Annual Report
August 31, 1997
INVESCO
VALUE FUNDS
Intermediate Government
Bond Fund
Total Return Fund
Value Equity Fund
INVESCO FUNDS
<PAGE>
MARKET OVERVIEW September 1997
U.S. financial markets are highly dependent on investors' perception of the
domestic economy. This has been especially true this year. In the early spring,
fears of inflation and the potential for an overheating economy caused the
Federal Reserve Board to increase short-term interest rates by 25 basis points.
This produced a sharp pullback in the stock market. Subsequently, the prevailing
view had been of strong and stable economic growth with benign inflation. With
this change of attitude, equity markets rallied, and many large-capitalization
indexes produced 20% gains within a two-month time period. In fact, the Dow
Jones Industrial Average jumped 20% in two months for only the third time in 59
years. Recently, however, renewed concerns over inflation, corporate profits,
and a stronger-than-expected economy have again increased day-to-day volatility
within the equity markets.(1)
Why has the economy been so difficult to gauge?
Conventional wisdom has always held that strong economic growth and benign
inflation couldn't coexist. However, for the last seven months, they have. Some
analysts are calling the current economic environment a "new paradigm" or a
"utopian environment." The Gross Domestic Product (GDP) -- the primary indicator
of economic status -- continues to increase at a rapid pace. In the fourth
quarter of 1996, the GDP rose at a revised rate of 3.9%; for the first quarter
of 1997, 4.9%; and for the second quarter of 1997, 3.3%.
Meanwhile, the specter of inflation has been nonexistent. Wholesale prices
across the economy decreased for the first seven months of 1997, yet the
unemployment rate measured 4.9% in August and 4.8% in July -- the lowest levels
since 1973.
Whatever your outlook on the economy, the current environment bodes well
for domestic equity markets. Low inflation with strong economic growth may
continue to lead to high multiples for corporate stock prices, albeit with
likely price volatility. Of course, a significant increase in interest rates
could alter the current market conditions and change the investment climate.
Until a clearer picture of the direction of the economy develops, fixed-
incomeinvestors may experience continued day-to-day volatility, although
probably to a lesser degree than equity markets.
INVESCO VALUE FUNDS
The line graphs below illustrate the value of a $10,000 investment in each
of the INVESCO Value Funds, plus reinvested dividends and capital gain
distributions, for the 10-year period ended 8/31/97. The charts and other total
return figures cited reflect the funds' operating expenses, but the indexes do
not have expenses, which would, of course, have lowered their performance.(2)
INTERMEDIATE GOVERNMENT BOND FUND
For the one-year period ended 8/31/97, INVESCO Intermediate Government
Bond Fund had a total return of 6.64%, compared to a total return of 8.05% for
the Lehman Intermediate Government Bond Index. (Of course, past performance is
not a guarantee of future results.)(1),(2)
<PAGE>
Intermediate Government Bond Fund
Average Annual Total Return
as of 8/31/97(2)
1 Year 6.64%
---------------------------------
5 Years 5.65%
---------------------------------
10 Years 7.54%
---------------------------------
Graph: This line graph represents a comparison of the value of a $10,000
investment in INVESCO Intermediate Government Bond Fund to the value
of a $10,000 investment in the Lehman Intermediate Government Bond
Index, assuming in each case reinvestment of all dividends and
capital gain distributions, for the ten year period ended August 31,
1997.
Due to the shifting interest rate environment over the last year, the
fund's investments have been highly influenced by interest rate movements and
maturity strategies. However, because of our conservative approach and
value-oriented bond selection process, we were able to mitigate much of the
volatility that affected the broad fixed-income market. We continue to focus the
fund's holdings in obligations of the U.S. government and its agencies which
mature in three to five years. Because of this narrow focus, the fund may
outperform or underperform during short market cycles.
Looking forward, we will continue to monitor the policies of the Federal
Reserve Board and forward rates. This analysis will dictate our maturity
strategy and investment philosophy. Our current evaluation of the Fed and
forward rates suggests a more neutral position than our previous expectation of
credit tightening.
FUND MANAGEMENT
Intermediate Government Bond Fund is managed by James O. Baker. Before
joining INVESCO, Jim was associated with Willis Investment Counsel., Morgan
Keegan, and Drexel Burnham Lambert. A Chartered Financial Analyst, he holds a BA
from Mercer University. Ralph H. Jenkins, Jr., assists in managing the fund. He
began his investment career in 1969 and is both a Chartered Financial Analyst
and Chartered Investment Counselor. He earned his MA at the University of
Alabama and a BBC from Auburn University.
TOTAL RETURN FUND
For the one-year period ended 8/31/97, INVESCO Total Return Fund had a
total return of 27.01%, compared to a total return of 40.57% for the S&P 500,
and 9.80% for the Lehman Government/Corporate Bond Index. The fund outperformed
its peer group for the same period, besting the average fund return of 23.17%
for the Lipper Flexible Portfolio objective. (Lipper Analytical Services, Inc.,
is an independent mutual fund analyst, which tracks fund performance unadjusted
for commissions. Of course, past performance is not a guarantee of future
results.)(1),(2)
<PAGE>
Total Return Fund
Average Annual Total Return
as pf 8/31/97(2)
1 Year 27.01%
---------------------------
5 Years 15.38%
---------------------------
10 Years 13.68%
---------------------------
Graph: This line graph represents a comparison of the value of a $10,000
investment in INVESCO Total Return Fund to the value of a $10,000
investment in the Lehman Government/Corporate Bond Index, assuming in each
case reinvestment of all dividends and capital gain distributions, for the
ten year period ended August 31, 1997.
Total Return Fund seeks to add value in three ways: through asset
allocation, stock selection, and bond strategy. Asset allocation is based on the
spread of returns between bonds and stocks. If this relationship is out-of-line
with the historical spread of three percent, then the fund's asset mix is
adjusted, with 60% stocks and 40% bonds considered a neutral position.
Presently, we slightly favor equities, with an approximate allocation of 25%
bonds, 64% equities, and 11% in cash and cash equivalents.
With regards to our equity strategy, over the last year the market has
been infatuated with lower-yielding, large-capitalization high-growth companies.
Although many of these firms are solid fundamentally, it appears that some may
be now overpriced. Thus, we have stayed away from higher growth sectors in favor
of more conservative, reasonably valued industry groups such as consumer
cyclicals, consumer staples, and capital goods. However, stock selectivity
remains the crucial ingredient, as our disciplined, "bottom-up" approach
identifies securities that may be undervalued, such as Columbia/HCA Healthcare
and British Telecommunications PLC Sponsored ADR. This value-oriented approach
also kept the fund away from momentum stocks that were devastated in the minor
correction that occurred in the spring.
Similarly, our bond selection process seeks to identify securities
undervalued by the broad market. Within this context, our investment decisions
are highly dependent on our analysis of the Federal Reserve Board policy.
Earlier this year, our evaluation suggested that the Fed might tighten credit
availability. Accordingly, we structured the bond portfolio conservatively. This
strategy paid off for the fund, as the Fed raised short-term interest rates in
March. Our present reading is more neutral in regards to Fed policy, and the
bond portfolio has been adjusted accordingly.
FUND MANAGEMENT
Total Return Fund is managed by Edward C. Mitchell, chairman of INVESCO
Capital Management. He earned his MBA at the University of Colorado and a BA
from the University of Virginia. Ed began his investment career in 1969 and is a
Chartered Financial Analyst. He is assisted by David S. Griffin, who began his
investment career in 1982. A Chartered Financial Analyst, David holds an MBA
from the College of William & Mary, and a BA from Ohio Wesleyan University.
<PAGE>
VALUE EQUITY FUND
For the one-year period ended 8/31/97, INVESCO Value Equity Fund achieved
a total return of 32.04%, compared to a total return of 40.57% for the S&P 500.
(Of course, past performance is not a guarantee of future results.)(1),(2)
During the last year, the investment community was infatuated with a select
few large-capitalization, blue chip stocks. This intense focus on a few names
has led to high valuation levels compared to historic norms. Within this
environment, we have stayed true to our value-oriented, disciplined investment
philosophy. This approach has kept the fund away from high-flying momentum
stocks, focusing instead on more conservative, reasonably valued investments.
