SEMIANNUAL REPORT
February 28, 1997
INVESCO
VALUE
FUNDS
Intermediate Government Bond
Total Return
Value Equity
INVESCO FUNDS
<PAGE>
Market Overview March 1997
Fueled by a stronger-than-expected economy and improving corporate
earnings, the stock market catapulted to new highs over the last six months.
During the fourth quarter of 1996, the growth rate (as measured by the Gross
Domestic Product) accelerated to a revised level of 3.9%. This surpassed most
analysts' expectations, as the expansion had slowed to a rate of 2.2% in the
previous quarter. The vibrant economy has rekindled fears that tightness in the
labor market could lead to renewed inflation. However, gains in productivity
thus far have offset wage increases and allowed companies to maintain profit
margins without raising prices. This has helped keep inflation under control. In
fact, the consumer price index rose just 0.1% in the month of January (the
smallest gain since June 1996) and finished 1996 at an annualized rate of 3.3%
- -- in line with historical averages.
The U.S. trade gap hit an eight-year high in 1996, primarily driven by a
stronger dollar; this has negative consequences for domestic exporters. As their
products become more expensive in foreign markets, profit margins and future
earnings may decrease. In addition, the phenomenal appreciation of
large-capitalization stocks, predicated on a nearly perfect investment
environment, may have created unwarranted expectations by many investors when
compared to historical averages.
In the middle of March, the investment environment shifted as increased
consumer spending reignited fears of inflation. Consequently, the Federal
Reserve Board increased short-term interest rates by 0.25%. This preemptive
strike against wage and price hikes was the first rate increase in more than two
years, and led to increased negative sentiment in the market, producing a sharp
5% to 10% pullback in many stocks.
A moderate inflation level represents a positive factor for the economy.
At the same time, though, the longevity of the current expansion -- over six
years -- remains a cause for concern; the post-World War II average is only four
and a half years. Negative growth hasn't been experienced since the first
quarter of 1993. If the growth rate does not slow, many economists expect the
Fed to continue raising short-term interest rates, with the concomitant danger
of cutting the expansion short.
In fact, despite the positive economic growth and inflation news, concerns
over inflation, interest rates, and the possibility of continued Fed
intervention led to extreme volatility in bond prices. This volatility, coupled
with a change in the risk/reward relationship for most bonds, caused nervousness
for most fixed-income investors. Many took on considerably more risk for less
reward as spreads narrowed between the yields on junk bonds and government
bonds. This spread has fallen to a little more than three percentage points from
almost five percentage points in late 1995, and compared to historic
measurements, it is well below its long-term average.
INVESCO Value Funds
The line graphs on the following pages illustrate the value of a $10,000
investment in each of the INVESCO Value Funds, plus reinvested dividends and
capital gain distributions, for the 10-year period ended 2/28/97 (or for Total
<PAGE>
Return Fund, from inception through 2/28/97). The charts and other total return
figures cited reflect the funds' operating expenses, but the indexes do not have
expenses, which would, of course, have lowered their performance.(2)
Composition of holdings is subject to change.
Intermediate Government Bond Fund
For the six-month period ended 2/28/97, INVESCO Intermediate Government
Bond Fund had a total return of 3.49%, compared to a total return of 4.20% for
the Lehman Intermediate Government Bond Index. (Of course, past performance is
not a guarantee of future results.)(1),(2)
Volatility in the fixed-income market has continued over the last six
months, which means the fund's investment strategy has been highly influenced by
interest rate movements and maturity strategies. The fund primarily invests in
obligations of the U.S. government and its agencies which mature in three to
five years. Due to the fund's very narrow focus and our value investment
methodology, the fund may overperform or underperform in short market cycles.
However, we seek to minimize the loss of capital in bear markets, while fully
participating in bull markets.
Over the last six months, we have positioned the fund somewhat defensively
in response to the volatile interest rate environment. The duration of the fund
as of 2/28/97 was 2.74 years, reflecting our cautious approach. We continue to
be heavily weighted in government bonds and have limited exposure to "plain
vanilla" mortgage-backed securities.
Looking forward, we plan to maintain this strategy, as volatility will
likely continue in the fixed-income market. We also believe that there is a
possibility that the Fed may further tighten credit availability as a preemptive
strike against inflation; a shorter duration may help cushion the fund against a
rise in interest rates.
Intermediate Government Bond Fund
Average Annual Total Return
as of 2/28/97(2)
1 year 3.07%
-----------------------------------------
5 years 6.45%
-----------------------------------------
10 years 6.93%
-----------------------------------------
Graph: Intermediate Government Bond Fund Total Return
This line graph compares the value of a $10,000 investment in INVESCO
Intermediate Government Bond Fund to the value of a $10,000 investment in
the Lehman Intermediate Government Bond Index, assuming in each case
reinvestment of all dividends and capital gain distributions, for the ten
year period ended 2/28/97.
<PAGE>
Fund Management
Intermediate Government Bond Fund is managed by James O. Baker. Before
joining INVESCO, Jim was associated with Willis Investment Counsel, Morgan
Keegan, and Drexel Burnham Lambert. A Chartered Financial Analyst, he holds a BA
from Mercer University. Ralph H. Jenkins, Jr., assists in managing the fund. He
began his investment career in 1969 and is both a Chartered Financial Analyst
and Chartered Investment Counselor. He earned his MA at the University of
Alabama and a BBC from Auburn University.
Total Return Fund
For the six-month period ended 2/28/97, INVESCO Total Return Fund had a
total return of 13.93%, compared to a total return of 22.52% for the S&P 500,
and 5.24% for the Lehman Government/Corporate Bond Index. The fund outperformed
its peer group during the one-year period ended 2/28/97 with a total return of
15.56%, compared to the average fund return of 13.86% for the Lipper Flexible
Portfolio objective. (Lipper Analytical Services, Inc., is an independent mutual
fund analyst, which tracks fund performance unadjusted for commissions. Of
course, past performance is not a guarantee of future results.)(1),(2)
Total Return Fund seeks to add value in three ways: asset allocation,
stock selection, and bond strategy. For example, the average historical spread
of returns between bonds and stocks is three percent. If the spread is
out-of-line with this historical relationship, then the fund's asset mix is
adjusted to reflect the current environment. A mix of 60% stocks and 40% bonds
is considered a neutral position; presently, our asset mix slightly favors
stocks, with an allocation between bonds and stocks of 29% and 62%,
respectively.
During the last six months, the fund made no major changes in its economic
sector weightings. Currently, the equity portfolio is underweighted in capital
goods and overweighted in consumer discretionary. We feel that many companies in
the consumer discretionary sector are presently undervalued by investors.
Over the winter, we made minor changes to the fixed-income portion of the
portfolio. In regard to duration, we have kept the fund's fixed-income portion
of the portfolio at a constant level of roughly four and half years (measured
without cash and cash equivalents). This is slightly shorter than the Lehman
Government/Corporate Bond Index. However, over the last six months, we continued
to decrease our exposure to Treasuries and have increased our exposure to
mortgage-backed securities, in response to spread differentials in these two
markets.
In the present market environment, it appears that equities continue to
offer a return advantage over fixed-income securities. However, we will monitor
this relationship and adjust the portfolio accordingly.
Graph: Total Return Fund Fund Total Return
This line graph compares the value of a $10,000 investment in INVESCO
Total Return Fund to the value of a $10,000 investment in the S&P 500 and
Lehman Government/Corporate Bond Indexes, assuming in each case
reinvestment of all dividends and capital gain distributions, for the
period from inception (9/87) through 2/28/97.
<PAGE>
Total Return Fund
Average Annual Total Return
as of 2/28/97(2)
1 year 15.56%
-----------------------------------------
5 years 13.61%
-----------------------------------------
Since Inception (9/87) 13.15%
-----------------------------------------
Fund Management
Total Return Fund is managed by Edward C. Mitchell, the president of
INVESCO Capital Management. He earned his MBA at the University of Colorado and
a BA from the University of Virginia. Ed began his investment career in 1969 and
is a Chartered Financial Analyst. He is assisted by David S. Griffin, who began
his investment career in 1982. A Chartered Financial Analyst, David holds an MBA
from the College of William & Mary, and a BA from Ohio Wesleyan University.
