized capital gains, if any, to its
shareholders at least annually, if not offset by capital loss carryovers.
<PAGE>
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for mortgage-backed securities, market discounts,
foreign currency transactions, nontaxable dividends, net operating losses and
expired capital loss carryforwards. For the year ended August 31, 1996,
Intermediate Government Bond Fund reclassified $13,028 from accumulated
undistributed net investment income to accumulated undistributed net realized
gain on investment securities and foreign currency transactions. For the year
ended August 31, 1996, Total Return and Value Equity Funds reclassified $922
and $11,306, respectively, from paid-in capital to accumulated undistributed
net investment income and $2,028 and $3,811, respectively, from accumulated
undistributed net realized gain on investment securities and foreign currency
transactions to paid-in capital. 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, Other
Expenses, which include Pricing Expenses, and Transfer Agent Fees are
reduced by credits earned by each Fund from security brokerage
transactions under certain broker/service arrangements with third
parties. Such credits are included in Fees and Expenses Paid Indirectly
in the Statement of Operations.
For the year ended August 31, 1996, Fees and Expenses Paid
Indirectly consisted of the following:
Custodian Fees Transfer Other
Fund and Expenses Agent Fees Expenses
- -------------------------------------------------------------------------------
Intermediate Government
Bond Fund $ 7,176 $ 0 $ 0
Total Return Fund 82,260 47 1,271
Value Equity Fund 20,168 0 1,753
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:
<PAGE>
AVERAGE NET ASSETS
-------------------------------------------
$0 to $500 Million Over
$500 to $1 $1
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 received a transfer agent fee at an annual rate of $14.00 for Total
Return and Value Equity Funds, and $20.00 for Intermediate Government Bond Fund
per shareholder account, or per participant in an omnibus account through April
30, 1996. 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. As of May 1, 1996, the transfer agent fee became $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, computed in a manner similar to the previous fee.
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, 1996, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were as follows:
Fund Purchases Sales
- -------------------------------------------------------------------------------
Total Return Fund $260,440,475 $14,537,728
Value Equity Fund 62,407,241 47,406,124
<PAGE>
For the year ended August 31, 1996, the aggregate cost of purchases and
proceeds from sales of U.S. Government securities were as follows:
Fund Purchases Sales
- -------------------------------------------------------------------------------
Intermediate Government Bond Fund $ 27,958,476 $23,650,712
Total Return Fund 257,459,477 70,145,290
NOTE 4 - APPRECIATION AND DEPRECIATION. At August 31, 1996, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation (depreciation) by Fund were as
follows:
Net
Gross Gross Appreciation
Fund Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------
Intermediate Government
Bond Fund $ 122,914 $ 443,176 $ (320,262)
Total Return Fund 145,204,884 20,003,103 125,201,781
Value Equity Fund 47,466,577 2,685,685 44,780,892
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 were
based on an annual rate equal to 25% of the retainer fee at the time of
retirement through June 30, 1996. As of July 1, 1996, benefits are based on an
annual rate of 40% of the retainer fee at the time of retirement.
Pension expenses for the year ended August 31, 1996, included in Trustees'
Fees and Expenses in the Statement of Operations, and unfunded accrued pension
costs and pension liability included in Prepaid Expenses and Accrued Expenses,
respectively, in the Statement of Assets and Liabilities were as follows:
Unfunded
Pension Accrued Pension
Fund Expenses Pension Costs Liability
- -------------------------------------------------------------------------------
Intermediate Government
Bond Fund $ 404 $ 834 $ 1,942
Total Return Fund 6,013 5,774 18,314
Value Equity Fund 1,681 3,046 7,401
<PAGE>
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. For the
year ended August 31, 1996, there were no such borrowings.
<PAGE>
INVESCO Value Trust
Financial Highlights
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period
Ended
Year Ended August 31 August 31 Year Ended December 31
---------------------------- ---------- ----------------------
1996 1995 1994 1993> 1992 1991
Intermediate Government Bond Fund
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.64 $12.16 $13.25 $12.68 $12.89 $12.13
------------------------------- ------ ------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.73 0.73 0.70 0.48 0.90 0.89
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (0.34) 0.48 (0.75) 0.57 (0.16) 0.77
------------------------------- ------ --------------------------
Total from Investment Operations 0.39 1.21 (0.05) 1.05 0.74 1.66
------------------------------- ------ --------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.73 0.73 0.70 0.48 0.90 0.90
Distributions from
Capital Gains 0.00 0.00 0.34 0.00 0.05 0.00
------------------------------ ------ --------------------------
Total Distributions 0.73 0.73 1.04 0.48 0.95 0.90
------------------------------ ------ --------------------------
Net Asset Value -
End of Period $12.30 $12.64 $12.16 $13.25 $12.68 $12.89
============================== ====== ==========================
TOTAL RETURN 3.12% 10.36% (0.37%) 8.38%* 6.03% 14.16%
RATIOS
Net Assets - End of Period
($000 Omitted) 39,949 37,339 31,861 39,384 29,649 24,385
Ratio of Expenses to
Average Net Assets# 1.15%@ 1.20% 1.07% 0.96%~ 0.97% 0.93%
Ratio of Net Investment Income
to Average Net Assets# 5.81% 6.04% 5.58% 5.48%~ 6.38% 7.28%
Portfolio Turnover Rate 63% 92% 49% 34%* 93% 51%
</TABLE>
<PAGE>
> From January 1, 1993 to August 31, 1993, the Fund's current fiscal year-end.