While we have underperformed the broad market indexes in the past 12 months, we
feel confident that, over a full market cycle, our investment philosophy should
pay off -- as many momentum investors typically suffer a severe loss of capital
in down markets.
With the broad market appearing fully valued in many sectors, stock
selectivity continues to drive the fund's performance. Our continuous search for
undervalued securities has lead us to companies like Lowe's Cos and Hanson PLC
Sponsored ADR. Lowe's is a home improvement retail company with headquarters in
the Southeast U.S. They have continued to exhibit strong earnings growth of
approximately 20%, while selling at a relatively low price-to-earnings multiple.
This company may also benefit from an improving regional economy. Hanson PLC, a
paper and forest products company, is in the process of restructuring and is
presently selling at 12 times earnings while providing a hefty dividend yield.
Graph: This line graph represents a comparison of the value of a $10,000
investment in INVESCO Value Equity Fund tot he value of a $10,000
investment in the S&P 500 Index, assuming in each case reinvestment of all
dividends and capital gain distributions, for the ten year period ended
August 31, 1997.
A continuing low interest rate environment bodes well for the economy and
potentially the markets -- this may lead to higher multiples for stocks. Stock
selectivity remains crucial, and we will continue to underweight momentum-prone
sectors such as technology.
FUND MANAGEMENT
Value Equity Fund is managed by Michael C. Harhai. Mike began his
investment career in 1972. Before joining INVESCO, he served as a portfolio
manager with Citizens & Southern Investment Advisors and later as head of the
equity/balanced group with Sovran Capital Management. He holds an MBA from the
University of Central Florida and a BA from the University of South Florida. He
is a Chartered Financial Analyst, as is Terrence Irrgang, who assists in
managing the fund. Terry is a 13-year veteran of the investment business, and
holds an MBA from Temple University, as well as a BA from Gettysburg College.
Value Equity Fund
Average Annual Total Return
as of 8/31/97(2)
1 Year 32.04%
---------------------------
5 Years 17.60%
---------------------------
10 Years 12.74%
---------------------------
<PAGE>
(1) The S&P 500 is an unmanaged index of common stocks considered representative
of the broad U.S. equity market. The Lehman Government/Corporate Bond Index and
Lehman Intermediate Government Bond Index are unmanaged indexes of securities
considered to be representative of the overall domestic fixed-income and
intermediate-term government bond markets, respectively. The Dow Jones
Industrial Average reflects the performance of large-capitalization stocks.
(2) Total return assumes reinvestment of dividends and capital gain
distributions for the periods indicated. Past performance is not a guarantee of
future results. Investment return and principal value will fluctuate so that,
when redeemed, an investor's shares may be worth more or less than when
purchased.
INVESCO Fund Codes
These two-digit codes appear after your account number on Investment
Summaries and confirmations. You may also use them to request information about
specific funds on PAL(R), your Personal Account Line.
Money Market Funds
44 U.S. Government Money Fund
25 Cash Reserves
40 Tax-Free Money Fund
Tax-Exempt Funds
36 Tax-Free Intermediate Bond
35 Tax-Free Long-Term Bond
Income Funds
33 Short-Term Bond
32 U.S. Government Securities
47 Intermediate Government Bond
30 Select Income
31 High Yield
Growth & Income Fund
71 Balanced
70 Multi-Asset Allocation
48 Total Return
15 Industrial Income
46 Value Equity
Capital Appreciation Funds
10 Growth
20 Dynamics
74 Small Company Value
60 Small Company Growth
Sector Funds
50 Energy
59 Environmental Services
57 Financial Services
51 Gold
52 Health Sciences
53 Leisure
42 Realty
55 Technology
58 Utilities
38 Worldwide Capital Goods
39 Worldwide Communications
<PAGE>
International Funds
49 International Growth
41 Asian Growth
56 European
37 European Small Company
34 Latin American Growth
54 Pacific Basin
For more information about any of the INVESCO Funds, including management fees
and expenses, please call us at 1-800-525-8085 for a prospectus. Read it
carefully before you invest or send money.
<PAGE>
INVESCO Value Trust
TEN LARGEST COMMON STOCK HOLDINGS
August 31, 1997
Description Value
- ---------------------------------------------------------------------------
TOTAL RETURN Fund
Compaq Computer $ 40,937,500
International Business Machines 22,192,500
Morgan Stanley Dean Witter
Discovery & Co 21,836,719
First Chicago NBD 21,525,000
Ford Motor 21,500,000
Dow Chemical 19,912,500
SuperValu Inc 19,625,000
Edison International 19,300,000
Bristol-Myers Squibb 19,000,000
Columbia/HCA Healthcare 18,937,500
VALUE EQUITY Fund
Electronic Data Systems $ 8,318,750
International Business Machines . 8,070,000
Ford Motor 7,955,000
Compaq Computer 7,516,125
Hewlett-Packard Co 7,357,500
Columbia/HCA Healthcare 7,322,500
Computer Associates International 7,205,781
Dover Corp 6,906,250
Unifi Inc 6,715,625
NationsBank Corp 6,612,238
Composition of holdings is subject to change.
<PAGE>
INVESCO Value Trust
STATEMENT OF INVESTMENT SECURITIES
August 31, 1997
<TABLE>
<CAPTION>
Shares or
Principal
Description Amount Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
INTERMEDIATE GOVERNMENT BOND Fund
FIXED INCOME SECURITIES 85.29%
US Government Obligations 72.05%
US Treasury Bonds
9.250%, 2/15/2016 $ 500,000 $ 636,406
--------------
US Treasury Notes
8.750%, 8/15/2000 $ 2,000,000 2,140,626
8.500%, 2/15/2000 $ 2,600,000 2,743,000
8.500%, 11/15/2000 $ 2,000,000 2,135,626
8.000%, 8/15/1999 $ 2,000,000 2,073,750
7.750%, 2/15/2001 $ 4,000,000 4,196,252
7.500%, 11/15/2001 $ 1,500,000 1,570,313
7.250%, 8/15/2004 $ 2,000,000 2,101,250
7.125%, 10/15/1998 $ 3,000,000 3,041,250
7.000%, 4/15/1999 $ 3,000,000 3,048,750
6.375%, 7/15/1999 $ 2,000,000 2,015,626
6.375%, 8/15/2002 $ 2,500,000 2,516,407
6.250%, 2/15/2003 $ 1,000,000 999,688
6.000%, 10/15/1999 $ 3,000,000 3,004,689
--------------
TOTAL US GOVERNMENT
OBLIGATIONS
(Cost $31,905,593) 32,223,633
--------------
US Government Agency Obligations 13.24%
Federal Home Loan Mortgage, Gold
Participation Certificates