Value Equity Fund
For the six-month period ended 2/28/97, INVESCO Value Equity Fund had a
total return of 16.64%, compared to a total return of 22.52% for the S&P 500.
(Of course, past performance is not a guarantee of future results.)(1),(2)
Over the last six months, we have witnessed a "flight to quality" in the
stock market, as large-capitalization growth stocks have dramatically
outperformed the overall market. Many investors chased these market momentum
stocks, which led to unusually high valuation levels relative to historical
price-to-earnings ratios. As value investors with a conservative, disciplined
investment style, we stayed away from these market momentum stocks and focused
on high-quality companies with broad diversification, which sell at more
attractive valuation levels. This approach caused fund performance to lag behind
the broad market. However, our more conservative strategy may eventually benefit
investors, since market momentum investors typically experience severe loss of
capital in down markets.
Our strategy did result in strong returns from the consumer non-durables
and health care sectors. However, we have since reduced our exposure to the
latter area, since we feel it is now fully valued. We continue to be
underweighted in energy and technology stocks; this has helped the fund's
performance recently as these sectors experienced volatile swings in
performance.
Looking Forward
We believe that stock selectivity will be crucial in the future, since
valuation levels appear to be high compared to historical norms. Thus, we plan
<PAGE>
to rebalance the portfolio by replacing some of our high beta stocks with lower
beta stocks. (Beta measures the volatility of a stock compared to the S&P 500.
The higher the beta, the higher the risk associated with that stock versus the
broad market.) This should give the fund a more conservative profile and help
lessen its volatility during market downturns. It may also provide a boost if
investors shift away from market momentum stocks and focus on value stocks.
Value Equity Fund
Average Annual Total Return
as of 2/28/97(2)
1 year 20.45%
-----------------------------------------
5 years 14.52%
-----------------------------------------
10 years 12.64%
-----------------------------------------
Graph: Value Equity Fund Total Return
This line graph compares the value of a $10,000 investment in INVESCO
Value Equity Fund to the value of a $10,000 investment in the S&P 500
Index, assuming in each case reinvestment of all dividends and capital
gain distributions, for the ten year period ended 2/28/97.
Fund Management
Value Equity Fund is managed by Michael C. Harhai. Mike began his
investment career in 1972. Before joining INVESCO, he served as a portfolio
manager with Citizens & Southern Investment Advisors and later as head of the
equity/balanced group with Sovran Capital Management. He holds an MBA from the
University of Central Florida and a BA from the University of South Florida. He
is a Chartered Financial Analyst, as is Terrence Irrgang, who assists in
managing the fund. Terry is a 13-year veteran of the investment business, and
holds an MBA from Temple University, as well as a BA from Gettysburg College.
(1)The S&P 500 is an unmanaged index of common stocks considered
representative of the broad U.S. equity market. The Lehman
Government/Corporate Bond Index and Lehman Intermediate Government
Bond Index are unmanaged indexes of securities considered to be
representative of the overall domestic fixed-income and
intermediate-term government bond markets, respectively.
(2)Total return assumes reinvestment of dividends and capital gain distributions
for the periods indicated. Past performance is not a guarantee of future
results. Investment return and principal value will fluctuate so that, when
redeemed, an investor's shares may be worth more or less than when purchased.
<PAGE>
INTRODUCING
INVESCO's netPAL for
Account Information
INVESCO now offers secure access to your account information from your own
computer -- at your convenience.
Account Balance
Latest Transactions
Latest Distributions
1. To go the INVESCO Funds' web
site at http://www.invesco.com.
2. Select netPAL on the
navigator bar.
3. Click on INVESCO Account
Information.
4. Key in your account number
and password. (Your password
is identical to the four-digit
personal identification number
code you use for the PAL(R)
Personal Account Line,
INVESCO's automated telephone
information system.)
5. Click on "Submit." Your current
account summary will then be
displayed automatically.
<PAGE>
INVESCO Value Trust
Ten Largest Common Stock Holdings
February 28, 1997
Description Value
- --------------------------------------------------------------------------------
TOTAL RETURN Fund
Compaq Computer $19,812,500
First Chicago NBD 17,550,000
Morgan Stanley Group 17,539,375
Edison International 17,200,000
Philip Morris 16,890,625
Ford Motor 16,437,500
Bristol-Myers Squibb 16,312,500
Dow Chemical 16,200,000
Unilever NV New York Shrs 16,192,500
International Business Machines 15,812,500
VALUE EQUITY Fund
NationsBank Corp 7,266,670
Philip Morris 6,756,250
Compaq Computer 6,260,750
Columbia/HCA Healthcare 5,898,900
American Brands 5,788,750
Illinois Central Series A 5,671,875
Ford Motor 5,588,750
Federal National Mortgage Association 5,460,000
Kimberly-Clark Corp 5,300,000
Raytheon Co 5,183,750
Composition of holdings is subject to change.
<PAGE>
INVESCO Value Trust
Statement of Investment Securities
February 28, 1997
UNAUDITED
Shares or
Principal
Description Amount Value
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT BOND Fund
FIXED INCOME SECURITIES 97.20%
US Government Obligations 83.07%
US Treasury Notes
8.750%, 8/15/2000 $2,000,000 $2,151,250
8.500%, 2/15/2000 2,800,000 2,970,624
8.500%, 11/15/2000 2,000,000 2,140,624
8.000%, 8/15/1999 5,000,000 5,207,810
7.750%, 2/15/2001 4,000,000 4,196,248
7.500%, 11/15/2001 1,500,000 1,565,155
7.125%, 10/15/1998 3,000,000 3,048,750
7.000%, 4/15/1999 3,000,000 3,053,439
6.375%, 7/15/1999 4,000,000 4,020,000
6.375%, 8/15/2002 2,500,000 2,496,875
6.250%, 2/15/2003 1,000,000 991,562
6.000%, 10/15/1999 3,000,000 2,990,625
5.125%, 3/31/1998 2,000,000 1,985,000
------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $36,548,180) 36,817,962
------------
US Government Agency Obligations 14.13%
Federal Home Loan Mortgage, Gold
Participation Certificates
8.000%, 10/1/2010 1,066,137 1,098,612
6.500%, 7/1/2001 962,214 960,569
Federal National Mortgage Association,
Gtd Mortgage Pass-Through Certificates
6.000%, 5/1/2009 992,294 955,817
Government National Mortgage Association I,
Pass-Through Certificates
7.500%, 3/15/2026 1,240,977 1,239,612
7.000%, 10/15/2008 625,378 627,161
6.500%, 10/15/2008 691,404 680,694
6.000%, 11/15/2008 724,406 699,812
------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Cost $6,331,206) 6,262,277
------------
TOTAL FIXED INCOME SECURITIES
(Cost $42,879,386) 43,080,239
------------
<PAGE>
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 2.80%
Repurchase Agreement with State Street
Bank & Trust Co dated 2/28/1997
due 3/3/1997 at 5.280%, repurchased
at $1,243,547 (Collateralized by
US Treasury Notes due 6/30/1999
at 6.750%, value $1,284,833)
(Cost $1,243,000) 1,243,000 1,243,000
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $44,122,386)
(Cost for Income
Tax Purposes
$44,205,784) 44,323,239
============
TOTAL RETURN Fund
COMMON STOCKS 62.43%
AEROSPACE & DEFENSE 2.50%
Boeing Co 100,000 10,175,000
Lockheed Martin 150,000 13,275,000
Raytheon Co 250,000 11,781,250
------------
35,231,250
------------
AUTO PARTS 1.62%