+ Distributions in excess of net investment income for the year ended August 31,
1994, aggregated less than $0.01 on a per share basis.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the year
ended August 31, 1996. If such expenses had not been voluntarily absorbed,
ratio of expenses to average net assets would have been 1.24% and ratio of
net investment income to average net assets would have been 5.72%.
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Invesment Adviser, which is before any expense offset arrangements.
~ Annualized
<PAGE>
INVESCO Value Trust
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period
Ended Year Ended
Year Ended August 31 August 31 December 31
------------------------------ -------------- ---------------------
1996 1995 1994 1993> 1992 1991
Total Return Fund
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $20.95 $18.54 $18.27 $17.18 $16.43 $14.21
---------------------------------- -------- ---------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.73 0.72 0.69 0.40 0.66 0.71
Net Gains on Securities
(Both Realized and
Unrealized) 1.78 2.46 0.60 1.09 0.93 2.78
---------------------------------- --------- ---------------------
Total from Investment
Operations 2.51 3.18 1.29 1.49 1.59 3.49
---------------------------------- --------- ---------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.73 0.72 0.60 0.40 0.65 0.72
In Excess of Net
Investment Income+ 0.00 0.00 0.09 0.00 0.00 0.00
Distributions from
Capital Gains 0.13 0.05 0.17 0.00 0.19 0.55
In Excess of Capital
Gains 0.00 0.00 0.16 0.00 0.00 0.00
---------------------------------- --------- ---------------------
Total Distributions 0.86 0.77 1.02 0.40 0.84 1.27
---------------------------------- --------- ---------------------
Net Asset Value -
End of Period $22.60 $20.95 $18.54 $18.27 $17.18 $16.43
================================== ========= =====================
TOTAL RETURN 12.06% 17.54% 7.22% 8.72%* 9.84% 24.96%
<PAGE>
RATIOS
Net Assets -
End of Period
($000 Omitted) $1,032,151 $563,468 $292,765 $220,224 $137,196 $82,219
Ratio of Expenses to
Average Net Assets 0.89%@ 0.95% 0.96% 0.93%~ 0.88% 0.92%
Ratio of Net Investment
Income to Average
Net Assets 3.44% 3.97% 3.31% 3.51%~ 4.06% 4.62%
Portfolio Turnover
Rate 10% 30% 12% 19%* 13% 49%
Average Commission
Rate Paid^^ $ 0.0539 - - - - -
> From January 1, 1993 to August 31, 1993, the Fund's current fiscal year-end.
+ Distributions in excess of net investment income for the year ended August
31, 1995, aggregated less than $0.01 on a per share basis.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangement.
~ 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 effective September 1, 1995.
</TABLE>
<PAGE>
INVESCO Value Trust
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period
Ended Year Ended
Year Ended August 31 August 31 December 31
----------------------------- -------------- --------------------
1996 1995 1994 1993> 1992 1991
Value Equity Fund
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $19.53 $18.12 $17.79 $16.91 $16.57 $13.88
------------------------------ ------ --------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.35 0.39 0.36 0.24 0.36 0.40
Net Gains on Securities (Both
Realized and Unrealized) 3.09 2.58 1.20 0.88 0.45 4.54
------------------------------ ------ --------------------
Total from Investment Operations 3.44 2.97 1.56 1.12 0.81 4.94
------------------------------ ------ --------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.35 0.39 0.31 0.24 0.34 0.40
In Excess of Net
Investment Income 0.00 0.00 0.04 0.00 0.00 0.00
Distributions from
Capital Gains 0.38 1.17 0.88 0.00 0.13 1.85
------------------------------
Total Distributions 0.73 1.56 1.23 0.24 0.47 2.25
------------------------------ ------ --------------------
Net Asset Value -
End of Period $22.24 $19.53 $18.12 $17.79 $16.91 $16.57
============================== ====== ====================
TOTAL RETURN 17.77% 17.84% 9.09% 6.65%* 4.98% 35.84%
<PAGE>
RATIOS
Net Assets - End of Period
($000 Omitted) $ 200,046 153,171 111,850 81,914 78,609 39,741
Ratio of Expenses to Average
Net Assets 1.01%@ 0.97% 1.01% 1.00%~ 0.91% 0.98%
Ratio of Net Investment Income
to Average Net Assets 1.64% 2.17% 1.80% 2.07%~ 2.19% 2.39%
Portfolio Turnover Rate 27% 34% 53% 35%* 37% 64%
Average Commission Rate Paid^^ $ 0.0589 - - - - -
> From January 1, 1993 to August 31, 1993, the Fund's current fiscal year-end.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ Ratio is based on Total Expenses of the Fund, which is before any offset
arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed effective September 1, 1995.
</TABLE>
<PAGE>
Report of Independent Accountants
To the Trustees and Shareholders 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 Intermediate Government Bond Fund,
Total Return Fund and Value Equity Fund (constituting INVESCO Value Trust,
hereafter referred to as the "Fund") at August 31, 1996, 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 each of 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, 1996 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Denver, Colorado
September 30, 1996
<PAGE>
INVESCO FUNDS
To receive general information and prospectuses on
any of INVESCO's funds or retirement plans, or to
obtain current account or price information,
call toll-free: 1-800-525-8085
To reach PAL(R), your 24-hour Personal Account Line,
call: 1-800-424-8085
You can find us on the World Wide Web:
http://www.invesco.com
Or write to:
INVESCO Funds Group, Inc., (SM) Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, please visit one of our
convenient Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center, 7800 East Union Avenue,
Lobby Level
This information must be preceded or accompanied by an effective prospectus.