8.000%, 10/1/2010 $ 961,750 994,882
6.500%, 7/1/2001 $ 902,085 903,672
Federal National Mortgage
Association, Gtd Mortgage
Pass-Through Certificates
6.000%, 5/1/2009 $ 929,094 905,588
<PAGE>
Government National Mortgage
Association I, Pass-Through
Certificates
7.500%, 3/15/2026 $ 1,188,637 1,199,940
7.000%, 10/15/2008 $ 604,301 609,734
6.500%, 10/15/2008 $ 643,620 639,758
6.000%, 11/15/2008 $ 686,954 670,413
--------------
TOTAL US GOVERNMENT
AGENCY OBLIGATIONS
(Cost $5,941,859) 5,923,987
--------------
TOTAL FIXED INCOME SECURITIES
(Cost $37,847,452) 38,147,620
--------------
SHORT-TERM INVESTMENTS 14.71%
US Government Obligations 6.37%
US Treasury Notes
6.000%, 12/31/1997 $ 2,000,000 $ 2,003,126
5.125%, 3/31/1998 $ 850,000 847,875
--------------
TOTAL US GOVERNMENT
OBLIGATIONS
(Cost $2,846,176) 2,851,001
--------------
US Government Agency Obligations 4.48%
Federal Farm Credit Bank
6.050%, 5/1/1998
(Cost $2,000,278) $ 2,000,000 2,002,499
--------------
Repurchase Agreements 3.86%
Repurchase Agreement with
State Street Bank & Trust Co
dated 8/29/1997 due 9/2/1997
at 5.500%, repurchased at
$1,725,054 (Collateralized
by US Treasury Bonds due
8/15/2019 at 8.125%, value
$1,768,487) (Cost $1,724,000) $ 1,724,000 1,724,000
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $6,570,454) 6,577,500
--------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $44,417,906)
(Cost for Income Tax Purposes
$44,561,784) $ 44,725,120
==============
<PAGE>
TOTAL RETURN Fund
COMMON STOCKS 64.04%
AEROSPACE & DEFENSE 2.56%
Boeing Co 200,000 $ 10,887,500
Lockheed Martin 175,000 18,145,312
Raytheon Co 325,000 17,875,000
--------------
46,907,812
--------------
AUTO PARTS 1.41%
Genuine Parts 500,000 15,437,500
Snap-On Inc 250,000 10,500,000
--------------
25,937,500
--------------
AUTOMOBILES 1.17%
Ford Motor 500,000 21,500,000
--------------
BANKS 4.08%
First Chicago NBD 300,000 21,525,000
First of America Bank 337,500 17,381,250
First Union 300,000 14,418,750
NationsBank Corp 200,000 11,875,000
Wachovia Corp 154,000 9,586,500
--------------
74,786,500
--------------
BEVERAGES 0.58%
Anheuser-Busch Cos 250,000 10,656,250
--------------
BUILDING MATERIALS 0.45%
Sherwin-Williams Co 300,000 8,231,250
--------------
CHEMICALS 1.85%
Dow Chemical . 225,000 19,912,500
Great Lakes Chemical 300,000 13,950,000
--------------
33,862,500
--------------
COMPUTER RELATED 6.18%
Compaq Computer* 625,000 40,937,500
Computer Associates International 250,000 16,718,750
Electronic Data Systems 400,000 15,125,000
Hewlett-Packard Co 300,000 18,393,750
International Business Machines 220,000 22,192,500
--------------
113,367,500
--------------
CONGLOMERATES 0.41%
Textron Inc 120,000 7,477,500
--------------
<PAGE>
DISTRIBUTION 1.35%
Ikon Office Solutions 200,000 5,200,000
SuperValu Inc 500,000 19,625,000
--------------
24,825,000
--------------
ELECTRIC UTILITIES 4.23%
DTE Energy 600,000 17,775,000
Edison International 800,000 19,300,000
Energy Group PLC Sponsored ADR 100,000 4,043,750
Texas Utilities 500,000 17,437,500
Unicom Corp 800,000 18,900,000
--------------
77,456,250
--------------
ELECTRICAL EQUIPMENT 1.02%
General Electric 300,000 18,750,000
--------------
FOODS 2.54%
Archer-Daniels-Midland Co 787,500 17,029,687
Heinz (H J) Co 300,000 12,487,500
Unilever NV New York Shrs 85,000 17,106,250
--------------
46,623,437
--------------
GOLD & PRECIOUS
METALS MINING 0.75%
Phelps Dodge 170,000 13,674,375
--------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 4.67%
Abbott Laboratories 175,000 10,489,062
American Home Products 200,000 14,400,000
Bristol-Myers Squibb 250,000 19,000,000
Lilly (Eli) & Co 150,000 15,693,750
Merck & Co 100,000 9,181,250
Schering-Plough Corp 350,000 16,800,000
--------------
85,564,062
--------------
HEALTH CARE RELATED 1.03%
Columbia/HCA Healthcare 600,000 18,937,500
--------------
HOUSEHOLD FURNITURE
& APPLIANCES 0.86%
Whirlpool Corp 275,000 15,743,750
--------------
INSURANCE 3.23%
American General 300,000 14,456,250
Lincoln National 150,000 10,040,625
Ohio Casualty 375,000 17,437,500
SAFECO Corp 350,000 17,193,750
--------------
59,128,125
--------------
<PAGE>
INSURANCE BROKERS 0.82%
Marsh & McLennan 220,000 15,015,000
--------------
INVESTMENT BANK/BROKER FIRM 1.19%
Morgan Stanley Dean Witter
Discovery & Co 453,750 21,836,719
--------------
MANUFACTURING 1.89%
Minnesota Mining & Manufacturing 130,000 11,683,750
National Service Industries 265,000 11,726,250
York International 250,000 11,218,750
--------------
34,628,750
--------------
OFFICE EQUIPMENT & SUPPLIES 1.03%
Xerox Corp 250,000 18,875,000
--------------
OIL & GAS RELATED 3.48%
Amoco Corp 150,000 14,184,375
Norsk Hydro AS Sponsored ADR 350,000 18,790,625
Repsol SA Sponsored ADR 450,000 17,718,750
Royal Dutch Petroleum New York
Registry 1.25 Gldr Shrs 260,000 13,195,000
--------------
63,888,750
--------------
PAPER & FOREST PRODUCTS 1.49%
Hanson PLC Sponsored ADR 700,000 16,800,000
Westvaco Corp 310,000 10,501,250
--------------
27,301,250
--------------
POLLUTION CONTROL 0.76%
Browning-Ferris Industries* 400,000 13,975,000
--------------
PUBLISHING 1.51%
Dun & Bradstreet 500,000 14,000,000
Gannett Co 140,000 13,641,250
--------------
27,641,250
--------------
RAILROADS 0.82%
Illinois Central Series A 450,000 15,103,125
--------------
RETAIL 4.08%
CVS Corp 200,000 11,275,000
Dillard's Department Store Class A 450,000 18,000,000
K mart Corp* 500,000 6,937,500
Penney (J C) Co 275,000 16,500,000
Rite Aid 175,000 8,760,938
Tandy Corp* 200,000 13,275,000
--------------
74,748,438
--------------
<PAGE>
SPECIALTY PRINTING 0.81%
Deluxe Corp 450,000 14,821,875
--------------
TELECOMMUNICATIONS -
LONG DISTANCE 0.71%
British Telecommunications PLC
Sponsored ADR Final Installment 200,000 12,937,500
--------------
TELEPHONE 3.17%
Bell Atlantic 230,400 16,675,200
Southern New England Telecommunications 300,000 11,475,000
Telefonica de Espana SA Sponsored ADR 150,000 11,662,500
Telefonos de Mexico SA de
CV Sponsored ADR
Representing Ord Series L Shrs 400,000 18,350,000
--------------
58,162,700
--------------
TEXTILE - APPAREL
MANUFACTURING 1.26%
Liz Claiborne 200,000 8,912,500
VF Corp 160,000 14,140,000
--------------
23,052,500
--------------
TEXTILE - HOME FURNISHINGS 0.24%
Shaw Industries 400,000 4,475,000
--------------
TOBACCO 1.61%
Fortune Brands 250,000 8,593,750