Genuine Parts 300,000 14,025,000
Snap-On Inc 225,000 8,746,875
------------
22,771,875
------------
AUTOMOBILES 1.17%
Ford Motor 500,000 16,437,500
------------
BANKS 4.70%
First Chicago NBD 300,000 17,550,000
First of America Bank 225,000 14,090,625
First Union 150,000 13,162,500
NationsBank Corp 100,000 11,975,000
Wachovia Corp 154,000 9,374,750
------------
66,152,875
------------
BEVERAGES 0.65%
Anheuser-Busch Cos 205,400 9,140,300
------------
BUILDING MATERIALS 0.60%
Sherwin-Williams Co 150,000 8,418,750
------------
<PAGE>
CHEMICALS 1.97%
Dow Chemical 200,000 16,200,000
Great Lakes Chemical 250,000 11,593,750
------------
27,793,750
------------
COMPUTER RELATED 4.15%
Compaq Computer* 250,000 19,812,500
Computer Associates International 204,750 8,906,625
Hewlett-Packard Co 250,000 14,000,000
International Business Machines 110,000 15,812,500
------------
58,531,625
------------
CONGLOMERATES 0.42%
Textron Inc 60,000 5,917,500
------------
DISTRIBUTION 1.10%
Supervalu Inc 500,000 15,500,000
------------
ELECTRIC UTILITIES 2.80%
Edison International 800,000 17,200,000
Energy Group PLC Sponsored ADR* 100,000 3,400,000
Texas Utilities 190,000 7,671,250
Unicom Corp 500,000 11,125,000
------------
39,396,250
------------
ELECTRICAL EQUIPMENT 1.10%
General Electric 150,000 15,431,250
------------
FOODS 2.79%
Archer-Daniels-Midland Co 577,500 10,683,750
Heinz (H J) Co 300,000 12,487,500
Unilever NV New York Shrs 85,000 16,192,500
------------
39,363,750
------------
GOLD & PRECIOUS METALS MINING 0.86%
Phelps Dodge 170,000 12,155,000
------------
HEALTH CARE DRUGS - PHARMACEUTICALS 5.76%
Abbott Laboratories 160,000 9,000,000
American Home Products 200,000 12,800,000
Bristol-Myers Squibb 125,000 16,312,500
Lilly (Eli) & Co 150,000 13,106,250
Merck & Co 100,000 9,200,000
Rite Aid 175,000 7,371,875
Schering-Plough Corp 175,000 13,409,375
------------
81,200,000
------------
<PAGE>
HEALTH CARE RELATED 0.67%
Columbia/HCA Healthcare 225,000 9,450,000
------------
HOUSEHOLD FURNITURE & APPLIANCES 0.99%
Whirlpool Corp 275,000 13,887,500
------------
HOUSEHOLD PRODUCTS 0.75%
Kimberly-Clark Corp 100,000 10,600,000
------------
INSURANCE 2.82%
American General 260,000 11,277,500
Ohio Casualty 350,000 13,868,750
SAFECO Corp 350,000 14,612,500
------------
39,758,750
------------
INSURANCE BROKERS 0.91%
Marsh & McLennan 110,000 12,870,000
------------
INVESTMENT BANK/BROKER FIRM 1.23%
Morgan Stanley Group 275,000 17,359,375
------------
MANUFACTURING 1.79%
Minnesota Mining & Manufacturing 130,000 11,960,000
National Service Industries 350,000 13,300,000
------------
25,260,000
------------
OFFICE EQUIPMENT & SUPPLIES 1.11%
Xerox Corp 250,000 15,625,000
------------
OIL & GAS RELATED 3.13%
Amoco Corp 150,000 12,675,000
Norsk Hydro A/S Sponsored ADR 100,000 5,000,000
Repsol SA Sponsored ADR 400,000 15,200,000
Royal Dutch Petroleum 5 Gldr Shrs 65,000 11,245,000
------------
44,120,000
------------
PAPER & FOREST PRODUCTS 0.81%
Hanson PLC Sponsored ADR 100,000 2,225,000
Westvaco Corp 310,000 9,145,000
------------
11,370,000
------------
POLLUTION CONTROL 0.89%
Browning-Ferris Industries 400,000 12,550,000
------------
PUBLISHING 1.66%
Dun & Bradstreet 500,000 12,250,000
Gannett Co 140,000 11,165,000
------------
23,415,000
------------
<PAGE>
RAILROADS 0.98%
Illinois Central Series A 400,000 13,750,000
------------
RESTAURANTS 0.32%
McDonald's Corp 103,200 4,463,400
------------
RETAIL 3.74%
CVS Corp 200,000 9,250,000
Dillard Department Store Class A 450,000 13,556,250
K mart Corp* 500,000 6,250,000
Penney (J C) Co 275,000 13,543,750
Tandy Corp 200,000 10,075,000
------------
52,675,000
------------
SPECIALTY PRINTING 1.01%
Deluxe Corp 450,000 14,231,250
------------
TELEPHONE 3.00%
NYNEX Corp 250,000 12,875,000
Telefonica de Espana SA Sponsored ADR 200,000 13,775,000
Telefonos de Mexico SA de CV Sponsored
ADR Representing Ord Series L Shrs 400,000 15,550,000
------------
42,200,000
------------
TEXTILE - APPAREL MANUFACTURING 1.36%
Liz Claiborne 200,000 8,100,000
VF Corp 160,000 11,120,000
------------
19,220,000
------------
TEXTILE - HOME FURNISHINGS 0.37%
Shaw Industries 400,000 5,200,000
------------
TOBACCO 2.13%
American Brands 250,000 13,156,250
Philip Morris 125,000 16,890,625
------------
30,046,875
------------
TRUCKERS 0.57%
Caliber System 350,000 7,962,500
------------
TOTAL COMMON STOCKS
(Cost $622,554,422) 879,456,325
------------
FIXED INCOME SECURITIES 29.29%
US Government Obligations 20.86%
US Treasury Bonds
11.250%, 2/15/2015 12,450,000 18,075,844
9.375%, 2/15/2006 17,450,000 20,749,132
<PAGE>
9.250%, 2/15/2016 20,000,000 24,937,500
8.750%, 8/15/2000 25,000,000 26,890,625
8.250%, 7/15/1998 20,000,000 20,606,240
8.125%, 8/15/2019 10,000,000 11,337,500
8.000%, 5/15/2001 19,100,000 20,251,959
7.875%, 11/15/1999 17,100,000 17,805,375
6.500%, 8/15/2005 28,000,000 27,912,500
6.375%, 1/15/2000 15,000,000 15,084,375
6.375%, 8/15/2002 22,150,000 22,122,313
US Treasury Notes
6.375%, 7/15/1999 25,000,000 25,125,000
5.750%, 8/15/2003 17,000,000 16,367,804
5.500%, 2/28/1999 10,000,000 9,890,620
US Treasury Security Stripped Interest
Payment, Generic Tint Payment,
Zero Coupon 8/15/2003 25,250,000 16,707,673
------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $292,913,663) 293,864,460
------------
US Government Agency Obligations 5.27%
Federal Home Loan Mortgage Gold,
Participation Certificates
8.000%, 10/1/2010 4,975,307 5,126,855
8.000%, 5/1/2024 7,228,258 7,407,664
7.500%, 12/1/2026 10,099,999 10,114,947
6.500%, 6/1/2001 6,735,498 6,723,980
Federal National Mortgage Association,
Gtd Mortgage Pass-Through Certificates
8.500%, 3/1/2010 7,554,940 7,857,062
7.500%, 8/1/2007 1,718,738 1,745,155
6.500%, 5/1/2026 7,832,069 7,452,840
6.000%, 5/1/2009 9,940,584 9,575,168
Government National Mortgage Association I,
Pass-Through Certificates
7.500%, 3/15/2026 5,791,227 5,784,856
7.000%, 10/15/2008 1,034,553 1,037,502
7.000%, 12/15/2022 230,321 225,937
7.000%, 12/15/2025 9,386,420 9,157,579
6.500%, 10/15/2008 1,037,106 1,021,041
6.000%, 11/15/2008 1,086,608 1,049,718
------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Cost $74,381,998) 74,280,304
------------
Corporate Bonds 3.16%
AEROSPACE & DEFENSE 0.10%
Rockwell International, Notes
6.625%, 6/1/2005 1,500,000 1,466,887
------------
AUTOMOBILES 0.06%
Ford Motor, Notes
7.500%, 11/15/1999 750,000 766,475
------------
<PAGE>
BANKS 0.86%
ABN Amro Bank NV Global Sub Notes
6.625%, 10/31/2001 5,000,000 4,965,550
BankAmerica Corp, Sub Notes
6.875%, 6/1/2003 4,000,000 3,988,664
National City, Sub Notes
7.200%, 5/15/2005 2,000,000 2,012,326
NationsBank Corp, Sr Notes
5.375%, 4/15/2000 1,250,000 1,207,874
------------
12,174,414
------------
BEVERAGES 0.11%
PepsiCo Inc, Notes
7.750%, 10/1/1998 1,500,000 1,534,267
------------
CONSUMER FINANCE 0.06%
Beneficial Corp, Medium-Term Notes,
5.350%, 10/8/1998 800,000 788,789
------------
ELECTRIC UTILITIES 0.13%
Duke Power, 1st & Ref Mortgage
7.500%, 4/1/1999 1,000,000 1,020,408
Union Electric, 1st Mortgage
6.750%, 10/15/1999 750,000 754,765
------------
1,775,173
------------
FINANCIAL 0.63%
Associates Corp of North America Notes,
6.375%, 10/15/2002 5,000,000 4,905,050
Commercial Credit, Notes
6.375%, 9/15/2002 4,000,000 3,904,600
------------
8,809,650
------------
FOODS 0.21%
CPC International Medium-Term
Notes, Series D
6.875%, 10/15/2003 3,000,000 3,004,929
------------
HEALTH CARE DRUGS - PHARMACEUTICALS 0.29%
American Home Products, Notes
7.700%, 2/15/2000 4,000,000 4,128,080
------------
PUBLISHING 0.24%
Gannett Co, Notes
5.850%, 5/1/2000 3,500,000 3,430,249
------------
<PAGE>
RETAIL 0.33%