Gallaher Group PLC Sponsored ADR* 250,000 4,484,375
Philip Morris 375,000 16,359,375
--------------
29,437,500
--------------
TRUCKERS 0.80%
Caliber System 350,000 14,612,500
--------------
TOTAL COMMON STOCKS
(Cost $782,684,142) 1,173,942,168
--------------
FIXED INCOME SECURITIES 25.64%
US Government Obligations 18.23%
US Treasury Bonds
11.250%, 2/15/2015 $ 12,450,000 18,375,428
9.375%, 2/15/2006 $ 17,450,000 20,836,399
9.250%, 2/15/2016 $ 20,000,000 25,456,259
8.125%, 8/15/2019 $ 10,000,000 11,631,250
7.250%, 8/15/2022 $ 20,000,000 21,312,500
<PAGE>
US Treasury Notes
8.750%, 8/15/2000 $ 25,000,000 26,757,824
8.000%, 5/15/2001 $ 19,100,000 20,240,040
7.875%, 11/15/1999 $ 17,100,000 17,746,602
6.500%, 8/15/2005 $ 28,000,000 28,210,000
6.375%, 7/15/1999 $ 25,000,000 25,195,324
6.375%, 1/15/2000 $ 15,000,000 15,126,569
6.375%, 8/15/2002 $ 22,150,000 22,295,370
6.250%, 2/15/2003 $ 22,000,000 21,993,135
5.750%, 8/15/2003 $ 17,000,000 16,548,445
5.500%, 2/28/1999 $ 25,000,000 24,859,375
US Treasury Security Stripped Interest
Payment, Generic Tint Payment
Zero Coupon, 8/15/2003 $ 25,250,000 17,452,040
--------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $329,459,061) 334,036,560
--------------
US Government Agency Obligations 4.35%
Federal Home Loan Mortgage, Gold
Participation Certificates
8.000%, 10/1/2010 $ 4,488,166 4,642,783
8.000%, 5/1/2024 $ 6,815,600 7,038,061
7.500%, 12/1/2026 $ 9,924,310 10,052,134
6.500%, 7/1/2001 $ 6,314,593 6,325,706
Federal National Mortgage
Association, Gtd Mortgage
Pass-Through Certificates
8.500%, 3/1/2010 $ 6,806,904 7,088,505
8.000%, 7/1/2024 $ 8,739,718 9,003,307
7.500%, 8/1/2007 $ 1,577,152 1,611,014
6.500%, 5/1/2026 $ 7,602,103 7,342,262
6.000%, 5/1/2009 $ 9,307,457 9,071,977
Government National Mortgage
Association I, Pass-Through
Certificates
7.500%, 3/15/2026 $ 5,546,970 5,599,721
7.000%, 10/15/2008 $ 978,718 987,516
7.000%, 12/15/2022 $ 220,529 219,365
7.000%, 12/15/2025 $ 8,890,133 8,798,030
6.500%, 10/15/2008 $ 965,430 959,638
6.000%, 11/15/2008 $ 1,030,432 1,005,619
--------------
TOTAL US GOVERNMENT
AGENCY OBLIGATIONS
(Cost $79,097,651) 79,745,638
--------------
Corporate Bonds 2.79%
AEROSPACE & DEFENSE 0.08%
Rockwell International, Notes
6.625%, 6/1/2005 $ 1,500,000 1,491,964
AUTOMOBILES 0.04%
Ford Motor, Notes
7.500%, 11/15/1999 $ 750,000 767,391
--------------
<PAGE>
BANKS 0.40%
BankAmerica Corp, Sub Notes
6.875%, 6/1/2003 $ 4,000,000 4,018,080
National City, Sub Notes
7.200%, 5/15/2005 $ 2,000,000 2,038,146
NationsBank Corp, Sr Notes
5.375%, 4/15/2000 $ 1,250,000 1,220,306
--------------
7,276,532
--------------
BEVERAGES 0.08%
PepsiCo Inc, Deb, 7.750%, 10/1/1998 $ 1,500,000 1,526,952
--------------
CONSUMER FINANCE 0.04%
Beneficial Corp, Medium-Term Notes
5.350%, 10/8/1998 $ 800,000 793,845
--------------
ELECTRIC UTILITIES 0.25%
Duke Power 1st & Refunding Mortgage
7.500%, 4/1/1999 $ 1,000,000 1,018,378
Medium-Term Notes
6.125%, 7/22/2003 $ 2,900,000 2,810,741
Union Electric, 1st Mortgage
6.750%, 10/15/1999 $ 750,000 756,582
--------------
4,585,701
--------------
FINANCIAL 0.49%
Associates Corp of North America
Notes, 6.375%, 10/15/2002 $ 5,000,000 4,946,834
Commercial Credit, Notes
6.375%, 9/15/2002 $ 4,000,000 3,943,204
--------------
8,890,038
--------------
FOODS 0.33%
CPC International, Medium-Term
Notes, Series D, 6.875%, 10/15/2003 $ 3,000,000 3,028,188
Nabisco Inc, Notes, 8.000%, 1/15/2000 $ 3,000,000 3,098,766
--------------
6,126,954
--------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 0.23%
American Home Products, Notes
7.700%, 2/15/2000 $ 4,000,000 4,126,060
--------------
PUBLISHING 0.19%
Gannett Co, Notes, 5.850%, 5/1/2000 $ 3,500,000 3,456,694
--------------
<PAGE>
RETAIL 0.55%
May Department Stores, Deb
6.875%, 11/1/2005 $ 4,000,000 4,023,387
Wal-Mart Stores, Notes
8.625%, 4/1/2001 $ 5,000,000 5,337,234
5.500%, 3/1/1998 $ 750,000 748,531
--------------
10,109,152
--------------
TELECOMMUNICATIONS -
LONG DISTANCE 0.11%
BellSouth Telecommunications, Notes
6.500%, 6/15/2005 $ 2,000,000 1,980,246
--------------
TOTAL CORPORATE BONDS
(Cost $50,955,817) 51,131,529
--------------
Foreign Corporate Obligations 0.27%
BANKS 0.27%
ABN Amro Bank NV, Global Sub Notes,
6.625%, 10/31/2001 (Cost $5,001,134) $ 5,000,000 4,993,574
--------------
TOTAL FIXED INCOME SECURITIES
(Cost $464,513,663) 469,907,301
--------------
SHORT-TERM INVESTMENTS 10.32%
US Government Obligations 5.05%
US Treasury Notes
8.250%, 7/15/1998 $ 25,000,000 25,523,449
7.875%, 1/15/1998 $ 21,750,000 21,933,526
6.125%, 3/31/1998 $ 25,000,000 25,078,125
6.000%, 11/30/1997 $ 20,000,000 20,025,000
--------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $92,363,734) 92,560,100
--------------
Commercial Paper 1.09%
FINANCIAL 1.09%
Greenwich Funding, 5.600%, 9/2/1997
(Cost $19,996,856) $ 20,000,000 19,996,856
--------------
Repurchase Agreements 4.18%
Repurchase Agreement with State
Street Bank & Trust Co dated
8/29/1997 due 9/2/1997 at 5.500%,
repurchased at $76,670,826
(Collateralized by US Treasury
Bonds due 8/15/2019 at 8.125%,
value $78,424,451) (Cost $76,624,000) $ 76,624,000 76,624,000
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $188,984,590) 189,180,956
--------------
<PAGE>
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $1,436,182,395)
(Cost for Income Tax Purposes
$1,438,652,250) $1,833,030,425
==============
VALUE EQUITY Fund
COMMON STOCK 100.00%
AEROSPACE & DEFENSE 3.39%
Lockheed Martin 56,860 $ 5,895,671
Raytheon Co 120,000 6,600,000
--------------
12,495,671
--------------
AUTO PARTS 1.19%
Genuine Parts 142,500 4,399,687
--------------
AUTOMOBILES 2.16%
Ford Motor 185,000 7,955,000
--------------
BANKS 5.55%
First Chicago NBD 80,000 5,740,000
First Union 60,000 2,883,750
NationsBank Corp 111,364 6,612,238
Wachovia Corp 83,700 5,210,325
--------------
20,446,313
--------------
BEVERAGES 1.47%
PepsiCo Inc 150,000 5,400,000
--------------
BUILDING MATERIALS 1.41%
Lowe's Cos 150,000 5,184,375
--------------
CHEMICALS 2.82%
Dow Chemical 65,000 5,752,500
Great Lakes Chemical 100,000 4,650,000
--------------
10,402,500
--------------
COMMUNICATIONS - EQUIPMENT
& MANUFACTURING 0.67%
Motorola Inc 33,500 2,458,062
--------------
COMPUTER RELATED 10.44%
Compaq Computer* 114,750 7,516,125
Computer Associates International 107,750 7,205,781
Electronic Data Systems 220,000 8,318,750
Hewlett-Packard Co 120,000 7,357,500