May Department Stores, Notes
6.875%, 11/1/2005 4,000,000 3,954,840
Wal-Mart Stores, Notes
5.500%, 3/1/1998 750,000 746,408
------------
4,701,248
------------
TELECOMMUNICATIONS -
CELLULAR & WIRELESS 0.14%
BellSouth Telecommunications Notes,
6.500%, 6/15/2005 2,000,000 1,952,252
------------
TOTAL CORPORATE BONDS
(Cost $44,763,115) 44,532,413
------------
TOTAL FIXED INCOME SECURITIES
(Cost $412,058,776) 412,677,177
------------
SHORT-TERM INVESTMENTS 8.28%
US Government Obligations 2.64%
US Treasury Bonds
7.875%, 1/15/1998 16,750,000 17,048,368
US Treasury Notes
6.000%, 11/30/1997 20,000,000 20,056,240
------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $ 37,051,883) 37,104,608
------------
Commercial Paper 4.92%
ELECTRICAL EQUIPMENT 1.42%
Emerson Electric
5.230%, 3/21/1997 20,000,000 19,979,605
------------
FINANCIAL 1.53%
Greenwich Funding
5.330%, 3/10/1997 21,540,000 21,517,663
------------
HOUSEHOLD PRODUCTS 1.41%
Kimberly-Clark Corp
5.250%, 3/21/1997 20,000,000 19,947,354
------------
OIL & GAS RELATED 0.56%
Cortez Capital,
5.280%, 3/17/1997 7,870,000 7,853,795
------------
TOTAL COMMERCIAL PAPER
(Cost $69,298,417) 69,298,417
------------
<PAGE>
Repurchase Agreements 0.72%
Repurchase Agreement with
State Street Bank & Trust Co
dated 2/28/1997 due 3/3/1997
at 5.280%, repurchased at
$10,193,483 (Collateralized
by US Treasury Notes due
6/30/1999 at 6.750%,
value $10,394,567)
(Cost $10,189,000) 10,189,000 10,189,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Amortized Cost $116,539,300) 116,592,025
------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $1,151,152,498)
(Cost for Income Tax Purposes
$1,151,165,823) 1,408,725,527
============
VALUE EQUITY Fund
COMMON STOCKS 95.17%
AEROSPACE & DEFENSE 2.75%
Lockheed Martin 35,860 3,173,610
Raytheon Co 110,000 5,183,750
------------
8,357,360
------------
AUTO PARTS 2.28%
Cooper Tire & Rubber 125,000 2,484,375
Genuine Parts 95,000 4,441,250
------------
6,925,625
------------
AUTOMOBILES 1.84%
Ford Motor 170,000 5,588,750
------------
BANKS 7.04%
Banc One 80,000 3,530,000
First Chicago NBD 80,000 4,680,000
First Union 30,000 2,632,500
NationsBank Corp 60,682 7,266,670
Wachovia Corp 53,700 3,268,987
------------
21,378,157
------------
BEVERAGES 1.62%
PepsiCo Inc 150,000 4,931,250
------------
BUILDING MATERIALS 1.39%
Sherwin-Williams Co 75,000 4,209,375
------------
<PAGE>
CHEMICALS 2.73%
Dow Chemical 45,000 3,645,000
Great Lakes Chemical 100,000 4,637,500
------------
8,282,500
------------
COMPUTER RELATED 6.61%
Compaq Computer* 79,000 6,260,750
Computer Associates International 107,750 4,687,125
Hewlett-Packard Co 86,000 4,816,000
International Business Machines 30,000 4,312,500
------------
20,076,375
------------
CONGLOMERATES 1.37%
Textron Inc 42,000 4,142,250
------------
DISTRIBUTION 1.02%
Supervalu Inc 100,000 3,100,000
------------
ELECTRIC UTILITIES 2.65%
DTE Energy 70,000 2,117,500
Southern Co 135,000 2,936,250
Unicom Corp 135,000 3,003,750
------------
8,057,500
------------
ELECTRICAL EQUIPMENT 2.49%
Emerson Electric 32,700 3,237,300
General Electric 42,100 4,331,037
------------
7,568,337
------------
FINANCIAL 1.80%
Federal National Mortgage Association 136,500 5,460,000
------------
FOODS 2.07%
General Mills 50,000 3,262,500
Heinz (H J) Co 72,500 3,017,812
------------
6,280,312
------------
GOLD & PRECIOUS METALS MINING 0.73%
Phelps Dodge 31,000 2,216,500
------------
HEALTH CARE DRUGS - PHARMACEUTICALS 9.68%
Abbott Laboratories 47,000 2,643,750
American Home Products 52,000 3,328,000
Astra AB Sponsored ADR Representing
Series A Shrs 65,000 3,128,125
Bristol-Myers Squibb 30,000 3,915,000
Lilly (Eli) & Co 25,000 2,184,375
<PAGE>
Merck & Co 37,000 3,404,000
Rite Aid 100,000 4,212,500
Schering-Plough Corp 42,000 3,218,250
Warner-Lambert Co 40,000 3,360,000
------------
29,394,000
------------
HEALTH CARE RELATED 2.74%
Biomet Inc 157,600 2,403,400
Columbia/HCA Healthcare 140,450 5,898,900
------------
8,302,300
------------
HOUSEHOLD FURNITURE & APPLIANCES 1.09%
Maytag Corp 150,000 3,300,000
------------
HOUSEHOLD PRODUCTS 1.75%
Kimberly-Clark Corp 50,000 5,300,000
------------
INSURANCE 7.64%
American General 100,000 4,337,500
American International Group 28,500 3,448,500
General Re 23,000 3,901,375
Jefferson-Pilot Corp 57,575 3,396,925
SAFECO Corp 110,000 4,592,500
Torchmark Corp 60,000 3,532,500
------------
23,209,300
------------
INSURANCE BROKERS 1.16%
Marsh & McLennan 30,000 3,510,000
------------
INVESTMENT BANK/BROKER FIRM 0.75%
Salomon Inc 41,000 2,280,625
------------
MACHINERY 1.64%
Dover Corp 100,000 4,962,500
------------
MANUFACTURING 1.45%
York International 100,000 4,412,500
------------
OFFICE EQUIPMENT & SUPPLIES 3.11%
Pitney-Bowes Inc 71,700 4,454,363
Xerox Corp 80,000 5,000,000
------------
9,454,363
------------
<PAGE>
OIL & GAS RELATED 4.96%
Amoco Corp 55,000 4,647,500
Exxon Corp 35,275 3,523,091
Repsol SA Sponsored ADR 80,400 3,055,200
Royal Dutch Petroleum New York
Registry 5 Gldr Shrs 22,076 3,819,148
------------
15,044,939
------------
PAPER & FOREST PRODUCTS 0.97%
Westvaco Corp 100,050 2,951,475
------------
POLLUTION CONTROL 1.04%
WMX Technologies 100,000 3,162,500
------------
PUBLISHING 1.57%
Dun & Bradstreet 195,000 4,777,500
------------
RAILROADS 1.87%
Illinois Central Series A 165,000 5,671,875
------------
RESTAURANTS 1.25%
McDonald's Corp 88,000 3,806,000
------------
RETAIL 4.19%
Dillard Department Store Class A 100,000 3,012,500
Giant Food Class A 94,000 3,066,750
Penney (J C) Co 68,000 3,349,000
Wal-Mart Stores 125,000 3,296,875
------------
12,725,125
------------
TELEPHONE 0.96%
Southern New England Telecommunications 80,000 2,900,000
------------
TEXTILE - APPAREL MANUFACTURING 2.93%
Russell Corp 135,000 5,079,375
Unifi Inc 120,000 3,825,000
------------
8,904,375
------------
TEXTILE - HOME FURNISHINGS 0.75%
Shaw Industries 175,000 2,275,000
------------
TOBACCO 4.13%
American Brands 110,000 5,788,750
Philip Morris 50,000 6,756,250
------------
12,545,000
------------
TOYS 1.15%
Mattel Inc 140,000 3,482,500
------------
<PAGE>
TOTAL COMMON STOCKS
(Cost $216,519,044) 288,946,168
------------
SHORT-TERM INVESTMENTS 4.83%
Commercial Paper 4.78%
FINANCIAL 4.78%
Greenwich Funding 5.330%, 3/7/1997
(Cost $14,509,397) 14,518,000 14,509,397
------------
Repurchase Agreements 0.05%
Repurchase Agreement with State Street
Bank & Trust Co dated 2/28/1997
due 3/3/1997 at 5.280%, repurchased
at $167,073 (Collateralized by US
Treasury Notes due 6/30/1999 at
6.750%, value $176,146) (Cost $167,000) 167,000 167,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Amortized Cost $14,676,397) 14,676,397
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $231,195,441)
(Cost for Income Tax
Purposes $231,969,229) 303,622,565
==============
* Security is non-income producing.
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Statement of Assets and Liabilities
February 28, 1997
UNAUDITED
<TABLE>
<CAPTION>
Intermediate
Government Total Return Value Equity
Bond Fund Fund Fund
-------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost~ $44,122,386 $1,151,152,498 $231,195,441
=======================================================
At Value~ $44,323,239 $1,408,725,527 $303,622,565
Cash 516 0 2,454,026
Receivables:
Investment Securities Sold 192,344 0 1,669,968
Fund Shares Sold 42,012 5,264,396 999,140
Dividends and Interest 298,029 5,803,013 624,155
Prepaid Expenses and
Other Assets 98,647 166,390 47,940
-------------------------------------------------------
TOTAL ASSETS $44,954,787 $1,419,959,326 $309,417,794
-------------------------------------------------------
LIABILITIES
Payables:
Custodian 0 165,664 0
Distributions to
Shareholders 11,367 177,805 0
Investment Securities
Purchased 0 5,113,577 4,547,664
Fund Shares Repurchased 10,243 1,336,377 448,439
Accrued Expenses and
Other Payables 8,324 967,902 12,608
-------------------------------------------------------
TOTAL LIABILITIES 29,934 7,761,325 5,008,711
-------------------------------------------------------
Net Assets at Value $44,924,853 $1,412,198,001 $304,409,083
=======================================================
NET ASSETS
Paid-in Capital $45,326,899 $1,150,444,748 $225,567,859
Accumulated Distributions
in Excess of Net
Investment Income
(See Note 1) (195,497) (1,918,737) (57,638)
<PAGE>
Accumulated Undistributed
Net Realized Gain (Loss)
on Investment Securities
and Foreign Currency
Transactions (407,402) 6,098,961 6,471,738
Net Appreciation of
Investment Securities and
Foreign Currency
Transactions 200,853 257,573,029 72,427,124
-------------------------------------------------------
Net Assets at Value $44,924,853 $1,412,198,001 $304,409,083
=======================================================
Shares Outstanding* 3,622,231 55,843,649 12,105,447
Net Asset Value, Offering
and Redemption Price
per Share $12.40 $25.29 $25.15
=======================================================
</TABLE>
~ Investment securities at cost and value at February 28, 1997 include
repurchase agreements of $1,243,000, $10,189,000 and $167,000 for Intermediate
Government Bond, Total Return and Value Equity Funds, respectively.
* The Trust has one class of shares, which may be divided into different series,
each representing an interest in a separate Fund. At February 28, 1997, there
was an unlimited number of authorized Fund shares.
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Statement of Operations
Six Months Ended February 28, 1997
UNAUDITED
<TABLE>
<CAPTION>
Intermediate
Government Total Return Value Equity
Bond Fund Fund Fund
------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 0 $ 9,770,039 $ 2,740,880
Interest 1,413,955 13,805,898 384,586
Foreign Taxes Withheld 0 (132,534) (24,309)
------------------------------------------------------
TOTAL INCOME 1,413,955 23,443,403 3,101,157
------------------------------------------------------
EXPENSES
Investment Advisory Fees 134,154 4,041,352 937,275
Transfer Agent Fees 125,484 1,049,254 243,562
Administrative Fees 8,414 96,261 23,805
Custodian Fees and Expenses 6,562 88,779 26,659
Professional Fees and Expenses 7,225 28,841 12,087
Registration Fees and Expenses 13,966 80,230 26,692
Reports to Shareholders 3,966 28,248 12,403
Trustees' Fees and Expenses 4,636 28,942 8,773
Other Expenses 2,009 18,823 3,852
------------------------------------------------------
TOTAL EXPENSES 306,416 5,460,730 1,295,108
Fees and Expenses Absorbed
by Investment Adviser (78,403) 0 0
Fees and Expenses Paid
Indirectly (3,623) (45,323) (19,820)
------------------------------------------------------
NET EXPENSES 224,390 5,415,407 1,275,288
------------------------------------------------------
NET INVESTMENT INCOME 1,189,565 18,027,996 1,825,869
------------------------------------------------------
REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on
Investment Securities
and Foreign Currency
Transactions 96,028 6,861,420 8,054,587
<PAGE>
Change in Net Appreciation
of Investment Securities
and Foreign Currency
Transactions 437,717 132,357,923 27,463,931
------------------------------------------------------
NET GAIN ON INVESTMENT
SECURITIES 533,745 139,219,343 35,518,518
------------------------------------------------------
Net Increase in Net Assets
from Operations $ 1,723,310 $ 157,247,339 $ 37,344,387
======================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Intermediate Government
Bond Fund Total Return Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
February 28 August 31 February 28 August 31
---------------------------------- ----------------------------------
1997 1996 1997 1996
UNAUDITED UNAUDITED
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 1,189,565 $ 2,274,936 $ 18,027,996 $ 29,217,334
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 96,028 416,138 6,861,420 6,273,916
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 437,717 (1,505,858) 132,357,923 48,298,544
---------------------------------- ----------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 1,723,310 1,185,216 157,247,339 83,789,794
---------------------------------- ----------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (1,385,062) (2,261,908) (19,958,076) (29,200,386)
Net Realized Gain on Investment
Securities 0 0 (4,314,900) (4,352,151)
---------------------------------- ----------------------------------
TOTAL DISTRIBUTIONS (1,385,062) (2,261,908) (24,272,976) (33,552,537)
---------------------------------- ----------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 17,024,415 28,705,527 456,705,812 609,919,491
Reinvestment of Distributions 1,097,867 2,132,961 21,992,604 32,908,763
---------------------------------- ----------------------------------
18,122,282 30,838,488 478,698,416 642,828,254
Amounts Paid for Repurchases of Shares (13,484,181) (27,152,636) (231,625,936) (224,382,843)
---------------------------------- ----------------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 4,638,101 3,685,852 247,072,480 418,445,411
---------------------------------- ----------------------------------
Total Increase in Net Assets 4,976,349 2,609,160 380,046,843 468,682,668
NET ASSETS
Beginning of Period 39,948,504 37,339,344 1,032,151,158 563,468,490
---------------------------------- ----------------------------------
End of Period 44,924,853 39,948,504 1,412,198,001 1,032,151,158
================================== ==================================
Accumulated Undistributed
(Distributions in Excess of)
Net Investment Income Included
in Net Assets at End of Period
(See Note 1) (195,497) 0 (1,918,737) 11,343
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 1,346,595 2,283,726 18,746,650 27,294,383
Shares Issued from Reinvestment
of Distributions 89,225 169,140 889,723 1,459,274
---------------------------------- ----------------------------------
1,435,820 2,452,866 19,636,373 28,753,657
Shares Repurchased (1,060,447) (2,159,851) (9,467,431) (9,971,539)
---------------------------------- ----------------------------------
Net Increase in Fund Shares 375,373 293,015 10,168,942 18,782,118
================================== ==================================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Statement of Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
Value Equity Fund
-------------------------------------
Six Months Year
Ended Ended
February 28 August 31
-------------------------------------
1997 1996
UNAUDITED
<S> <C> <C>
OPERATIONS
Net Investment Income $ 1,825,869 $ 3,014,041
Net Realized Gain on
Investment Securities and
Foreign Currency Transactions 8,054,587 4,119,794
Change in Net Appreciation of
Investment Securities and
Foreign Currency Transactions 27,463,931 20,794,083
-------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 37,344,387 27,927,918
-------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (1,926,168) (2,995,302)
Net Realized Gain on
Investment Securities (5,507,948) (3,086,946)
-------------------------------------
TOTAL DISTRIBUTIONS (7,434,116) (6,082,248)
-------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 227,292,699 214,313,579
Reinvestment of Distributions 7,254,609 5,906,003
-------------------------------------
234,547,308 220,219,582
Amounts Paid for Repurchases