International Business Machines 80,000 8,070,000
--------------
38,468,156
--------------
<PAGE>
CONGLOMERATES 1.42%
Textron Inc 84,000 5,234,250
--------------
DISTRIBUTION 2.41%
Ikon Office Solutions 160,000 4,160,000
Supervalu Inc 120,000 4,710,000
--------------
8,870,000
--------------
ELECTRIC UTILITIES 3.88%
DTE Energy 137,000 4,058,625
Entergy Corp 150,000 3,721,875
Southern Co 135,000 2,843,437
Unicom Corp 155,000 3,661,875
--------------
14,285,812
--------------
ELECTRICAL EQUIPMENT 1.26%
General Electric 74,200 4,637,500
--------------
ELECTRONICS - SEMICONDUCTOR 0.50%
Intel Corp 20,000 1,842,500
--------------
FINANCIAL 1.63%
Federal National Mortgage
Association 136,500 6,006,000
--------------
FOODS 1.72%
Archer-Daniels-Midland Co 194,250 4,200,656
Tyson Foods Class A 100,000 2,125,000
--------------
6,325,656
--------------
FOOTWEAR 1.16%
NIKE Inc Class B 80,000 4,270,000
--------------
GOLD & PRECIOUS METALS MINING 0.68%
Phelps Dodge 31,000 2,493,563
--------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 8.85%
Abbott Laboratories 47,000 2,817,062
Allergan Inc 130,000 4,208,750
American Home Products 52,000 3,744,000
Astra AB Sponsored ADR
Representing Series A Shrs 200,000 3,200,000
Bristol-Myers Squibb 60,000 4,560,000
Lilly (Eli) & Co 15,000 1,569,375
Merck & Co 37,000 3,397,062
Schering-Plough Corp 84,000 4,032,000
Warner-Lambert Co 40,000 5,082,500
--------------
32,610,749
--------------
<PAGE>
HEALTH CARE RELATED 3.72%
Biomet Inc 307,100 6,372,325
Columbia/HCA Healthcare 232,000 7,322,500
--------------
13,694,825
--------------
HOUSEHOLD FURNITURE & APPLIANCES 1.55%
Whirlpool Corp 100,000 5,725,000
--------------
HOUSEHOLD PRODUCTS 1.61%
Kimberly-Clark Corp 125,000 5,929,688
--------------
INSURANCE 8.78%
American General 100,000 4,818,750
American International Group 42,750 4,034,531
General Re 23,000 4,459,125
Jefferson-Pilot Corp 57,575 4,005,061
Loews Corp 50,000 5,096,875
SAFECO Corp 110,000 5,403,750
Torchmark Corp 120,000 4,522,500
--------------
32,340,592
--------------
INSURANCE BROKERS 1.11%
Marsh & McLennan 60,000 4,095,000
--------------
INVESTMENT BANK/BROKER FIRM 0.67%
Salomon Inc 41,000 2,454,875
--------------
MACHINERY 1.87%
Dover Corp 100,000 6,906,250
--------------
MANUFACTURING 1.34%
York International 110,000 4,936,250
--------------
OFFICE EQUIPMENT & SUPPLIES 2.58%
Pitney-Bowes Inc 45,600 3,482,700
Xerox Corp 80,000 6,040,000
--------------
9,522,700
--------------
OIL & GAS RELATED 5.80%
Amoco Corp 55,000 5,200,938
Exxon Corp 70,550 4,316,778
Norsk Hydro AS Sponsored ADR 60,000 3,221,250
Repsol SA Sponsored ADR 105,400 4,150,125
Royal Dutch Petroleum New York
Registry 1.25 Gldr Shrs 88,304 4,481,428
--------------
21,370,519
--------------
<PAGE>
PAPER & FOREST PRODUCTS 1.25%
Hanson PLC Sponsored ADR 50,000 1,200,000
Westvaco Corp 100,050 3,389,194
--------------
4,589,194
--------------
POLLUTION CONTROL 1.04%
Waste Management 120,000 3,840,000
--------------
PUBLISHING 1.48%
Dun & Bradstreet 195,000 5,460,000
--------------
RAILROADS 1.50%
Illinois Central Series A 165,000 5,537,813
--------------
RESTAURANTS 1.20%
McDonald's Corp 93,300 4,414,256
--------------
RETAIL 3.61%
Dillard's Department Store Class A 115,000 4,600,000
Rite Aid 100,000 5,006,250
Wal-Mart Stores 103,900 3,688,450
--------------
13,294,700
--------------
TELEPHONE 1.56%
Southern New England
Telecommunications 150,000 5,737,500
--------------
TEXTILE - APPAREL
MANUFACTURING 1.82%
Unifi Inc 175,000 6,715,625
--------------
TEXTILE - HOME FURNISHINGS 0.53%
Shaw Industries 175,000 1,957,813
--------------
TOBACCO 2.69%
Fortune Brands 120,000 4,125,000
Philip Morris 132,200 5,767,225
--------------
9,892,225
--------------
TOYS 1.68%
Mattel Inc 185,000 6,185,938
--------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $266,169,020)
(Cost for Income Tax Purposes
$266,932,603) $ 368,386,557
==============
</TABLE>
* Security is non-income producing.
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1997
<TABLE>
<CAPTION>
Intermediate
Government Total Return Value Equity
Bond Fund Fund Fund
-----------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost~ $44,417,906 $1,436,182,395 $266,169,020
===========================================================
At Value~ $44,725,120 $1,833,030,425 $368,386,557
Cash 3,581 479,725 448,905
Receivables:
Investment Securities Sold 0 0 489,217
Fund Shares Sold 68,338 7,871,403 765,461
Dividends and Interest 502,554 9,363,419 736,777
Prepaid Expenses and Other Assets 18,270 122,756 44,838
-----------------------------------------------------------
TOTAL ASSETS 45,317,863 1,850,867,728 370,871,755
-----------------------------------------------------------
LIABILITIES
Payables:
Distributions to Shareholders 15,084 209,466 33,657
Fund Shares Repurchased 856,839 5,043,497 1,063,767
Accrued Expenses and Other Payables 5,272 20,660 8,711
-----------------------------------------------------------
TOTAL LIABILITIES 877,195 5,273,623 1,106,135
-----------------------------------------------------------
Net Assets at Value $44,440,668 $1,845,594,105 $369,765,620
===========================================================
NET ASSETS
Paid-in Capital $44,705,750 $1,430,960,585 $249,058,417
Accumulated Undistributed
Net Investment Income (See Note 1) 0 106,017 17,483
Accumulated Undistributed Net Realized
Gain (Loss) on Investment Securities
and Foreign Currency Transactions (572,296) 17,679,473 18,472,183
Net Appreciation of Investment
Securities (See Notes 1) 307,214 396,848,030 102,217,537
-----------------------------------------------------------
Net Assets at Value $44,440,668 $1,845,594,105 $369,765,620
===========================================================
Shares Outstanding* 3,572,904 66,466,489 13,063,984
Net Asset Value, Offering and Redemption
Price per Share $12.44 $27.77 $28.30
===========================================================
</TABLE>
<PAGE>
~ Investment securities at cost and value at August 31, 1997 include repurchase
agreements of $1,724,000 and $76,624,000 for Intermediate Government Bond and
Total Return Funds, respectively.
* The Trust has one class of shares which may be divided into different series,
each representing an interest in a separate Fund. At August 31, 1997, there was
an unlimited number of authorized Fund shares.