of Shares (160,094,154) (195,190,483)
-------------------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 74,453,154 25,029,099
-------------------------------------
Total Increase in Net Assets 104,363,425 46,874,769
NET ASSETS
Beginning of Period 200,045,658 153,170,889
-------------------------------------
End of Period $ 304,409,083 $ 200,045,658
=====================================
<PAGE>
Accumulated Undistributed
(Distributions in Excess of)
Net Investment Income (Loss)
Included in Net Assets at
End of Period (57,638) 42,661
FUND SHARE TRANSACTIONS
Shares Sold 9,371,546 9,902,174
Shares Issued from Reinvestment
of Distributions 303,137 277,102
-------------------------------------
9,674,683 10,179,276
Shares Repurchased (6,563,768) (9,026,840)
-------------------------------------
Net Increase in Fund Shares 3,110,915 1,152,436
=====================================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
Notes to Financial Statements
UNAUDITED
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Value Trust
(the "Trust") was organized under the laws of the Commonwealth of Massachusetts
and presently consists of three separate Funds: Intermediate Government Bond
Fund, Total Return Fund and Value Equity Fund. The investment objectives of the
Funds are to achieve a high total return on investments through capital
appreciation and current income. The Trust is registered under the Investment
Company Act of 1940 (the "Act") as a diversified, open-end management investment
company.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION - Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales
price in the market where such securities are primarily traded. If last
sales prices are not available, securities are valued at the highest
closing bid price obtained from one or more dealers making a market for
such securities or by a pricing service approved by the Trust's trustees.
Debt securities are valued at evaluated bid prices as determined by a
pricing service approved by the Trust's trustees. If evaluated bid prices
are not available, debt securities are valued by averaging the bid prices
obtained from one or more dealers making a market for such securities.
Foreign securities are valued at the closing price on the principal
stock exchange on which they are traded. In the event that closing prices
are not available for foreign securities, prices will be obtained from the
principal stock exchange at or prior to the close of the New York Stock
Exchange. Foreign currency exchange rates are determined daily prior to
the close of the New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith
by the Trust's trustees.
Short-term securities are stated at amortized cost (which approximates
market value) if maturity is 60 days or less at the time of purchase, or
market value if maturity is greater than 60 days.
Assets and liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars at the prevailing market rates
as quoted by one or more banks or dealers on the date of valuation. The
cost of securities is translated into U.S. dollars at the rates of
exchange prevailing when such securities are acquired. Income and expenses
are translated into U.S. dollars at the rates of exchange prevailing when
accrued.
B. REPURCHASE AGREEMENTS - Repurchase agreements held by the Trust are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Trust's custodian. The collateral is evaluated daily to
ensure its market value exceeds the current market value of the repurchase
agreements including accrued interest.
<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, original issue discount and amortized premium is recorded
on the accrual basis. Discounts and premiums on debt securities purchased
are amortized over the life of the respective security as adjustments to
interest income. Cost is determined on the specific identification basis.
The Trust may have elements of risk due to concentrated investments in
foreign issuers located in a specific country. Such concentrations may
subject the Trust to additional risks resulting from future political or
economic conditions and/or possible impositions of adverse foreign
governmental laws or currency exchange restrictions. Net realized and
unrealized gain or loss from investments includes fluctuations from
currency exchange rates and fluctuations in market value.
The Fund's use of short-term forward foreign currency contracts may
subject it to certain risks as a result of unanticipated movements in
foreign exchange rates. The Fund does not hold short-term forward currency
contracts for trading purposes. The Fund may hold foreign currency in
anticipation of settling foreign security transactions and not for
investment purposes.
Investments in securities of governmental agencies may only be
guaranteed by the respective agency's limited authority to borrow from the
U.S. Government and may not be guaranteed by the full faith and credit of
the United States.
Effective September 1, 1996, the Trust began accruing income using the
effective interest method which includes amortizing premiums on purchases
of portfolio securities as adjustments to income. This method of recording
income more closely reflects the economics of holding and disposing of
debt instruments. Prior to September 1, 1996, the Trust accrued coupon
interest income and original issue discount and accounted for purchased
premiums as capital gains or losses when realized upon disposition of the
associated security. The cumulative effect of applying this accounting
change was to decrease accumulated distributions in excess of
undistributed net investment income by $195,497 and $1,917,260 for
Intermediate Government Bond and Total Return Funds, respectively. Such
accounting change had no effect on net asset value per share.
D. FEDERAL AND STATE TAXES - The Trust has complied and continues to comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make
sufficient distributions of net investment income and net realized capital
gains, if any, to relieve it from all federal and state income taxes and
federal excise taxes. At August 31, 1996, Intermediate Government Bond
Fund had $411,995 and $16,031 in net capital loss carryovers which expire
in the years 2003 and 2004, respectively.
To the extent future capital gains are offset by capital loss
carryovers, such gains will not be distributed to shareholders..
Dividends paid by the Trust from net investment income and
distributions of net realized short-term capital gains are, for federal
income tax purposes, taxable as ordinary income to shareholders.
Investment income received from foreign sources may be subject to
foreign withholding taxes. Dividend and interest income is shown gross of
foreign withholding taxes in the accompanying financial statements.
<PAGE>
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - For Total Return and Value
Equity Funds, dividends and distributions to shareholders are recorded on
the ex dividend/distribution date. All of Intermediate Government Bond
Fund's net investment income is distributed to shareholders by dividends
declared daily and paid monthly. Reinvestment of dividends is effected at
the month-end net asset value. The Trust distributes net realized capital
gains, if any, to its shareholders at least annually, if not offset by
capital loss carryovers. Income distributions and capital gain
distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for mortgage-backed
securities, market discounts, premiums, foreign currency transactions,
nontaxable dividends, net operating losses and expired capital loss
carryforwards.