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
STATEMENT OF OPERATIONS
Year Ended August 31, 1997
<TABLE>
<CAPTION>
Intermediate
Government Total Return Value Equity
Bond Fund Fund Fund
-----------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 0 $ 23,898,737 $ 6,243,692
Interest 2,833,739 33,302,056 931,093
Foreign Taxes Withheld 0 (548,396) (50,896)
------------------------------------------------------------
TOTAL INCOME 2,833,739 56,652,397 7,123,889
------------------------------------------------------------
EXPENSES
Investment Advisory Fees 268,593 9,140,227 2,250,039
Transfer Agent Fees 251,070 2,332,422 610,115
Administrative Fees 16,715 224,249 55,001
Custodian Fees and Expenses 13,316 199,691 47,971
Professional Fees and Expenses 14,225 60,021 24,779
Registration Fees and Expenses 27,972 179,562 59,101
Reports to Shareholders 9,430 59,721 33,029
Trustees' Fees and Expenses 9,671 65,158 19,539
Other Expenses 4,322 62,040 12,274
------------------------------------------------------------
TOTAL EXPENSES 615,314 12,323,091 3,111,848
Fees and Expenses Absorbed by
Investment Adviser (159,761) 0 0
Fees and Expenses Paid Indirectly (7,109) (167,273) (34,115)
------------------------------------------------------------
NET EXPENSES 448,444 12,155,818 3,077,733
------------------------------------------------------------
NET INVESTMENT INCOME 2,385,295 44,496,579 4,046,156
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain on
Investment Securities
and Foreign Currency Transactions 126,618 20,361,309 20,055,067
Change in Net Appreciation/Depreciation
of Investment Securities and
Foreign Currency Transactions 348,594 269,713,544 57,254,344
------------------------------------------------------------
NET GAIN ON INVESTMENT SECURITIES 475,212 290,074,853 77,309,411
------------------------------------------------------------
Net Increase in Net Assets
from Operations $ 2,860,507 $ 334,571,432 $ 81,355,567
============================================================
</TABLE>
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
-------------------------------- --------------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 2,385,295 $ 2,274,936 $ 44,496,579 $ 29,217,334
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 126,618 416,138 20,361,309 6,273,916
Change in Net Appreciation
(Depreciation) of Investment
Securities and Foreign Currency
Transactions 348,594 (1,505,858) 269,713,544 48,298,544
------------------------------- ---------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 2,860,507 1,185,216 334,571,432 83,789,794
------------------------------- ---------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (2,385,295) (2,261,908) (44,405,999) (29,200,386)
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 0 0 (4,314,901) (4,352,151)
------------------------------- ---------------------------------
TOTAL DISTRIBUTIONS (2,385,295) (2,261,908) (48,720,900) (33,552,537)
------------------------------- ---------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 26,474,792 28,705,527 997,370,885 609,919,491
Reinvestment of Distributions 2,208,130 2,132,961 47,962,510 32,908,763
------------------------------- ---------------------------------
28,682,922 30,838,488 1,045,333,395 642,828,254
Amounts Paid for Repurchases of Shares (24,665,970) (27,152,636) (517,740,980) (224,382,843)
------------------------------- ---------------------------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 4,016,952 3,685,852 527,592,415 418,445,411
------------------------------- ---------------------------------
Total Increase in Net Assets 4,492,164 2,609,160 813,442,947 468,682,668
NET ASSETS
Beginning of Period 39,948,504 37,339,344 1,032,151,158 563,468,490
------------------------------- ---------------------------------
End of Period $ 44,440,668 $ 39,948,504 $1,845,594,105 $1,032,151,158
=============================== =================================
Accumulated Undistributed Net Investment
Income Included in Net Assets at
End of Period (See Note 1) 0 0 106,017 11,343
--------------------------------------------------------------
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 2,132,651 2,283,726 39,163,785 27,294,383
Shares Issued from Reinvestment
of Distributions 178,829 169,140 1,844,859 1,459,274
------------------------------- ---------------------------------
2,311,480 2,452,866 41,008,644 28,753,657
Shares Repurchased (1,985,434) (2,159,851) (20,216,862) (9,971,539)
------------------------------- ---------------------------------
Net Increase in Fund Shares 326,046 293,015 20,791,782 18,782,118
=============================== =================================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Value Trust
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended August 31
<TABLE>
<CAPTION>
Value Equity Fund
-------------------------------
1997 1996
<S> <C> <C>
OPERATIONS
Net Investment Income $ 4,046,156 $ 3,014,041
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 20,055,067 4,119,794
Change in Net Appreciation of
Investment Securities and Foreign
Currency Transactions 57,254,344 20,794,083
-------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 81,355,567 27,927,918
-------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (4,071,368) (2,995,302)
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions (5,507,949) (3,086,946)
-------------------------------
TOTAL DISTRIBUTIONS (9,579,317) (6,082,248)
-------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 517,380,902 214,313,579
Reinvestment of Distributions 9,315,225 5,906,003
-------------------------------
526,696,127 220,219,582
Amounts Paid for Repurchases of Shares (428,752,415) (195,190,483)
-------------------------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 97,943,712 25,029,099
------------------------------
Total Increase in Net Assets 169,719,962 46,874,769
NET ASSETS
Beginning of Period 200,045,658 153,170,889
------------------------------
End of Period $369,765,620 $200,045,658
===============================
Accumulated Undistributed Net
Investment Income Included in
Net Assets at End of Period $ 17,483 $ 42,661
-------------------------------------
<PAGE>
FUND SHARE TRANSACTIONS
Shares Sold 20,198,347 9,902,174
Shares Issued from Reinvestment
of Distributions 378,067 277,102
-------------------------------
20,576,414 10,179,276
Shares Repurchased (16,506,962) (9,026,840)
-------------------------------
Net Increase in Fund Shares 4,069,452 1,152,436
===============================
</TABLE>
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") is organized under the laws of the Commonwealth of Massachusetts
and presently consists of three separate Funds: Intermediate Government Bond
Fund, Total Return Fund and Value Equity Fund. The investment objective of each
Fund is to achieve a high total return on investments through capital
appreciation and current income. The Trust is registered under the Investment
Company Act of 1940 (the "Act") as a diversified, open-end management investment
company.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION - Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales
price in the market where such securities are primarily traded. If last
sales prices are not available, securities are valued at the highest closing
bid price obtained from one or more dealers making a market for such
securities or by a pricing service approved by the Trust's trustees.
Debt securities are valued at evaluated bid prices as determined by a
pricing service approved by the Trust's trustees. If evaluated bid prices
are not available, debt securities are valued by averaging the bid prices
obtained from one or more dealers making a market for such securities.
Foreign securities are valued at the closing price on the principal
stock exchange on which they are traded. In the event that closing prices
are not available for foreign securities, prices will be obtained from the
principal stock exchange at or prior to the close of the New York Stock
Exchange. Foreign currency exchange rates are determined daily prior to the
close of the New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith
by the Trust's trustees.
Short-term securities are stated at amortized cost (which approximates
market value) if maturity is 60 days or less at the time of purchase, or
market value if maturity is greater than 60 days.
Assets and liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars at the prevailing market rates
as quoted by one or more banks or dealers on the date of valuation. The
cost of securities is translated into U.S. dollars at the rates of exchange
prevailing when such securities are acquired. Income and expenses are
translated into U.S. dollars at rates of exchange prevailing when accrued.
B. REPURCHASE AGREEMENTS - Repurchase agreements held by the Trust are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Trust's custodian. The collateral is evaluated daily to
ensure its market value exceeds the current market value of the repurchase
agreements including accrued interest. In the event of default on the
<PAGE>
obligation to repurchase, the Trust has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. In the
event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral or proceeds may be subject to
legal proceedings.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the trade date and dividend income is recorded on the
ex dividend date. Certain dividends from foreign securities will be
recorded as soon as the Trust is informed of the dividend if such
information is obtained subsequent to the ex dividend date. Interest income,
which may be comprised of stated coupon rate, market discount, original
issue discount and amortized premium, is recorded on the accrual basis.
Discounts and premiums on debt securities purchased are amortized over the
life of the respective security as adjustments to interest income. Cost is
determined on the specific identification basis.
Mortgage paydown gain/loss is treated as ordinary income for tax
purposes and is included in interest income on the Statement of Operations.
Effective September 1, 1996, the Trust began accruing income using the
effective interest method which includes amortizing premiums on purchases of
portfolio securities as adjustments to income. This method of recording
income more closely reflects the economics of holding and disposing of debt
instruments. Prior to September 1, 1996, the Trust accrued coupon interest
income, market discount and original issue discount and accounted for
purchased premiums as capital gains or losses when realized upon disposition
of the associated security. The cumulative effect of applying this
accounting change was to decrease accumulated undistributed net investment
income and increase net unrealized appreciation of investment securities by
$195,484 and $1,919,380 for Intermediate Government Bond and Total Return
Funds, respectively. Such accounting change had no effect on net asset value
per share.