F. FORWARD FOREIGN CURRENCY CONTRACTS - The Trust enters into short-term
forward foreign currency contracts in connection with planned purchases or
sales of securities as a hedge against fluctuations in foreign exchange
rates pending the settlement of transactions in foreign securities. A
forward foreign currency contract is an agreement between contracting
parties to exchange an amount of currency at some future time at an agreed
upon rate. These contracts are marked-to-market daily and the related
appreciation or depreciation of the contracts is presented in the
Statement of Assets and Liabilities.
G. EXPENSES - Each of the Funds bears expenses incurred specifically on its
behalf and, in addition, each Fund bears a portion of general expenses,
based on the relative net assets of each Fund.
Under an agreement between each Fund and the Trust's Custodian, agreed
upon Custodian Fees and Expenses are reduced by credits granted by the
Custodian from any temporarily uninvested cash. Similarly, Transfer Agent
Fees are reduced by credits earned by each Fund from security brokerage
transactions under certain broker/service arrangements with third parties.
Such credits are included in Fees and Expenses Paid Indirectly in the
Statement of Operations.
For the six months ended February 28, 1997, Fees and Expenses Paid
Indirectly consisted of the following:
Custodian Fees Transfer
Fund and Expenses Agent Fees
- --------------------------------------------------------------------------------
Intermediate Government Bond Fund $ 3,623 $ 0
Total Return Fund 44,267 1,056
Value Equity Fund 19,810 10
NOTE 2 - INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Trust's investment adviser. As compensation for its
services to the Trust, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee is based on the annual
rate of each Fund's average net assets as follows:
<PAGE>
AVERAGE NET ASSETS
---------------------------------------------------
$0 to $500 Million Over
$500 to $1 $1
Fund Million Billion Billion
- --------------------------------------------------------------------------------
Intermediate Government
Bond Fund 0.60% 0.50% 0.40%
Total Return Fund 0.75% 0.65% 0.50%
Value Equity Fund 0.75% 0.65% 0.50%
In accordance with a Sub-Advisory Agreement between IFG and INVESCO
Capital Management, Inc. ("ICM"), an affiliate of IFG, investment decisions of
the Trust are made by ICM. Fees for such sub-advisory services are paid by IFG.
In accordance with an Administrative Agreement, each Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee at an annual rate of $20.00 for Total
Return and Value Equity Funds, and $26.00 for Intermediate Government Bond Fund
per shareholder account, or, where applicable, per participant in an omnibus
account, per year. IFG may pay such fee for participants in omnibus accounts to
affiliates or third parties. The fee is paid monthly at one-twelfth of the
annual fee and is based upon the actual number of accounts in existence during
each month.
IFG has voluntarily agreed, in some instances to absorb certain fees and
expenses incurred by Intermediate Government Bond.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months ended
February 28, 1997, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were as follows:
Fund Purchases Sales
- ---------------------------------------------------------------------------
Total Return Fund $159,820,014 $ 32,936,575
Value Equity Fund 117,916,197 53,362,433
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities were as follows:
Fund Purchases Sales
- ---------------------------------------------------------------------------
Intermediate Government Bond Fund $16,601,834 $12,157,479
Total Return Fund 81,721,614 10,122,156
NOTE 4 - APPRECIATION AND DEPRECIATION. At February 28, 1997, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation by Fund were as follows:
<PAGE>
Gross Gross Net
Fund Appreciation Depreciation Appreciation
- --------------------------------------------------------------------------------
Intermediate Government
Bond Fund $ 294,450 $ 176,995 $ 117,455
Total Return Fund 271,052,617 13,492,913 257,559,704
Value Equity Fund 74,091,531 2,438,195 71,653,336
NOTE 5 - TRANSACTIONS WITH AFFILIATES. Certain of the Trust's officers and
trustees are also officers and directors of IFG or ICM.
The Trust has adopted an unfunded deferred compensation plan covering all
independent trustees of the Trust who will have served as an independent trustee
for at least five years at the time of retirement. Benefits under this plan are
based on an annual rate of 40% of the retainer fee at the time of retirement.
Pension expenses for the six months ended February 28, 1997, included in
Trustees' Fees and Expenses in the Statement of Operations, and unfunded accrued
pension costs and pension liability included in Prepaid Expenses and Accrued
Expenses, respectively, in the Statement of Assets and Liabilities were as
follows:
Unfunded
Pension Accrued Pension
Fund Expenses Pension Costs Liability
- --------------------------------------------------------------------------------
Intermediate Government
Bond Fund $ 359 $ 1,477 $ 2,944
Total Return Fund 7,229 21,712 41,482
Value Equity Fund 1,626 6,172 12,154
NOTE 6 - LINE OF CREDIT. The Trust has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maxium of 10% of the Net Assets at Value of each respective
Fund. Each Fund agrees to pay annual fees and interest on the unpaid principal
balance based on prevailing market rates as defined in the agreement. At
February 28, 1997, there were no such borrowings.
<PAGE>
Other Information
UNAUDITED
On January 31, 1997, a special meeting of the shareholders of the Trust was held
at which the eleven trustees identified below were elected, the selection of
Price Waterhouse LLP as independent accountants (Proposal 1), the approval of a
new investment advisory agreement with INVESCO Funds Group, Inc. ("IFG")
(Proposal 2) and a new sub-advisory agreement between IFG and INVESCO Trust
Company (Proposal 3) were ratified. The following is a report of the votes cast:
Withheld/
Nominee/Proposal For Against Abstain Total
- --------------------------------------------------------------------------------
Intermediate Government
Bond Fund
Charles W. Brady 2,477,451 0 27,067 2,504,518
Dan J. Hesser 2,477,940 0 26,578 2,504,518
Fred A. Deering 2,477,478 0 27,040 2,504,518
Victor L. Andrews 2,477,940 0 26,578 2,504,518
Bob R. Baker 2,475,969 0 28,549 2,504,518
Lawrence H. Budner 2,477,940 0 26,578 2,504,518
Daniel D. Chabris 2,475,079 0 29,439 2,504,518
A.D. Frazier, Jr. 2,477,940 0 26,578 2,504,518
Hubert L. Harris, Jr. 2,478,010 0 26,508 2,504,518
Kenneth T. King 2,475,079 0 29,439 2,504,518
John W. McIntyre 2,477,940 0 26,578 2,504,518
Proposal 1 2,470,212 5,636 28,669 2,504,517
Proposal 2 2,440,204 13,004 51,310 2,504,518
Proposal 3 2,443,658 11,079 49,781 2,504,518
Total Return Fund
Charles W. Brady 30,764,351 0 570,613 31,334,964
Dan J. Hesser 30,765,474 0 569,490 31,334,964
Fred A. Deering 30,778,958 0 556,006 31,334,964
Victor L. Andrews 30,782,064 0 552,900 31,334,964
Bob R. Baker 30,783,089 0 551,875 31,334,964
Lawrence H. Budner 30,782,434 0 552,530 31,334,964
Daniel D. Chabris 30,775,393 0 559,571 31,334,964
A.D. Frazier, Jr. 30,766,773 0 568,191 31,334,964
Hubert L. Harris, Jr. 30,772,664 0 562,300 31,334,964
Kenneth T. King 30,771,189 0 563,775 31,334,964
John W. McIntyre 30,782,657 0 552,307 31,334,964
Proposal 1 30,680,409 452,950 201,605 31,334,964
Proposal 2 30,564,520 497,228 273,216 31,334,964
Proposal 3 30,557,517 493,468 283,979 31,334,964
<PAGE>
Value Equity Fund
Charles W. Brady 6,097,742 0 169,615 6,267,357
Dan J. Hesser 6,097,868 0 169,489 6,267,357
Fred A. Deering 6,096,758 0 170,599 6,267,357
Victor L. Andrews 6,097,292 0 170,065 6,267,357
Bob R. Baker 6,097,815 0 169,542 6,267,357
Lawrence H. Budner 6,097,854 0 169,503 6,267,357
Daniel D. Chabris 6,097,386 0 169,971 6,267,357
A.D. Frazier, Jr. 6,097,933 0 169,424 6,267,357
Hubert L. Harris, Jr. 6,098,822 0 168,535 6,267,357
Kenneth T. King 6,096,704 0 170,653 6,267,357
John W. McIntyre 6,097,227 0 170,130 6,267,357
Proposal 1 6,088,176 145,250 33,930 6,267,356
Proposal 2 5,769,946 160,489 336,922 6,267,357
Proposal 3 5,762,429 166,379 338,548 6,267,356
<PAGE>
INVESCO Value Trust
Financial Highlights
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Six Months Period Year
Ended Ended Ended
February 28 Year Ended August 31 August 31 December 31
------------- --------------------------------- --------- --------------------
1997 1996 1995 1994 1993>> 1992 1991
UNAUDITED
<S> <C> <C> <C> <C> <C>
Intermediate Government Bond Fund
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 12.30 $ 12.64 $ 12.16 $ 13.25 $ 12.68 $ 12.89 $ 12.13
------------- --------------------------------- --------- --------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.33 0.73 0.73 0.70 0.48 0.90 0.89
Net Gains or (Losses)
on Securities
(Both Realized and
Unrealized) 0.10 (0.34) 0.48 (0.75) 0.57 (0.16) 0.77
------------- --------------------------------- --------- --------------------
Total from Investment
Operations 0.43 0.39 1.21 (0.05) 1.05 0.74 1.66
------------- --------------------------------- --------- --------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.33 0.73 0.73 0.70 0.48 0.90 0.90
Distributions from Capital Gains 0.00 0.00 0.00 0.34 0.00 0.05 0.00
------------- --------------------------------- --------- --------------------
Total Distributions 0.33 0.73 0.73 1.04 0.48 0.95 0.90
------------- --------------------------------- --------- --------------------
Net Asset Value -
End of Period $ 12.40 $ 12.30 $ 12.64 $ 12.16 $ 13.25 $ 12.68 $ 12.89
============= ================================= ========= ====================
TOTAL RETURN 3.49%* 3.12% 10.36% (0.37%) 8.38%* 6.03% 14.16%
RATIOS
Net Assets - End of Period
($000 Omitted) $ 44,925 $ 39,949 $ 37,339 $ 31,861 $ 39,384 $ 29,649 $ 24,385
Ratio of Expenses to
Average Net Assets# 0.51%*@ 1.15%@ 1.20% 1.07% 0.96%~ 0.97% 0.93%
Ratio of Net Investment Income
to Average Net Assets# 2.66%* 5.81% 6.04% 5.58% 5.48%~ 6.38% 7.28%
Portfolio Turnover Rate 34%* 63% 92% 49% 34%* 93% 51%
</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 six
months ended February 28, 1997 and the year ended August 31, 1996. If such
expenses had not been voluntarily absorbed, ratio of expenses to average net
assets would have been 0.68% (not annualized) and 1.24%, respectively, and
ratio of net investment income to average net assets would have been 2.49%
(not annualized) and 5.72%, respectively.
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
~ Annualized
<PAGE>
INVESCO Value Trust
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Six Months Period Year
Ended Ended Ended
February 28 Year Ended August 31 August 31 December 31
------------- ---------------------------------- ---------- ----------------------
1997 1996 1995 1994 1993>> 1992 1991
UNAUDITED
<S> <C> <C> <C> <C> <C> <C> <C>
Total Return Fund
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 22.60 $ 20.95 $ 18.54 $ 18.27 $ 17.18 $ 16.43 $ 14.21
------------- ---------------------------------- ---------- ---------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.36 0.73 0.72 0.69 0.40 0.66 0.71
Net Gains on Securities
(Both Realized and
Unrealized) 2.78 1.78 2.46 0.60 1.09 0.93 2.78
------------- ---------------------------------- ---------- ---------------------
Total from Investment
Operations 3.14 2.51 3.18 1.29 1.49 1.59 3.49
------------- ---------------------------------- ---------- ---------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.36 0.73 0.72 0.60 0.40 0.65 0.72
In Excess of Net
Investment Income+ 0.00 0.00 0.00 0.09 0.00 0.00 0.00
Distributions from Capital Gains 0.09 0.13 0.05 0.17 0.00 0.19 0.55
In Excess of Capital Gains 0.00 0.00 0.00 0.16 0.00 0.00 0.00
------------- ---------------------------------- ---------- ---------------------
Total Distributions 0.45 0.86 0.77 1.02 0.40 0.84 1.27
------------- ---------------------------------- ---------- ---------------------
Net Asset Value -
End of Period 25.29 22.60 20.95 18.54 18.27 17.18 16.43
============= ================================== ========== =====================
TOTAL RETURN 13.93%* 12.06% 17.54% 7.22% 8.72%* 9.84% 24.96%
RATIOS
Net Assets - End of Period
($000 Omitted) $ 1,412,198 $1,032,151 $ 563,468 $ 292,765 $ 220,224 $ 137,196 $ 82,219
Ratio of Expenses to
Average Net Assets 0.45%*@ 0.89%@ 0.95% 0.96% 0.93%~ 0.88% 0.92%
Ratio of Net Investment Income
to Average Net Assets# 1.49%* 3.44% 3.97% 3.31% 3.51%~ 4.06% 4.62%
Portfolio Turnover Rate 4%* 10% 30% 12% 19%* 13% 49%
Average Commission Rate Paid^^ 0.0553* 0.0539 - - - - -
</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, 1995, aggregated less than $0.01 on a per share basis.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Value Trust
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Six Months Period Year
Ended Ended Ended
February 28 Year Ended August 31 August 31 December 31
------------- --------------------------------- ----------- ---------------------
1997 1996 1995 1994 1993>> 1992 1991
UNAUDITED
Value Equity Fund
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 22.24 $ 19.53 $ 18.12 $ 17.79 $ 16.91 $ 16.57 $ 13.88
------------- --------------------------------- ---------- ---------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.18 0.35 0.39 0.36 0.24 0.36 0.40
Net Gains on Securities
(Both Realized and
Unrealized) 3.48 3.09 2.58 1.20 0.88 0.45 4.54
------------- --------------------------------- ---------- ---------------------
Total from Investment
Operations 3.66 3.44 2.97 1.56 1.12 0.81 4.94
------------- --------------------------------- ---------- ---------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.19 0.35 0.39 0.31 0.24 0.34 0.40
In Excess of Net Investment
Income 0.00 0.00 0.00 0.04 0.00 0.00 0.00
Distributions from
Capital Gains 0.56 0.38 1.17 0.88 0.00 0.13 1.85
------------- --------------------------------- ---------- ---------------------
Total Distributions 0.75 0.73 1.56 1.23 0.24 0.47 2.25
------------- --------------------------------- ---------- ---------------------
Net Asset Value -
End of Period $ 25.15 $ 22.24 $ 19.53 $ 18.12 $ 17.79 $ 16.91 $ 16.57
TOTAL RETURN 16.64%* 17.77% 17.84% 9.09% 6.65%* 4.98% 35.84%
RATIOS
Net Assets - End of Period
($000 Omitted) $ 304,409 $200,046 $153,171 $111,850 $ 81,914 $ 78,609 $ 39,741
Ratio of Expenses to
Average Net Assets 0.52%*@ 1.01%@ 0.97% 1.01% 1.00%~ 0.91% 0.98%
Ratio of Net Investment Income
to Average Net Assets# 0.73%* 1.64% 2.17% 1.80% 2.07%~ 2.19% 2.39%
Portfolio Turnover Rate 23%* 27% 34% 53% 35%* 37% 64%
Average Commission Rate Paid^^ $ 0.0564* $ 0.0589 - - - - -
</TABLE>
<PAGE>
>> From January 1, 1993 to August 31, 1993, the Fund's current fiscal year-end.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ Ratio is based on Total Expenses of the Fund, which is before any offset
arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for the fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO FUNDS
We're easy to stay in touch with:
INVESCO Services Representatives,
1-800-525-8085
PAL(R), your Personal Account Line,
1-800-424-8085
On the World Wide Web:
http://www.invesco.com
Denver Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center, 7800 E. Union Avenue,
Lobby Level
INVESCO Funds Group, Inc.,(SM) Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied by a current prospectus.