The Trust's use of short-term forward foreign currency contracts may
subject it to certain risks as a result of unanticipated movements in
foreign exchange rates. The Fund does not hold short-term forward foreign
currency contracts for trading purposes.
Investments in securities of governmental agencies may only be
guaranteed by the respective agency's limited authority to borrow from the
U.S. Government and may not be guaranteed by the full faith and credit of
the United States.
D. FEDERAL AND STATE TAXES - The Trust has complied, and continues to comply,
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make
sufficient distributions of net investment income and net realized capital
gains, if any, to relieve it from all federal and state income taxes and
federal excise taxes. At August 31, 1997, Intermediate Government Bond
Fund had $411,995, $16,031 and $8,387 in net capital loss carryovers which
expire in the years 2003, 2004 and 2005, respectively.
To the extent future capital gains are offset by capital loss
carryovers, such gains will not be distributed to shareholders.
Dividends paid by the Trust from net investment income and
distributions of net realized short-term capital gains are, for federal
income tax purposes, taxable as ordinary income to shareholders. Of the
<PAGE>
ordinary income distributions declared for the year ended August 31, 1997,
44.31% for Total Return Fund and 89.87% for Value Equity Fund qualified for
the dividends received deduction available to the Trust's corporate
shareholders.
Investment income received from foreign sources may be subject to
foreign withholding taxes. Dividend and interest income is shown gross of
foreign withholding taxes in the accompanying financial statements.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - For Total Return and Value
Equity Funds, dividends and distributions to shareholders are recorded on
the ex dividend/distribution date. All of Intermediate Government Bond
Fund's net investment income is distributed to shareholders by dividends
declared daily and paid monthly. Income dividends are reinvested at the ex
dividend date. The Trust distributes net realized capital gains, if any, to
its shareholders at least annually, if not offset by capital loss
carryovers. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for mortgage-backed securities, market
discounts, amortized premiums, foreign currency transactions, nontaxable
dividends, net operating losses and expired capital loss carryforwards.
For the year ended August 31, 1997, the effects of such differences
were as follows:
<TABLE>
<CAPTION>
Accumulated
Accumulated Undistributed
Undistributed Net Realized
Net Investment Gain on Paid-In
Fund Income Investments Capital
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Intermediate Government Bond Fund $195,484 $(195,484) -
Total Return Fund 1,923,474 (1,919,376) $ (4,098)
Value Equity Fund 34 (34) -
</TABLE>
Net Investment income, net realized gains and net assets were not affected.
F. EXPENSES - Each of the Funds bears expenses incurred specifically on its
behalf and, in addition, each Fund bears a portion of general expenses,
based on the relative net assets of each Fund.
Under an agreement between each Fund and the Trust's Custodian, agreed
upon Custodian Fees and Expenses are reduced by credits granted by the
Custodian from any temporarily uninvested cash. Similarly, Transfer Agent
Fees are reduced by credits earned by each Fund from security brokerage
transactions under certain broker/service agreements with third parties.
Such credits are included in Fees and Expenses Paid Indirectly in the
Statement of Operations.
For the year ended August 31, 1997, Fees and Expenses Paid Indirectly
consisted of the following:
<PAGE>
Custodian Fees Transfer
Fund and Expenses Agent Fees
- --------------------------------------------------------------------------------
Intermediate Government Bond Fund $ 7,109 $ 0
Total Return Fund 91,539 75,734
Value Equity Fund 34,103 12
NOTE 2 - INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Trust's investment adviser. As compensation for its
services to the Trust, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee is based on the annual
rate of each Fund's average net assets as follows:
AVERAGE NET ASSETS
-------------------------------------------
$0 to $500 Million Over
$500 to $1 $1
Fund Million Billion Billion
- --------------------------------------------------------------------------------
Intermediate Government Bond Fund 0.60% 0.50% 0.40%
Total Return Fund 0.75% 0.65% 0.50%
Value Equity Fund 0.75% 0.65% 0.50%
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Capital
Management, Inc. ("ICM"), an affiliate of IFG, investment decisions of the Trust
are made by ICM. Fees for such sub-advisory services are paid by IFG.
In accordance with an Administrative Agreement, each Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee at an annual rate of $20.00 for Total
Return and Value Equity Funds, and $26.00 for Intermediate Government Bond Fund
per shareholder account, or, where applicable, per participant in an omnibus
account, per year. IFG may pay such fee for participants in omnibus accounts to
affiliates or third parties. The fee is paid monthly at one-twelfth of the
annual fee and is based upon the actual number of accounts in existence during
each month.
IFG has voluntarily agreed, in some instances, to absorb certain fees and
expenses incurred by Intermediate Government Bond Fund.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended August
31, 1997, the aggregate cost of purchases and proceeds from sales of investment
securities (excluding all U.S. Government securities and short-term securities)
were as follows:
Fund Purchases Sales
- --------------------------------------------------------------------------------
Total Return Fund $334,924,181 $ 57,764,719
Value Equity Fund 206,698,944 104,495,742
<PAGE>
For the year ended August 31, 1997, the aggregate cost of purchases and
proceeds from sales of U.S. Government securities were as follows:
Fund Purchases Sales
- --------------------------------------------------------------------------------
Intermediate Government Bond Fund $ 23,299,219 $20,977,579
Total Return Fund 153,243,664 0
NOTE 4 - APPRECIATION AND DEPRECIATION. At August 31, 1997, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation by Fund were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Fund Appreciation Depreciation Appreciation
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Intermediate Government Bond Fund $ 291,356 $ 128,020 $ 163,336
Total Return Fund 402,842,089 8,463,914 394,378,175
Value Equity Fund 104,888,866 3,434,912 101,453,954
</TABLE>
NOTE 5 - TRANSACTIONS WITH AFFILIATES. Certain of the Trust's officers and
trustees are also officers and directors of IFG or ICM.
The Trust has adopted an unfunded deferred compensation plan covering all
independent trustees of the Trust who will have served as an independent trustee
for at least five years at the time of retirement. Benefits under this plan are
based on an annual rate equal to 40% of the retainer fee at the time of
retirement.
Pension expenses for the year ended August 31, 1997, included in Trustees'
Fees and Expenses in the Statement of Operations, and unfunded accrued pension
costs and pension liability included in Prepaid Expenses and Accrued Expenses,
respectively, in the Statement of Assets and Liabilities were as follows:
<TABLE>
<CAPTION>
Unfunded
Pension Accrued Pension
Fund Expenses Pension Costs Liability
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Intermediate Government Bond Fund $ 605 $ 1,477 $ 3,190
Total Return Fund 13,333 21,712 47,585
Value Equity Fund 2,824 6,172 13,351
</TABLE>
NOTE 6 - LINE OF CREDIT. The Trust has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 10% of the Net Assets at Value of each respective
Fund. Each Fund agrees to pay annual fees and interest on the unpaid principal
balance based on prevailing market rates as defined in the agreement. At August
31, 1997, there were no such borrowings.
<PAGE>
INVESCO Value Trust
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period Year
Ended Ended
Year Ended August 31 August 31 December 31
------------------------------------------------------ ---------- ------------
1997 1996 1995 1994 1993^ 1992
Intermediate Government Bond Fund
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.30 $12.64 $12.16 $13.25 $12.68 $12.89
------------------------------------------------------ ---------- ------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.66 0.73 0.73 0.70 0.48 0.90
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 0.14 (0.34) 0.48 (0.75) 0.57 (0.16)
------------------------------------------------------ ---------- ------------
Total from Investment
Operations 0.80 0.39 1.21 (0.05) 1.05 0.74
------------------------------------------------------ ---------- ------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.66 0.73 0.73 0.70 0.48 0.90
Distributions from
Capital Gains 0.00 0.00 0.00 0.34 0.00 0.05
------------------------------------------------------ ---------- ------------
Total Distributions 0.66 0.73 0.73 1.04 0.48 0.95
------------------------------------------------------ ---------- ------------
Net Asset Value -
End of Period $12.44 $12.30 $12.64 $12.16 $13.25 $12.68
====================================================== ========== ============
TOTAL RETURN 6.64% 3.12% 10.36% (0.37%) 8.38%* 6.03%
RATIOS
Net Assets - End of Period
($000 Omitted) $44,441 $39,949 $37,339 $31,861 $39,384 $29,649
Ratio of Expenses to
Average Net Assets # 1.02%@ 1.15%@ 1.20% 1.07% 0.96%~ 0.97%
Ratio of Net Investment
Income to Average
Net Assets# 5.32% 5.81% 6.04% 5.58% 5.48%~ 6.38%
Portfolio Turnover Rate 37% 63% 92% 49% 34%* 93%
</TABLE>
<PAGE>
^ From January 1, 1993 to August 31, 1993.
+ Distributions in excess of net investment income for the year ended August 31,
1994, aggregated less than $0.01 on a per share basis.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended August 31, 1997 and 1996. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 1.37% and
1.24%, respectively, and ratio of net investment income to average net assets
would have been 4.97% and 5.72%, respectively.
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
~ Annualized
<PAGE>
INVESCO Value Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period Year
Ended Ended
Year Ended August 31 August 31 December 31
---------------------------------------------------- --------- -----------
1997 1996 1995 1994 1993^ 1992
Total Return Fund
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $22.60 $20.95 $18.54 $18.27 $17.18 $16.43
--------------------------------------------------- --------- -----------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.77 0.73 0.72 0.69 0.40 0.66
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 5.26 1.78 2.46 0.60 1.09 0.93
--------------------------------------------------- --------- -----------
Total from Investment
Operations 6.03 2.51 3.18 1.29 1.49 1.59
--------------------------------------------------- --------- -----------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.77 0.73 0.72 0.60 0.40 0.65
In Excess of Net Investment
Income+ 0.00 0.00 0.00 0.09 0.00 0.00
Distributions from
Capital Gains 0.09 0.13 0.05 0.17 0.00 0.19
In Excess of Capital Gains 0.00 0.00 0.00 0.16 0.00 0.00
--------------------------------------------------- --------- -----------
Total Distributions 0.86 0.86 0.77 1.02 0.40 0.84
--------------------------------------------------- --------- -----------
Net Asset Value -
End of Period $27.77 $22.60 $20.95 $18.54 $18.27 17.18
=================================================== ========= ===========
TOTAL RETURN 27.01% 12.06% 17.54% 7.22% 8.72%* 9.84%
RATIOS
Net Assets - End of Period
($000 Omitted) $1,845,594 $1,032,151 $563,468 $292,765 $220,224 $137,196
Ratio of Expenses to
Average Net Assets 0.86%@ 0.89%@ 0.95% 0.96% 0.93%~ 0.88%
<PAGE>
Ratio of Net Investment
Income to Average
Net Assets 3.11% 3.44% 3.97% 3.31% 3.51%~ 4.06%
Portfolio Turnover Rate 4% 10% 30% 12% 19%* 13%
Average Commission
Rate Paid^^ $ 0.0520 $ 0.0539 - - - -
</TABLE>
^ From January 1, 1993 to August 31, 1993.
+ Distributions in excess of net income for the year ended August 31, 1995,
aggregated less than $0.01 on a per share basis.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ Ratio is based on Total Expenses of the Fund, which is before any offset
arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESCO Value Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period Year
Ended Ended
Year Ended August 31 August 31 December 31
---------------------------------------------------- ---------- -----------
1997 1996 1995 1994 1993^ 1992
Value Equity Fund
<S> <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
--------------------------------------------------- ---------- -----------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.35 0.35 0.39 0.36 0.24 0.36
Net Gains on Securities
(Both Realized and
Unrealized) 6.62 3.09 2.58 1.20 0.88 0.45
--------------------------------------------------- ---------- -----------
Total from Investment
Operations 6.97 3.44 2.97 1.56 1.12 0.81
--------------------------------------------------- ---------- -----------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.35 0.35 0.39 0.31 0.24 0.34
In Excess of Net
Investment Income 0.00 0.00 0.00 0.04 0.00 0.00
Distributions from
Capital Gains 0.56 0.38 1.17 0.88 0.00 0.13
--------------------------------------------------- ---------- -----------
Total Distributions 0.91 0.73 1.56 1.23 0.24 0.47
--------------------------------------------------- ---------- -----------
Net Asset Value -
End of Period $28.30 $22.24 $19.53 $18.12 $17.79 $16.91
=================================================== ========== ===========
TOTAL RETURN 32.04% 17.77% 17.84% 9.09% 6.65%* 4.98%
RATIOS
Net Assets - End of Period
($000 Omitted) $369,766 $200,046 $153,171 $111,850 $81,914 $78,609
Ratio of Expenses to
Average Net Assets 1.04%@ 1.01%@ 0.97% 1.01% 1.00%~ 0.91%
Ratio of Net Investment
Income to Average
Net Assets 1.35% 1.64% 2.17% 1.80% 2.07%~ 2.19%
Portfolio Turnover Rate 37% 27% 34% 53% 35%* 37%
Average Commission Rate Paid^^ 0.0538 0.0589 - - - -
</TABLE>
<PAGE>
^ From January 1, 1993 to August 31, 1993.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ Ratio is based on Total Expenses of the Fund, which is before any expenses
offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
INVESCO Value Trust
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO Intermediate Government
Bond Fund, INVESCO Total Return Fund and INVESCO Value Equity Fund (constituting
INVESCO Value Trust, hereafter referred to as the "Fund") at August 31, 1997,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1997 by
correspondence with the custodian and the application of alternative auditing
procedures where securities purchased had not been received, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Denver, Colorado
October 8, 1997
<PAGE>
FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- --------------------------------------------------------------------------------
International
International Growth 49 FSIGX IntlGr
Asian Growth 41 IVAGX AsianGr
European 56 FEURX Europ
European Small Company 37 IVECX EuroSmCo
Latin American Growth 34 IVSLX LatinAmGr
Pacific Basin 54 FPBSX PcBas
- --------------------------------------------------------------------------------
Sector
Energy 50 FSTEX Enrgy
Environmental Services 59 FSEVX Envirn
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Realty 42 IVSRX Realty
Technology 55 FTCHX Tech
Utilities 58 FSTUX Util
Worldwide Capital Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
- --------------------------------------------------------------------------------
Capital Appreciation
Growth 10 FLRFX Grwth
Dynamics 20 FIDYX Dynm
Small Company 74 IDSCX DivSmCo
Emerging Growth 60 FIEGX Emgrth
- --------------------------------------------------------------------------------
Growth & Income
Industrial Income 15 FIIIX IndInc
Value Equity 46 FSEQX ValEq
Multi-Asset Allocation 70 IMAAX MulAstAl
Balanced 71 IMABX Bal
Total Return 48 FSFLX TotRtn
- --------------------------------------------------------------------------------
Bond
Short-Term Bond 33 INIBX ShTrBd
Intermediate Government Bond 47 FIGBX IntGov
U.S. Government Securities 32 FBDGX USGvt
Select Income 30 FBDSX SelInc
High Yield 31 FHYPX HiYld
- --------------------------------------------------------------------------------
Tax-Exempt
Tax-Free Intermediate Bond 36 IVTIX *
Tax-Free Long-Term Bond 35 FTIFX TxFre
- --------------------------------------------------------------------------------
<PAGE>
Money Market
U.S. Government Money Fund 44 FUGXX InvGvtMF
Cash Reserves 25 FDSXX InvCshR
Tax-Free Money Fund 40 FFRXX InvTaxFree
* This fund does not meet size requirements to be assigned a ticker symbol in
newspaper listings.
For more information about any of the INVESCO Funds, including management fees
and expenses, please call us at 1-800-525-8085 for a prospectus. Read it
carefully before you invest or send money.
<PAGE>
INVESCO FUNDS
INVESCO Distributors, Inc., (SM)
Distributor (formerly INVESCO
Funds Group, Inc., Distributor)
Post Office Box 173706
Denver, CO 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
If you're in Denver, visit one of our
convenient Investor Centers:
Cherry Creek,
155-B Fillmore Street
Denver Tech Center,
7800 East Union Avenue,
Lobby Level
